If an adviser wants access to long/short strategies (or more leverage), but Fidelity and Schwab have locked them out, as I wrote recently, they have three options:
- Join up with a bigger practice
- Use another custodian (Interactive Brokers, Goldman Sachs, Pershing)
- Trade directly with prime brokers like Morgan Stanley, JP Morgan, and Goldman Sachs.
To trade with prime brokers, the account usually requires a minimum allocation of $15 million. An investor typically establishes a legal entity to house the assets, usually a limited liability company (LLC) or limited partnership (LP).
The choice of wrapper makes a big difference.