Using Hedge Funds in Financial Planning

Using Hedge Funds in Financial Planning

Financial Planning with Hedge Funds

hedge funds and financial planningIf you are a financial advisor and would like to begin using hedge funds within your financial planning practice the steps below might help you navigate this process. Note: While this article was written for financial advisors, others might also find some useful tips and resources here.

  1. Speak with your broker-dealer as applicable about available hedge funds through their organization and what the process would be to invest in a hedge fund through their compliance/reporting requirements. Make sure and get a clear understanding of what licenses the broker-dealer requires you to have as well.
  2. Become a continual learner of hedge funds, read 50-100 posts on my hedge fund blog (, subscribe to newsletters by FinTag, Fierce Finance, and the Albourne Village. This organic education (vs. being spoon fed by consultants) will pay dividends when it comes to evaluating fund managers and negotiating fees.
  3. Evaluate your current book of business. Who is an accredited investor? Who will soon become one? What amount of assets or % of your total book is of individuals who would be considered accredited investors?
  4. Conduct some research on hedge fund consultants and hedge fund brokers and explore the various options available to you. You might not need to work with a consultant but it could help to be connected to a few consulting firms that see hundreds of hedge funds a year and would happy to introduce you to who they have selected as “best of breed” in the industry.
  5. Try to customize your portfolio allocation software or reports so that you can show your clients 3 typical asset allocation strategies. One might suggest a 5% allocation to hedge funds with others allocating say 11% and then 20-25% as more aggressive options. These are not hard and fast numbers but they might help start a conversation around their use of hedge fund sin the near term.
  6. Have 3 resources on hedge funds available to provide to your client in case they ask more about what they are. One way to provide this information would be to print out 2-3 posts from within this blog that would be serve your clientele. For example it might be helpful to show them posts I have written on the Differences between “Hedge Funds & Mutual Funds,” “What is a Hedge Fund,” and “Why Invest in Hedge Funds?.”
  7. Establish your own internal due diligence process that can help you weed out managers that are not likely to provide the type of performance or capital preservation you are seeking.
None of the above should be taken as financial advice or recommendations and a qualified compliance professional or lawyer should review your procedures before making investments in hedge funds or advising others on placing your money with hedge funds. If you need to speak with a lawyer please let me know I have a few friends who have worked with dozens if not hundreds of hedge funds in the past. My email address is

- Richard

Permanent Link:Using Hedge Funds in Financial Planning
Related Posts:
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  6. Prime Brokers
  7. Hedge Fund Strategy
  8. Hedge Fund Marketing
  9. Hedge Fund Due Diligence
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