Starting your own financial planning business is a great way to help people save for their future. However, there are a few things you need to know before getting started.
Here are the ten steps you can take to build your own financial planning business.
10 Steps to Launching a New Financial Planning Business
1. Choose Your Type of Financial Planning Business
The first step in launching a financial planning firm is identifying the type of business you want to launch. You might choose from the following types, among others:
- Financial Advisor: Also called a wealth manager, investment advisor, or financial planner, this type of professional helps individuals save and invest for long-term financial goals.
- Insurance Agent: This type of financial planner sells and advises on insurance products like life insurance, disability insurance, and long-term care insurance.
- Tax Specialist: This financial planner helps individuals and businesses with tax planning and preparation.
- Retirement Planner: As the name suggests, this type of financial planner helps individuals save for retirement.
2. Name Your Financial Planning Business
Give your financial planning business an identity so people will consider it a well-known and respected brand. You can take the name of your financial planning business from your industry, focus on a geographical location, or use your name, among other options.
The main goal of naming your financial planning business is to make it sound appealing and trustworthy so that clients will be more likely to seek out your financial planning services.
3. Determine Your Financial Planning Business Model
There are several possible types of business models for a financial planning business, including:
- Fee-only: This type of financial planning business only charges clients fees for advice and services. There are no commissions or product sales.
- Commission-based: This type of financial planning business earns commissions from selling products like insurance or investments.
- Hybrid: This type of financial planning business uses a combination of fee-only and commission-based models.
Whichever model you choose, ensure it aligns with your business goals and the services you offer.
4. Choose a Legal Form for Your Business
By incorporating your financial planning 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 planning 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 planning business structures.
5. Write a Financial Planning Business Plan
All financial planning 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 the company’s products or services, market analysis, financial projections, and management team.
When developing your financial planning business plan and strategy, you should think about the following questions your customers might have:
- What services do you offer?
- How are you different from other financial planners?
- What is your experience in the financial planning industry?
- What are your qualifications?
- How much do your services cost?
- Do you have any conflicts of interest?
Answering these questions in your business plan will give potential clients a better understanding of your financial planning business and what you can offer them.
Read our article about how to write a financial planning business plan.
6. Apply for the Necessary Permits and Licenses
You may need to obtain required licenses and permits before launching your financial planning business.
For example, if you offer investment advice, you will need to register with the Securities and Exchange Commission (SEC) as an investment adviser.
You must also register your financial planning 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 planning business licenses.
7. Determine Your Budget & Apply for Funding as Needed
In developing your financial planning 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 planning business, you may consider taking advantage of that. In addition to your personal funds, other forms of potential funding for your financial planning business include traditional bank loans, SBA loans, credit cards, angel investors and family and friends.
Read our article about how to fund your financial planning business.
8. Get the Technology & Software Needed to Run Your Business Efficiently
When you start your financial planning 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 help manage your clients, as well as financial planning software to assist with your financial analysis and projections. In addition, consider investing in a project management tool to help you keep track of deadlines, tasks and deliverables for your team.
Read our article about the technology and software you need to run a financial planning business.
9. Market Your Financial Planning Business to Potential Clients
Before you start selling your services, you have to 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 Twitter. Also consider networking with other people in the financial planning 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 planning businesses should consider the following promotional strategies for which you should start getting prepared:
- Develop a strong online presence. This can be done through a well-designed website, social media profiles and engaging blog content.
- Attend industry events and network with potential clients and referral partners.
- Sponsor local events and charities that align with the values of your financial planning business.
- Write articles and whitepapers on topics related to financial planning to establish yourself as a thought leader in the industry.
- Get involved with local business groups, chambers of commerce and professional associations.
Read our article about how to market your financial planning 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 planning business.
Read our article about how to effectively grow your financial planning business to learn more.
Starting a Financial Planning Business FAQs
There are many reasons to start a financial planning business. Financial planning is a growing industry with a lot of opportunities for those who are starting their own businesses. The aging population is increasingly in need of financial planning services, and the industry is expected to grow in the coming years.
In addition, as a financial planner, you can make a difference in people’s lives by helping them achieve their financial goals. You can also have a flexible work schedule and be your boss.
There are several ways to market a financial planning business online. First, you need to have a strong online presence. This can be done through a well-designed website, social media profiles and engaging blog content. You should also consider search engine optimization (SEO) to ensure your website appears in search results when potential clients are looking for financial planning services.
In addition, you can market your business through online directories, industry association websites, and pay-per-click (PPC) advertising.
Here are a few tips for starting a financial planning business:
- Get the right education and experience.
- Choose a niche market.
- Invest in financial planning software and technology.
- Develop a marketing and promotional strategy.
- Establish systems to manage your business effectively.
- Get involved with local business groups, chambers of commerce and professional associations.
- Attend industry events and trade shows.
- Join online forums and discussion groups.
A simple checklist to use when starting a financial planning business is as follows:
- Choose Your Type of Financial Planning 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 Planning 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 Planning Business Model: Determine how your business will make money. Will you sell products, services, or a combination of both?
- Write a Financial Planning 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 will be required to apply for a business license and/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 to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
- Market Your Financial Planning 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 planning business requires several steps, but if you follow the tips we’ve outlined in this article, you’ll be well on your way to success. Remember to choose a niche market, get the proper education and experience, invest in financial planning software and technology, and develop a marketing and promotional strategy. With the right tools, you can attract and serve the clients who need your services the most.