How to Start a Financial Advisor Business

Written by Dave Lavinsky

how to start your own firm

A financial planning firm is a company that provides financial advising and planning services to individuals and businesses. Financial advisors offer advice on managing investments, insurance, mortgages, and other financial matters. If you’re looking to start your independent financial planning firm, there are a few key things you need to know. 

In this article, we’ll walk you through the process of starting your own financial planning firm and provide tips for launching your business.
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Importantly, a critical step in starting a financial planning business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Financial Advisor Business Plan Template here.

12 Steps to Starting a Financial Advisor Business

1. Figure out your Niche

The financial and investment advisor industry can be very competitive, so you have to find a way to set yourself apart from the rest of the investment advisers out there. Find your niche, and focus on it.

A few niches include:

  • The “mass affluent,” which is a financial services market made up of individuals with investable assets between $100,000 and $1 million.
  • Retirees who have accumulated savings that they can’t afford to lose in a volatile market

2. Choose an Investment Management Style

Once you’ve identified your niche, it’s time to choose a method of financial planning you’re going to focus on. Here are the most popular styles:

  • Asset management – focuses on how much money a client can save in a given year, and helps them budget accordingly
  • Wealth preservation – works with clients to ensure their assets are being protected from market volatility and inflation
  • Income planning – focuses on a client’s long-term financial stability, helping them create a sustainable income flow
  • Consultative sales – offers a wide range of services for large fees that can be covered through loans or investments

3. Consider your Target Audience

Next, think about who you’re targeting. Your ideal audience will be the clients that value your services the most and are more likely to pay for them.

Some things to consider when choosing a target audience include:

  • Geography – where do they live?
  • Age – will they need financial education or wealth preservation services?
  • Wealth – how much money do they already have?
  • Occupation – are they educated professionals, or are they self-employed?
  • Gender – how will this affect your financial advisor marketing strategy?

4. Find your Competitors

Now it’s time to find out what your competition is up to in the financial advisory industry. Think about whom you’re going after and which companies offer services that might compete with yours.

5. Get your Business Plan in Order

Once you’ve set up your niche, chosen an investment style, identified your target audience, and found out what your competition is doing, it’s time to create a financial planner business plan for success.

To enhance your planning process, incorporating insights from a sample financial advisor business plan can be beneficial. This can provide you with a clearer perspective on industry standards and effective strategies, helping to solidify your own business approach.

Your business plan should include:

  • A general description of the company
  • The services you will offer
  • A description of the market you plan to target
  • How you will attract clients and get them to pay for your services
  • A financial summary of how much money you need to start a successful business

Be sure to include all of this information in a well-thought-out plan that will help you get funding from investors and convince clients that your financial services are the best choice.

6. Secure Funding for Startup Costs

The nature of a financial advisor business means you will need funding to provide initial marketing, advertising, and operational costs. This is generally done through personal investments by the founders or loans from local banks or other institutions interested in lending money to small businesses.

To get outside funding for your business, follow these steps:

  • Conduct market research to find potential investors and lenders
  • Get referrals from clients or other financial planners you know of in the industry who have already received loans or investments
  • Create a list of possible lenders and investors you want to approach with your business plan
  • Create an advertising plan to show how you will attract clients and make money for your business

Be prepared to answer questions about your financial services, your target audience, and the market in general; also be ready to explain how much startup funding you need and what it will be used for.

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7. Start Marketing Yourself

Now that you have a financial planner business plan in place, it’s time to start marketing yourself. Begin by creating an online presence and using the Internet to attract potential clients for your services. You can start with these things:

  • A website with specific information about your services, fees, and target market
  • A social media presence on Twitter, Facebook, LinkedIn, etc. to help you promote your business online
  • Blogs related to comprehensive financial planning that allow you to include links back to the main website for clients or potential clients to see

Once you’ve started to build your online presence, start building relationships with other financial advisors in the business. Hang out in chat rooms or forums where they’re already congregating and offer advice whenever possible. This establishes you as an expert in the field to people who might need your services later on.

Building a name for yourself will take time, but starting a financial advisor business is rewarding and you’ll soon find yourself with plenty of new clients.

8. Develop an Elevator Pitch

An elevator pitch is a 30-second explanation of your financial advisor business that you can use to introduce yourself to potential clients. Your investment advisor elevator pitch should highlight the unique aspects of your Financial Advisor business and immediately communicate what makes you stand out from other financial advisors in your Financial Advisor niche.

Focus on capturing attention as soon as possible. Your elevator pitch should be simple and straight to the point; you want your clients to remember what sets you apart from other financial advisors, not a long speech about how great you are.

Pitch yourself at networking events and financial advisor business startup seminars.

9. Create your Client Acquisition Plan

Once you’ve built up an online presence, it’s time to create a client acquisition plan that will help you meet your goals for getting new clients and start bringing in money. To develop this plan, identify your ideal client and decide how exactly you will attract them to your business:

  • What types of clients do you want? What’s the best way to reach them through online and offline marketing?
  • What about referrals from other local financial advisors or people currently using your services? How will you get more referrals to grow your business even faster?
  • How will you make your clients want to spend their money and come back for more services?

Once you’ve identified the right clients and found the best way to attract them, it’s time to start filling those client coffers. You’ll be surprised at how much business can grow from word-of-mouth referrals alone, so don’t hesitate to ask satisfied clients for a referral whenever possible.

10. Work on Client Retention

A happy client is a client who will come back for more services and tell their friends about your financial planning firm. You can stay in touch with clients through digital or paper newsletters, phone calls, text messages, social media, email blasts – whatever works best to keep you at the forefront of their minds.

The first sale is always the hardest, but after that client has purchased a service, you’ll find it much easier to sell them other services down the road. To start this process, create a basic financial plan for your clients; take time to sit down with each of them, identify their needs and goals, and develop an investment strategy that makes sense for their current financial state. You can also offer services like estate planning, tax preparation, and insurance to give your clients more options when they’re ready to expand their financial portfolios.

11. Achieve Success by Setting Goals and Measuring Results

Setting goals is one of the most integral parts of operating a successful business, so it’s important to set clear, attainable goals for your financial advisor business. For example, if you want to grow your client base by attracting ten new clients in the first month of operation, start with smaller goals like attracting five or three new clients and work up from there so you know what to expect throughout the process.

Once you’ve set your initial client goals, develop a strategy for how you’ll measure your progress. Set up Google Analytics or another program to track how many people visit the website and social media presence of your financial planning firm so you can see which sources bring in the most traffic and clients. This will help guide future marketing efforts and help you see what’s really working when it comes to promoting your financial planning business.

12. Get the Training and Licenses You Need to be Successful

Financial advisors are governed by strict legal and ethical standards, so it’s important to get enough training to stay in compliance with both local and federal laws. While many states allow financial planners to operate under their own licenses (and sometimes without any license at all), other states require financial planners to have a license from the Series 65 exam. If you live in one of these regulated states, be sure that your education and experience meet the standards set forth by the state: Finra.

    Want to Start a Successful Financial Advisor Business?

If you’d like to launch a successful financial advisor business, get the “How to Start a Financial Advisor Business” course that walks you step-by-step to becoming a successful business owner.  

How Big is the Financial Planning & Advice Industry?

The financial services industry is growing at a rapid pace and continues to grow despite the recent economic downturn. The industry is worth over $59.2 billion and is expected to grow by 4% every year over the next decade.

What are the Key Sectors of the Financial Planning & Advice Industry?

The financial services industry is made up of five main sectors:

  1. Personal Financial Planning and Investment Services – The business of helping individuals make investment decisions along with managing their investments, such as retirement accounts such as 401(k)s and IRAs, stocks or bonds, mutual funds, and retirement savings accounts.
  2. Broker Dealer –  The business activities involving buying and selling securities, such as stocks, bonds, and mutual funds on behalf of investors.
  3. Trust Services – The business of providing trust, custody, and related services to customers/clients who have entrusted their money or investment products with the financial institution.
  4. Financial Management Consulting – The business of providing one-time financial management and planning services to clients.
  5. Estate Planning Services – The business of providing financial advice and services to clients when they are ready to distribute their assets after death.


What External Factors Affect the Financial Planning & Advice Industry?

The financial planning and advice industry is affected by external factors such as market performance, economic trends, and the overall state of the economy.

For example, advisors that focus on selling investments or providing investment services must consider the performance of the stock market. If the market is performing well and people feel good about their money, it’s likely they’ll invest more funds in stocks, which will affect how brokers make a living.

The other external factors that affect the financial planning profession are macroeconomic trends that affect the population’s confidence in the economy.

For example, during an economic recession, it’s important for financial advisors to understand that their clients may be more risk-averse, and not investing as much money into stocks or mutual funds would be wise.

On the other hand, if the economy is doing well and people are feeling confident about their financial stability, then it’s wise to invest more money into stocks.


Who are the Key Competitors in the Financial Planning & Advice Industry?

The financial planning and advice industry is highly competitive, and there are over 130,000 financial advisors in the United States alone. Although many of these advisors work for large financial institutions such as banks and credit unions, many others run their own business full-time or on a part-time basis.

Some of the key competitors in the financial advising industry are:

  • Banks & Credit Unions – These financial institutions provide many of the same services as a financial advisor, such as investment advice and personal finance guidance. They can be a source of competition for advisors because they’re equipped with similar services, but they don’t necessarily compete directly in terms of clientele.
  • Insurance Companies – These financial institutions provide services such as life insurance and annuities, so they can be a source of competition for advisors if the advisor is also selling these types of products.
  • Other Financial Advisors – Most financial advisors have to compete with other advisors from the same company, especially within a large financial advisory firm where each advisor specializes in a different investing sector.


What are the Key Customer Segments in the Financial Advice Market?

The financial advising industry provides services to individuals of all income levels, but there are some key differences in the type of client each advisor typically deals with.

  • High-Income Clients – These clients have a high net worth and can afford to hire an advisor on a full-time or part-time basis. They’re typically more willing to pay for financial advice and services, especially if the advisor specializes in a specific industry that pertains to their financial situation.
  • Middle-Income Clients – These clients have a moderate net worth and can afford to hire an advisor on a part-time basis for monthly or quarterly checkups. They’re often satisfied with what they receive from the financial advisor, but typically don’t require as much service or attention to their finances.
  • Lower-Income Clients – These clients typically have a low income and struggle with managing their personal finances on their own. They’re more likely to benefit from the types of services that advisors provide, such as budgeting advice or debt management plans.

From growing family needs to save for retirement, financial advisors provide services that help clients meet their individual goals.

What are the Typical Startup Costs for a New Financial Advisor?

Financial advisors have two primary types of startup costs: the cost to set up a legal entity for their new company and ongoing costs that must be met in order to keep the business running.

The Legal Entity

If you want to set up a financial advisor business, you’ll need to create a legal entity for your company. Your startup costs will depend on how you choose to structure your company, but these options are the most common:

  • Sole Proprietorship – This is the cheapest option for creating a legal entity, but it also provides the least amount of tax-related benefits.
  • Partnership – This is another cheap option for starting your company, but it requires at least one other co-founder who contributes to the partnership equally.
  • Corporation – You can register an S Corporation or C Corporation through your state’s Secretary of State’s office, but this type of entity comes with the highest startup costs.

Ongoing Business Expenses

The other primary cost you’ll need to consider when starting a financial advisor business is how much it will cost to keep your company running on a monthly basis. These are some common expenses that every financial advisor has to pay:

  • Salary and Wages – The cost of hiring employees and freelancers can vary significantly, depending on their expertise and area of focus.
  • Insurance Costs – These costs will typically include life insurance, health insurance, and business liability insurance.
  • Utilities – You’ll need to pay for electricity, water, internet access, telephone services, and other standard utilities to keep your business running.
  • Loans – Any loans you take out will need to be paid back within a set amount of time, which will add to your ongoing expenses.

The good news is that there are many different financial advisor business models you can choose from depending on what startup costs you’re able to cover. You can either start a full-service financial planning company, which will require more overhead because you’ll need to hire employees and freelancers, or you can start a fee-only financial planning company that only charges clients through the services they use.

What are the Key Costs to Launching a Successful Financial Planning Firm?

The key costs you’ll need to cover when launching a successful financial planning company include:

  • Operating Expenses – These are the ongoing fees that make it possible for your financial planning firm to remain in operation, such as paying for employees and freelancers, insurance costs, and other standard utilities.
  • Technology – The more sophisticated your technology needs become, the more financial resources you’ll need to cover them. For example, if you want to offer clients the ability to submit their financial plan proposals online and check on their progress towards goals with web-based software and apps, you’ll need to cover the initial investment.
  • Marketing – Marketing costs typically include online advertising, trade magazine ads, direct mail campaigns, and other promotional expenses.
  • Additional Costs – These additional costs will vary depending on the financial advisor model you choose to adopt, but they could include anything from client meetings in person at their homes or place of business to covering the cost of hiring freelancers.

Even though you’ll need to invest money initially, having your own financial planning company can save you thousands of dollars per month in fees, which means that advisors who go independent typically recoup their startup costs within three years. Plus, once you establish yourself as a success and gain clients, you’ll be able to cut back on your marketing expenses, which means that you’ll see a return on investment much sooner.

    Want to Start a Successful Financial Advisor Business?

If you’d like to launch a successful financial advisor business, get the “How to Start a Financial Advisor Business” course that walks you step-by-step to becoming a successful business owner.  

Is a Financial Advisor Business Profitable?

The amount of money you’ll make as a financial advisor depends on how much work you put into establishing your business and what financial advisor business model you adopt. Advisors who work with institutions and rely on investments to generate their income will generally earn more money annually compared to smaller financial advisory businesses.


What Type of Financial Advisor Business Model Should I Choose?

When you launch a financial advisor business, you’ll need to choose between the following business models: fee-only financial planning, concierge service, and full-service.

  • Fee-Only Financial Planning – This type of financial planner typically charges clients hourly rates for consultations and other services, and there are no commissions or fees involved. Most fee-only financial planners work with clients on a retainer basis instead of just a one-time consultation.
  • Concierge Service – Under this model, advisors typically charge based on the services they provide rather than an hourly rate or retainer. For example, you can charge clients by the hour for phone consultations or monthly fees for access to planning tools.
  • Full-Service – As a full-service financial advisor, you can offer all types of services to your clients without having to specialize in one specific discipline. This model is typically only appropriate if you have enough financial resources to hire other advisors and financial planners, such as accountants and tax specialists.

The model you choose to adopt depends on the financial advisor business you establish. For example, if you plan to launch a fee-only financial planning business that offers high levels of personalized service, then you’ll probably want to choose the concierge service model for your business. If you’re more likely to attract prospective clients who are interested in investing their money with you, then you’ll likely want to choose the full-service financial advisor business model.


What are the Keys to Launching a New Financial Advisor Business?

Once you’ve decided on a financial advisor business model and have gathered all of the necessary tools, it’s time to launch your new company. Below are some tips for a successful launch:

  • Set Up Your Business – Before you can begin offering any services as a financial advisor, you’ll need to set up your business. You’ll want to choose a business structure, create your company’s website and social media pages, and get all of the necessary licenses.
  • Establish Relationships – Even though you can launch a financial advisor business online by establishing an online presence through websites and social media platforms, you’ll most likely want to establish personal relationships with clients by meeting face-to-face. Whether you travel to meet with clients or find a suitable office space to work from, building relationships is essential for your financial advisor business’ success.
  • Market Yourself – In order to attract as many prospects as possible and stand out from other financial advisors, it’s important that you market yourself properly. Through your company website and social media pages, you can post articles, blog posts, and videos that educate consumers about financial planning.
  • Reach Out to Clients – Once you’ve reached out to prospects and generated some interest in your financial advisor business, it’s important that you reach out to clients frequently. You can do so through email or phone contacts, online surveys, or social media engagement.
  • Grow Your Business – To grow your financial business, you’ll need to develop a sound business strategy and create a long-term plan. You’ll also want to establish goals that will make it easier for you to meet your financial targets.


Additional Resources

Financial Advisor Mavericks


How to Finish Your Financial Advisor Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your financial advisor business plan?

With Growthink’s Ultimate Financial Advisor Business Plan Template you can finish your plan in just 8 hours or less!

Click here to finish your financial advisor business plan today.


Starting a Financial Advisor Business FAQs

To start a financial advisor business, you'll typically need at least two to three years of experience in the financial planning field. You can meet this requirement by holding various financial planning positions or taking relevant online courses and continuing education classes.

The best way to find financial planning leads is by utilizing your company website or social media pages. You can also track down prospects through online directories, referrals from friends, personal networking engagements, and cold calling techniques.

The primary benefit of launching your own financial advisor business is establishing control over how you make money. Aside from that, there are many other benefits including building lasting relationships with clients, gaining greater flexibility in your work schedule, and enjoying the satisfaction that comes with helping others achieve their financial goals.

One of the main risks associated with launching a financial advisor business is going into debt. You'll want to have at least six months' worth of living expenses saved up as well as an emergency fund in place to help balance this risk out. Another risk to consider is not having enough time to focus on your company due to the demands of your full-time job.

A few well-known, highly successful financial advisors include Charles Schwab, Kenneth Fisher, and David Bach. These advisors have written numerous books on their financial strategies and how they can be applied to everyday life.

In order to become a financial advisor, you'll need to have a sound financial advisor business plan in place. It will help you determine how much money you'll need to make the annual salary you desire, your marketing strategies going forward, and how much money you can spend on expenses each month.

In order to become a registered investment advisor, you'll need to meet certain requirements regarding your education and professional background as well as pass the Series 7 exam. You can find out more about the requirements by visiting websites such as Investment Adviser Association or FINRA.

You can download our financial advisor business plan PDF template here. This is a business plan template you can use in PDF format.


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