Answers on LLP set-up for DM

	calesmith	0
	Got some questions from "DM" on my Cale in the Keys blog about setting up Islamorada Investment Management as an LLP, and thought I'd answer them here. So here ya go: Q. You mentioned that you set up Islamadora Investment Management as an LLP. Is the Investment Manager an investor in the Spoke Fund itself or does it operate solely as an Advisor/Manager to the fund thereby collecting fees? Are the other Spoke investors limited partners in the LLP or is the LLP distinct from the Spoke Fund? A. My LLP shouldn't be confused with the LLP of a hedge fund, and the fund isn't a distinct entity or partnership, either. The LLP is simply the corporate structure I chose because I might want some day to bring on partners, train them up, and then take distributions from the company as a retirement plan of sorts should I ever retire - similar to how many law firms work. IIM is an RIA that happens to be an LLP, but wouldn't matter in the least if it was a LLC, sole proprietor, etc. You can set up your RIA company however best you see fit. And the other investors are not partners...they are simply clients of the RIA, and they open account in their own name with my custodian and give me discretionary authority. My own accounts are set up the same way, too. So IIM earns fees from my own accounts, too...same as all my investors. Q. Along a similar vein, is any personal contribution you make through the investment manager/LLP or is it directly through a separate account in the Spoke Fund, like any other investor? A. Yes, my own money is invested directly through a separate account in the Spoke Fund, just like any other investor. Q. Are you personally the General Partner of the LLP or did you have to set up a separate company to be the General Partner (to limit liability) - ie who is the general partner and who are the limited partners? A. Yes, to be a partnership you've gotta have a partner, but again, the structure is otherwise distinct from the GP/LP relationship in the typical hedge fund. In my case, I am the managing partner and own almost all of the firm, and my wife is the minority partner. Suppose you could form a new company to be GP, but then you'd have to register that GP as an RIA, too, and all that means more admin and $$$. So, didn't make much sense to me. Course, if you're managing billions, might be a different story there... Hope that helps. Cale
	Mon, Jun 20 '11 at 1:23PM EDT	Post 1 • IP

	DM1	0
	Thanks for that very thorough response. It was very helpful. DM
	Tue, Jun 21 '11 at 12:30AM EDT	Post 2 • IP

Answers on LLP set-up for DM31