The Difference Between a Broker-dealer
and an Advisor

How to Start a Broker-dealer and Investment Advisory Firm


An investment advisor or manager is someone who has the qualifications and experience provide investment advice and manage investments for high net worth and sophisticated clients. The investment advisor/manager charges fees based on the percentage of assets that are under management, although there are also some that charge fixed rates, or charge hourly.

A broker-dealer firm is a company that facilitates investment transactions for its clients. For this service, the broker-dealer is compensated through commissions that are based on investment transactions made on the client's behalf (ex. equities, bonds, MTNs, structured notes, forex, options, and commodities).

COMBINING AN INVESTMENT MANAGEMENT AND BROKER-DEALER

Many offshore broker-dealers in the Cayman Islands (i.e. securities investment business) also have representatives that can act as investment advisors and managers to help high net worth and sophisticated clients decide which investments to purchase, and which to sell.

A fully compliant global investment management broker-dealer (registered with the Cayman Islands Monetary Authority - "CIMA") can accept accounts from high net-worth/sophisticated citizens or residents of all countries (subject to local regulations) except citizens or residents of those countries or regions that are on the sanction list of the US Office of Foreign Asset Controls or similar lists.

INVESTMENT MANAGEMENT AND SECURITIES BROKERAGE SERVICES

The following is a short list of activities which may be carried out by a Cayman Islands securities investment business (Investment Management - Broker-Dealer):

- Dealing in securities: buying, selling, subscribing for or underwriting securities as an agent.

- Arranging deals in securities: Making arrangements in buying, selling, subscribing for or underwriting securities.

- Managing securities.

- Advising on securities: Advising a person on securities.

Frank Nagy Financial Services offers a turn-key solution to set up an investment management broker-dealer in the Cayman Islands. In addition, there are no minimum equity capitalization requirements for an excluded Cayman Islands securities investment business (i.e. broker-dealer).

Contact us to receive a free summary outlining the costs to set up and operate an investment management broker-dealer in the Cayman Islands.

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