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Building Your Financial Advisor Business: 8 Things to Know Now

Financial advisory services are booming in the U.S. Recent projections say the financial advisory industry may grow to a value of $122 billion by the end of this decade. It’s easy to see why financial advising could be lucrative, but how can one succeed?

It’s a complex and challenging business that can produce solid results with some mindful considerations. If you plan on starting one, here are eight things to consider now.

1. Services You’ll Provide

Financial advisors typically focus on their clients’ long-term goals. These usually involve investment and wealth management, which most financial advisors provide. This breaks down into a few specific areas you may want to focus on, including:

  • Insurance planning
  • Tax planning
  • Retirement and estate planning
  • Small business finances
  • Cash flow planning
  • Portfolio planning and asset allocation

These services are common to the entire financial advisory industry but think about what areas to specialize in and where you may need to expand your knowledge.

2. Licensing and Certification Requirements You’ll Need

Those just starting in the financial advisory business need to be clear on the requirements they need to meet. The Financial Industry Regulatory Authority (FINRA) obliges advisors to obtain some general licenses and may require further certifications for specific industries, such as fiduciary services and insurance.

It’s undoubtedly beneficial — though not always necessary — to be a certified financial planner or chartered financial analyst. These certifications reassure potential clients that their advisor is qualified.

3. What Kind of Clients You’ll Target

Some financial advisors focus squarely on corporate clients or wealthy individuals. Others may target specific industries. Still others concentrate on helping everyday individuals and small businesses manage their financial profiles. While some financial advisors offer a broad range of services, it’s advisable to have a picture of the most “typical” clients. 

4. The Competition

Who are the advisors most likely to vie with you for clients? Study the local financial advisory landscape — plus online services, if necessary — to determine the competition.

This information can help you tailor your services to be competitive in a constantly growing industry. It’s never been more critical to establish how your services are unique and valuable.

5. Your Business Plan

Every business benefits from having a detailed business plan. It includes the financial goals you’re hoping to achieve and specific steps to attain them. Comprehensive business plans include outlines for expenses, marketing strategies, target demographics, and realistic timelines for business growth.

6. How You’ll Build Client Relationships

In the early days of your financial advisory business, you’ll likely rely on referrals and marketing strategies to get clients. However, many financial advisory companies fail because they undervalue building long-term relationships with their client base. 

Think about ways to exceed your client’s expectations over the long term. Maintaining a personal approach to the people you serve is the best way to retain clients, and it’s just as important as getting new ones.

7. How You’ll Charge

Financial advisors are compensated in various ways, most commonly through fees or commissions. Flat fees are typically associated with fiduciary businesses. Commissions are usually tied to product sales or the client’s financial growth.

Map out the structure of the income you intend to make. Although your rates should be competitive, they shouldn’t be so low that they hinder long-term growth. Plan on being transparent with your clients about what they’ll get for the price they pay and explaining how you’re ready to offer the best service.

8. Networking and Branding Strategies

Social media has changed how small financial firms market their businesses. Many engage with customers and peers on sites like Facebook and LinkedIn. Some also make a point of finding in-person events like conferences to build up their professional network.

Whichever medium you use to establish your brand and grow your network, construct a detailed strategy and include it in your business plan.

Finding Success in Financial Advising

There are many pathways to building a successful financial advisory business. As businesses develop and grow across the world, the demand for financial advisory services will only rise.

As you enter the business, have a firm idea of how you’ll execute and what you expect to achieve. After establishing yourself, think of ways to improve your clients’ finances and build long-term relationships. Considering these considerations, your chances of becoming a successful financial advisor will be higher.

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