Starting a financial advisor business can be a lucrative and fulfilling endeavor, but it’s important to understand the necessary steps to ensure your business is successful.
Here are the ten steps you can take to build your own financial advisor business.
10 Steps to Launching a New Financial Advisor Business
1. Choose Your Type of Financial Advisor Business
The first step in launching a financial advisor business is to identify the type of financial advisor business you want to launch. You might choose from the following types among others:
- Investment advisor: provides services such as asset management, portfolio construction, and investment research
- Financial planning: helps clients with budgeting, saving, retirement planning, and estate planning
- Tax advisor: provides tax planning and preparation services
2. Name Your Financial Advisor Business
Give your financial advisor business an identity so people will consider it a well-known and respected brand. You can take the name of your financial advisor business from your industry, focus on a geographical location, or use your own name among other options.
The main goal for naming your financial advisor business is to make it sound appealing and trustworthy so people are more likely to seek out your services.
3. Determine Your Financial Advisor Business Model
There are several possible types of business models for a financial advisor business including:
- Fee-only: financial advisor charges a flat fee or an hourly rate for services provided
- Commission-based: financial advisor earns commissions from the sale of products such as insurance or investments
- Retainer: financial advisor is paid a monthly/yearly fee in exchange for ongoing services
No matter which model you choose, make sure that it aligns with your business goals and the services you offer.
4. Choose a Legal Form for Your Business
By incorporating your financial advisor business, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.
The business structure you choose for your financial advisor business will determine the taxes you pay and which state or federal tax forms you need to file.
Read our article comparing the most common financial advisor business structures.
5. Write a Financial Advisor Business Plan
All financial advisor business owners should develop a business plan.
A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include information on the company’s products or services, market analysis, financial projections, and management team.
When developing your financial advisor business plan and strategy, you should think about the following questions your customers might have:
- What services does your financial advisor business offer?
- What is the experience of your financial advisor team?
- How do you choose the products and services to offer your clients?
- What is your investment philosophy?
- Are you a fiduciary?
- Do you have any charges or fees associated with your services?
- What are the qualifications of your financial advisor team members?
- What is your approach to financial planning?
- Do you provide advice on insurance and annuities?
- What other services do you offer?
- What is your process for onboarding new clients?
- How often do you meet with clients?
- Do you have a minimum account size?
- What is your process for reviewing and modifying a client’s investment portfolio?
- What type of reporting do you provide to clients?
- Do you offer any discounts on your services?
- What are the different ways to get in touch with your financial advisor team?
- What are your business hours?
- Do you have any blog articles or other resources that potential clients can read?
- How did you choose the products and services that you offer?
Read our article about how to write a financial advisor business plan.
6. Apply for the Necessary Permits and Licenses
You may need to obtain the required licenses and permits before launching your financial advisor business.
For example, if you provide investment advice, you may need to register with the Securities and Exchange Commission (SEC) as a Registered Investment Advisor (RIA). Other financial advisor business owners may need to obtain a state insurance license if they plan on selling insurance products.
You must also register your financial advisor business as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State website.
Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website if you plan to hire employees.
Read our article about obtaining the proper financial advisor business licenses.
7. Determine Your Budget & Apply for Funding as Needed
In developing your financial advisor business plan, you will figure out how much funding you need to start and grow your business.
If you have your funds to invest in your financial advisor business, you may consider taking advantage of that. In addition to your personal funds, other forms of potential funding for your financial advisor business include traditional bank loans, SBA loans, credit cards, angel investors and family and friends.
Read our article about how to fund your financial advisor business.
8. Get the Technology & Software Needed to Run Your Business Efficiently
When you start your financial advisor business, it’s essential to have the right technology in place to maximize efficiency. You definitely need a computer with Internet access, and accounting software for tracking expenses and revenues.
You may also want to invest in customer relationship management (CRM) software to manage your client relationships and financial planning software to help with the financial planning.
In addition, many online tools can help with various aspects of running a financial advisor business, such as marketing, appointment scheduling and project management.
Read our article about the technology and software you need to run a financial advisor business.
9. Market Your Financial Advisor Business to Potential Clients
Before selling your services, you must let the world know you exist. The first step is to create a website so people can learn more about your services and how they benefit them.
After you launch your website, start promoting it through social media channels like Facebook, LinkedIn, and Instagram. Also consider networking with other people in the financial advisor industry through social media and blogs so they can help share your business.
You also need to start gathering the materials needed to execute on your promotions strategy, which is your strategy for attracting new customers. Financial advisor businesses should consider the following promotional methods for which you should start getting prepared:
- Develop a strong social media presence.
- Create informative blog content and share it on social media.
- Connect with other professionals in the financial advisor industry.
- Network with potential clients at events and meetings.
- Send direct mail to potential clients.
- Advertise your services in relevant publications.
- Speak at relevant conferences and events.
- Offer free consultations to potential clients.
- Have a strong website with informative content.
Read our article about how to market your financial advisor business for more tips.
10. Get New Clients & Grow Your Business
When you promote your services, you’ll start to get interest from potential clients.
Make sure you’re ready to serve these clients. Also, be sure to establish systems to ensure consistency and reduce costs. And be sure to find and train the right people to help you grow your financial advisor business.
Read our article about how to effectively grow your financial advisor business to learn more.
Starting a Financial Advisor Business FAQs
There are many reasons to start a financial advisor business. The most common reason is that people want to be their own boss and have the ability to control their own income. Other reasons include the desire to help others improve their financial situation, the opportunity to work with various clients, and the challenge of building a successful business.
Many financial advisor businesses are started from home. This can be a great way to get your business off the ground because it lowers your overhead costs. In addition, starting from home gives you the flexibility to work around your family and other commitments.
If you decide to start your financial advisor business from home, there are a few things you need to keep in mind. First, you need to create a dedicated workspace in your home. This will help you stay focused and organized.
Second, you need to set boundaries with your family and friends so they understand that you are working and cannot be interrupted. Consider implementing a “closed door” policy when you’re in important meetings and cannot be disturbed.
Finally, you must ensure you have the right insurance coverage to protect you in case of any accidents or injuries.
There are many ways to market a financial advisor business online. The most important strategy is to create a strong social media presence. This can be done by creating informative blog content and sharing it on social media.
Additionally, connect with other professionals in the financial advisor industry and network with potential clients at events and meetings. You can also advertise your services in relevant publications and offer free consultations to potential clients.
If you are thinking about starting a financial advisor business, you should keep a few things in mind. Tips include:
- Ensure you have the experience and knowledge necessary to be a successful financial advisor.
- Develop a marketing plan to reach potential clients.
- Make sure you have the right insurance coverage in place.
- Describe your services clearly on your website.
- Include testimonials from satisfied clients.
- Install plugins that allow potential clients to book your services online.
- Stay organized and manage your time efficiently.
- Stay up to date on industry news and trends.
- Attend events and meetings to network with potential clients.
A simple checklist to use when starting a financial advisor business is as follows:
- Choose Your Type of Financial Advisor Firm: This should be based on what you are best at and how much experience you have. Remember to always keep your interests, skills, and experience in mind.
- Name Your Financial Advisor Business: This should be done carefully, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
- Choose a Legal Form for Your Business: Whether you become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
- Determine Your Financial Advisor Business Model: Determine how your business will make money. Will you sell products, services, or a combination of both?
- Write a Financial Advisor Business Plan: Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow.
- Apply for the Necessary Permits and Licenses: In most locations, you must apply for a business license or permits before you can begin operations.
- Determine Your Budget & Apply for Funding as Needed: You will need to know how much money you have to spend on all of your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
- Get the Technology & Software Needed to Run Your Business Efficiently: You need the right tools to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
- Market Your Financial Advisor Business to Potential Clients: A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the services they truly need.
- Get Clients & Grow Your Business: Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your services.
Starting a financial advisor business requires planning and preparation, but if you follow these tips and use the resources available, you will be on your way to success. Remember to research the market and create a solid business plan. With hard work and dedication, you can make your financial advisor dreams a reality.