How To Start A Financial Planning Business
Financial planning is a business idea that seems to thrive in every economy. A financial planner is important in this evolving world where finances have become the bedrock of every successful business and family. Many business owners look to financial planners to plan their finances so that they do not go bankrupt sooner or later. Families also look for financial planners to help plan their finances before they become knee-deep in loans. This is why a financial planning business is bound to be lucrative; people are continually looking for help in the world of finance.
A business in financial planning goes beyond keeping you above the waters, it also involves helping people, families, and businesses alike to set their financial goals with a map to getting to their destination. Financial planners will be responsible for analyzing the budgets of their various clients, their investment plans, their insurance packages, and any other financial product they may have.
They use the knowledge gathered to create great plans for their customers, this is why they are considered important in this world as the different financial concepts can be very difficult and confusing for many people to understand. Financial planners help you make sense of it all and also directs you in making the right plan that will fit your goal.
Financial planners are guides in the financial world for several people and businesses, they assist their customers with many tools they require to excel in the financial world. They act as a coach to their clients so that they do not take decisions that will not fit into their plans. The most lucrative financial planning businesses today are not just there to promote products to their various customers; they have made it their aim to change the way people positively approach the topic of finance. Their positive impacts help to shape the world and the lives of their customers positively.
If you’re a professional in the world of financial planning but have been working under another company and you’re looking to start your own then you’ve come to the right place. Even though it requires lots of money and several other factors that can make it look really difficult, there is a way to make it easier for yourself.
As many people near the age of retirement and many financial planners are looking for other careers, there is a gaping hole that needs to be filled by financial planners, this is why a business in this line is bound to be successful. Many people are looking for advice on the right financial product to invest in that would fit both their long-term goals and their long term goals too.
Professional financial planners get a better chance at the financial planning business as they already have clients that will probably follow them when they open their own business. However a new person without a client base might find it a bit harder, these plans help you figure out how to make it easier. Our plan will help you create a successful financial planning business while outlining the important factors to be considered when opening your very own financial planning business.
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Carve A Niche For Yourself
It is important that before you open a financial planning business, you carve out a unique niche for yourself. Trying to attend to every financial planning area can prove to be quite stressful in the long run. A jack of all trade and master of none will find it hard to succeed in the financial planning business; this is because a lot of people are looking for people who know far better than them and will lead them down the right part.
To do this, you need to first figure out what part of the financial planning business you love most. You can carve your niche out based on the audience you’re looking to focus on. When you do this, you can then focus and become a specialist in that area. This will make you the number one choice whenever anyone needs advice in that niche.
If you want to focus on military personnel, then do exactly that. If your audience is teachers, then learn everything about teachers’ finances. If you’re looking to help people plan out their retirement financial issues, then become an expert in that niche. Focusing on one particular niche instead of being diverse helps a financial planner look more effective when dishing out advice.
Pick a Name
Your company needs a name, doesn’t it? You don’t want your company to be called that financial planning firm. You need to pick a name that sounds professional but not complicated at the same time. A lot of people get it wrong here, you don’t want something too long that gets tiring to pronounce for prospective clients.
It is important that you pick a name that hasn’t already been picked by another firm to avoid legal issues in the future. Choose a name that is unique yet simple, catchy but professional and you’ll do just fine.
Figure out Your Fees
You need to figure out how much you will be charging customers when the time comes to avoid coming up short when someone asks you how much your rates are. Find out how much the going rates in the industry are so that yours doesn’t fall too low or too high. Also, grade your payment into different levels. Make sure to have unique fees that fit into each prospective client’s needs and financial status to allow you to cater to clients of different levels.
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What’s Your Target Audience?
This is very important when starting a financial planning business. What kind of people are you targeting in the financial industry? Are you targeting those of the middle income? Then your products and fees need to reflect that. Choose your target audience based on the profit and customer base you can get from these audiences. If your target is the high-income earners, you need to reflect these in your fee ranges and take on the cons of targeting these audiences. Pick your audience and focus on them and make sure to pick an audience that will be able to afford your fees or you will lose out.
Figure out the Cost to Start Up
You will obviously need capital to be able to start a financial planning business. Make sure you take everything into consideration and these include the cost of getting a license and the amount you will need to advertise your new business. Also take in the cost of renting a place to start up your firm, the cost of utilities, and furniture that would be purchased.
Get Some Training
For an expert, these can be avoided but for someone who is fairly new and doesn’t have adequate information about this line of business, a certain level of training is required to prepare you for a successful future in your financial planning business. There are several professional training available both online and offline for people to take.
This training provides you with essential credentials at the end that will give you the value and integrity that you need to excel in this line of business. If you have being in this line of work for some time, you might need to extend your range to be considered a veteran in the business.
Pass Your Exam
To ensure that you’re not just an ineffective financial planner looking for another business to try out, there is a test to be taken. This test is to ensure you do not go into the business world unprepared and cost people their money. This certification helps check out that you are well aware of the business you’re choosing to open and you need to pass this test to proceed.
This financial planning business exam is given by the Board of Standard in relation to Financial planning. When you pass this exam, your business is proven to be legit and you are presented to the society as a professional who can thoroughly carry out their job. This will help you get new customers and it will also take you to the next level. This is because lots of training is required for the exam and this training will help you gain the knowledge you didn’t have before.
Get A License
You would need a license to operate appropriately in any country or location. There are licenses required to operate as a local business or as a state business. Decide if you want to operate locally or you’re looking to operate nationwide, then get the necessary license. When you fail to get these licenses when you should, you could be required to pay lots of money in fines or your business could face being shut down.
There is also a need to get a license that allows you to operate as an investment advisor in the country, this registered license helps you gain access past brokers when you’re looking to showcase the various investment products and carry out financial transactions. Once you pass the test given by the Authority in charge of regulations in the financial industry, a license will be awarded to you promptly.
Create a Plan
Just like any other business out there, it is important that you create a clearly written business plan that will help you keep track of the important parts of your business while revealing the chink in your armor. It also helps you discover parts you may have missed out on and what part of your business you need to look into once more.
The business plan needs to contain the name of your firm, the purpose and the aims of the business as well as steps that would be taken in order to achieve these aims. It is also important to include the capital and how much is needed to start a financial planning business. There is also a need to research the present state of the financial industry and include it in your plan.
Your plan should also reflect the audience you’re targeting, the location of your prospective clients as well as your viewpoint concerning your clients and the location. You also need to include a plan on how you will market your firm and the period you estimate before you will start to make profits and your goals will become a reality. Your business plan also needs you to create a map on how you will make your firm stand out amongst the others
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A thorough business plan covers all ground including how money can be made by the firm, these should include various methods like giving out financial advice to customers, management of customers’ investments, creating an all-inclusive plan for the customers and the fees charged would be based on percentages. Estimate how much profits can be made from the group which is usually much as is estimated from the profit margin of other financial planning firms in the industry.
You can also include several other ways you can make profits for the business apart from the conventional ways listed above. You can offer other plans apart from the popular plans available. There is also the option of becoming an expert in creating a particular financial plan so that you’re known for that financial plan.
Go Register Your Chosen Business Name
This is where it begins to come together, you need to register your business name to begin working officially. However, you can ignore this particular step if you plan to provide services using just your name. This limits you to self-employment and does not count as a business; this requires registration. To become a financial consultant with your very own firm, you will need to register your business name to be able to employ other people in your business.
Register With Tax Authority
It is important that you register your financial planning business with relevant tax authorities both at state and federal levels. As a corporate entity, there are certain taxes your business must pay. Also, if you hire employees that will be working for you, you need to deduct tax from their salaries which you are expected to remit to the state tax authority. Doing otherwise will be seen as tax evasion. Of course, this has its own legal implications.
Open a Bank Account
It is important that you have a bank account for your financial planning business. Even though you have a personal bank account, you still need to open a separate account for your business where you can lodge all the revenues. You may also need to have a separate account where monies belonging to your clients are lodged. Also, you should make all the expenses relating to the business from the account. This makes you more accountable. At the same time, it will be easier for you to source loans from the bank when needed. Furthermore, having a bank account makes it easy for your accountant to prepare the financial statements of your financial planning business.
Create Your Product Packages
This is another essential step in making your financial planning business become a reality. You need to create the different packages and products you would be providing for your customers. Ensure to make contacts with people in the insurance business who provide life insurance. Also, find those in the business of providing plans for college saving and several others
Also, make sure that the packages you create can cater to the different levels of clients and not just a particular range of clients. Your packages should also reflect various risk tolerance levels for those who might be interested in low-risk packages, medium risk package, and also high-risk packages.
Location
Another step in starting your financial planning business is getting a space in your chosen location. This is a crucial spot in making your business plan into a reality. An office where your clients can interact with you in person is crucial even though you can easily carry out your job from your laptop and in any location you decide.
However, there is a need for a formal setting where your clients can meet with you and have an official conversation. A coffee shop will not present you as a serious financial consultant or give your clients the right vibe to carry out transactions with you. You can choose not to rent a space for a year and simply take advantage of modern styles by renting halls and office space for a particular period of time. That way, you only make use of an office when you absolutely need it.
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Get Insurance
There is no business without risk; there is a level of risk that every business owner has to deal with in their line of work. There are however risks that are not profitable in any way and will only cost the business to lose money. To protect against this, it is important that you get protection against these risks. This is what the error and omissions insurance offer those who register for it.
This insurance package protects the insured from any kind of malpractice suit against your company; it is however up to you to make sure that your business is fully regulated. Deal with every complaints, queries, and issue from your clients in a very professional manner so that your company does not fall apart. Error and Omissions insurance is therefore vital insurance to financial planners who look to be in business for a long time especially in the face of a lawsuit.
They are an important part of any business and are just as essential as getting a license and obtaining permits to run your business. This insurance package protects your company in case there is ever a loss. There are however several other packages you can choose from to protect your business. There is also the option of insurance that covers all types of losses just in case you’re not sure what kind of risk is posed to your business.
You can also choose to get insurance for workers’ compensation if you plan to get staff and you don’t want to be involved in any legal battle with them over salary in the future. Check to confirm if your state or country offer this kind of insurance packages and then get them in place.
Get an Efficient Staff
It is important that you always get an efficient staff when starting your financial planning business. If you’re not looking to be a one-man shop, then an efficient staff is vital. Have a list of requirements and stick to it as your staff will represent you and you need to make a good impression as you introduce your business to the industry.
You can simply start with an assistant and then build up from there. You need people who are well-trained in this line of business and who might have a level of experience in the field. Make sure they are well trained in customer relations and can aptly answer any of the client’s questions and queries.
Create a Network of Professionals
Having a network of professionals in your line of business will help you become better at your business. It is important for an upcoming financial planning business to create professional connections especially when they do not already have many connections in the business world. If you need to find a lawyer who will work closely with you, then it would be a good idea.
You can also get you a mentor in the financial business who will show you the ropes and also give you advice when you require them. This can be beneficial in the long run to those who are relatively new to this business line. The more connections you make, the larger your support base becomes, and as your business grows, so will your outreach.
Marketing
This is the final part of starting a financial planning business; the need to effectively market your business. Create business rules that will help you service your clients effectively. Make sure to attend to clients as they come and not become partial in your dealings. If you need to create a website, then you should create a simple and easily navigated website.
Also, print out your business cards to make it easy to connect with as many people as you need. Offer discounts at the beginning to appeal to clients and draw them in. Make sure to give clients great experience working with you to get them to recommend you to their family and friends. Use online advertising platforms to your advantage to get the word out there and get amazing reviews to get your company out there.
Continually update your website as that is another channel that customers can get interested in the different products and packages that you offer. Provide enough information to enlighten your customers about your firm and what you can offer them.
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Final Thought
It obviously involves a lot of work to start a financial planning business as well as an enormous amount of risk. However, the profits are unlimited and should be viewed as an incitement to get you to make that leap. This is one of the most lucrative businesses globally and you’ll be making those profits in no time at all if you keep persevering.