Starting an Annuity Company

[rogercbryan]

Let me start by saying that I’ve lost confidence in publicly traded stocks. I’d much rather invest in small businesses then ever buy another stock in a public company. With that being said I know I need to set money aside for retirement (or just security). What I’m finding is that I’m not the only one thinking like this. There are a ton of people my age (30-ish) with great incomes ($100K+) who are confused about what to do when it comes to a secured retirement.

The formulas are fairly straight forward when it comes to keeping cash invested or saved in accounts with guaranteed interest rates. Knowing those rates, the time frame to retirement, the amount to be invested, and the time frame in which payments are to be made makes planning a personal annuity fairly simple.

Here is my question. I could easily set-up my own annuity in fixed income investments. I also have people who are interested in doing the same. Is there a way to start (for me to start) a company that pools the money from multiple investors to create a new annuity firm? Can I do this without a license? The reason I ask is that I’m not creating any risk as I’m not investing a risk associated methods.

Using accounts like ING to get started and creating formulas that allow people to feel comfortable with the return during retirement would give me a chance to start the business. Once the account starts to gather capital it can be used to get higher interest rates from bonds and or CD’s. This would create a benefit that people could not do on their own.

I just don’t know if I can do this legally without licensing or insurance. Any guidance would be appreciated.

[BusinessAdviser]

Wouldn't waste much time laying awake at night planning this one. Not possible with what you're wanting to do.

[rogercbryan]

Wouldn't waste much time laying awake at night planning this one. Not possible with what you're wanting to do.

Any info you could provide would be helpful...

[lalit_mrt]

roger i cud help u in this great way.rather i know how to do it.Let us talk in details ,cud u talk to me on skpype -lalit_mrt,YM -lalit_mrt@yahoo.co.in ,MSN-lalit_mrt@hotmail.com

[numberman]

I would be very very careful, depending on your country and/or state the legal issues are very complex. Also, you are correct, annuities are relatively simple, but I don't see how you'd have any advantage over the experts unless you have significant experience.

That said, you've identified a captive market, and I think you are bang on- people need conservative financial advice more then ever. If you have a range of captive investors just specialize in selling products on behalf of institutions, and focus on managing funds rather then structuring. Merrill Lynch will let you be a freelance advisor, which gives you access to a range of products, instant credibility and they'll sort out all the the legal, investment issues etc. If you feel you can get the investors, that's the best option, you can always branch out later.

[rogercbryan]

roger i cud help u in this great way.rather i know how to do it.Let us talk in details ,cud u talk to me on skpype -lalit_mrt,YM -lalit_mrt@yahoo.co.in ,MSN-lalit_mrt@hotmail.com

I have to apologize but I wouldn't consider working with someone who types and spells like this.

[rogercbryan]

I'm going to start my own annuity and manage it myself.. its a long term project... I need to do it before I can sell it.. if I ever sell it

[mthomas]

I'm not positive, but I'm pretty sure you'd need a license for this sort of thing. You'd be required to do trades, and if you are doing it through another firm as an intermediary (you mentioned ING), you'd probably get killed in brokerage and transaction fees. Even if you CAN somehow do this without licensing, I think you would be at a disadvantage if you didn't have it.

Based on some quick reading I just did, it sounds like you need to get certain licenses (ie: Series 7) to even talk to certain retail investors. It further sounds like the registration you may need for your business is to be a "Registered Broker/Dealer".

Good luck!

[BusinessAdviser]

I'm going to start my own annuity and manage it myself.. its a long term project... I need to do it before I can sell it.. if I ever sell it

Again, great idea, but what you're proposing is like saying, "I'm going to be a lawyer," or "I'm going to be a doctor," because you think you can make money. You need licenses. Plain and simple. But nice thoughts.

[JohnGalt]

Roger,

I think the feasibility of your idea depends on what you are actually trying to do. If you want to create a "fund" you would need certifications and licenses

BUT

If you are just looking to pool your money with like minded individuals in order to increase your bargaining power when shopping around for investments I think you could probably do this. I would look into creating an LLC that you and your partners would contribute money to. The LLC would then be the entity buying and holding the investment assets: bonds, cd's, etc...

This is a simplified brainstorming thread so no need to flame.


P.S. BusinessAdviser it seems like every one of your posts I see is 1-2 sentences long and a cynical quip...

[rogercbryan]

I killed this idea and instead moved towards starting a 'small business capital fund' which I've already started raising funds for. This annuity idea has no legs in the small cap world in which I live.