How to Start a Financial Advisor Business: 11 Steps Explained (2024)

While it might seem the hardest to earn revenue and generate profits for your company, oftentimes, it is harder to manage and invest the earned sum.

To make business profitable, businesses will need to hire an expert to help you navigate the intricacy of financial management for your company.

As individuals and businesses recognize the value of professional financial guidance, the opportunity to start a financial advisor business seems lucrative.

If you want to start your own financial advisor business, we have collected the best tips and tricks to help you guide along the way.

Now, let’s get going!

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What Is the Role of a Financial Advisor?

A financial advisor is equipped to provide guidance and advice to individuals seeking help on various aspects of personal or business finance.

Some key responsibilities of a financial advisor involve:

• Financial Planning: Planning future goals and finances is an important task that is levied upon financial advisors. The financial advisors help their customers meet their unique needs and goals, such as investing, owning a home, retirement, and further education.
• Investment Management: People and businesses often require guidance on where to invest their hard-earned money, and financial advisors do just that. A financial advisor is aware of the various investment opportunities and options available and can guide customers according to their needs and requirements.
• Risk Management: With higher financial responsibilities, there are also a lot of risks involved. A small business financial advisor can provide you with the best recommendations according to your requirements.
• Tax Planning: Tax season can be hard for a lot of businesses and individuals. Filling out required documentation and managing finances can be hard for many reasons, But hiring a financial advisor helps customers minimize their tax liabilities and maximize their tax preparation through planning.

How to Start a Financial Advisor Business?

Here are some detailed tips on how to start a financial advisor business:

1. Defining Business Objectives and Mission

A clear business plan is a must to start any business, and a financial advisor business is no different. To start your own financial planning firm, you need to consider a lot of factors.

Here are some objectives to plan ahead:

• Business mission and vision
• Services to be offered,
• Details of business operations,
• Business marketing plans

This business plan gives you the opportunity to study your services and niche out your target audience properly. You can keep this business plan handy for your business even in the future.

2. Choose a Business Structure

Opening a business requires some important documentation, like choosing legal structure and business.

The next step is to choose a legal form for your financial consulting business, keeping in mind things like regulatory requirements, tax consequences, and liability protection.

Seek advice from a legal or financial expert to help you find the best organizational structure for your company, given your unique situation and objectives.

3. Get the Necessary Permits, Licenses, and Insurances for your Financial Planning Firm

For any business, it is important to get the required documentation and licenses in place before setting up the business. When your firm deals directly with a client’s finances, this becomes even more important. You need to get the licensing and registration requirements according to the location and regulatory bodies you are dealing with.

You might also need to get operating licenses for starting a financial advisory fir of your own.

To operate your business smoothly, it is also important to safeguard it from prudential downfalls and troubles. To achieve this, it is important to get the required insurance. Some of these are General Liability, E&O Insurance, Cyber Liability, Commercial Property Insurance, etc.

4. Set Up Your Office

If you wish to welcome your clients to your office for meetings and business purposes, your office will serve as a branding element.

Make sure your workspace reflects the level of professionalism you wish to convey to potential clients. You need to make sure to be available at a location closer to your clients’ reach.

You will need to purchase office furniture, equipment, and supplies necessary for conducting client meetings and managing your day-to-day operations. This may include desks, chairs, computers, printers, software, and office supplies.

5. Develop Your Service Offering

Before you launch your business, you need to map out all the services that you want to offer to your clients. You need to choose them according to your area of expertise.

Access the needs of your target market and what is most required by your clients to describe the services you want to offer. This includes financial planning for retirement, investments, taxes, estates, risk management, and insurance.

You will also need to select whether to use a fee-based, commission-based, or hybrid pricing model for all the services that you are offering.

6. Invest in Technology and Software

As a financial advisor business, you will also need to bill your clients according to the services provided. This is where you will require smooth billing and invoicing software.

As a financial advising company, it is best to invest in technology and software when you first start to keep these financial records straight. With the help of these tools, you may provide your clients with better service and more efficient money management.

You will be able to automate tasks, analyze data, and communicate with your clients more effectively by using automatic accounting software like Moon Invoice.

You may also use intuitive invoicing software like Moon Invoice to expedite the invoicing process, cut down on errors, and ensure on-time payments. You can efficiently create and send invoices to clients, track payments made by clients, be aware of late payments, manage accounts, and maintain accurate financial records for taxation and accounting. You can also use the financial advisor invoice template to make the invoicing process efficient.

7. Build Your Client Base

In a market of immense competition, it is difficult to keep your business at the right pace without a proper network.

To achieve this, you will need to establish connections with possible customers and sources of referrals and networks within your neighborhood and industry. You can also try networking events, become a member of professional associations, and attend industry conferences and seminars.

Using social media networking platforms like Linkedin can also help you network with the right people in your business area. You can use platforms like LinkedIn to highlight your areas of expertise and build relationships with prospective customers.

Make a professional website as a base point for your business that highlights your experience, offerings, and client testimonials in order to attract customers online.

8. Comply with Regulatory Requirements

Financial advisory businesses are governed under strict legal metrics to ensure the safety of clients’ assets. Complying with the regulatory requirements for the financial advisory business of your area will ensure that your business continues conformity to all applicable laws and regulations for your financial advisory firm.

You will need to get the necessary licenses, registrations, and certifications in addition to abiding by industry regulations such as the Investment Advisers Act of 1940 and the Securities Act of 1933. You can get additional information from the SBA regulatory body.

9. Implement Client Onboarding Process

Developing a clear and coherent client onboarding process is a must for your business to set up clear expectations and ensure a positive client experience from the start. This may include gathering necessary documentation, conducting risk assessments, setting clear client-advisor relationships, and explaining your services and fees.

Establish proper communication channels, such as email, phone, or video conferencing, to stay in touch with clients and provide ongoing support from the start.

10. Market Your Business

Now that your business is all set to go, you will need to make a promotional plan to market your business and brand to your ideal client.

Start by creating a complete marketing strategy to promote and attract consumers to your financial advice firm. You can use a combination of offline and online marketing methods, such as social media, website development, email marketing, networking events, content marketing, and referral schemes.

Your small business financial advisor business needs to focus on creating compelling marketing materials, such as brochures, flyers, and presentations, that highlight your services, expertise, and unique value proposition.

11. Provide Exceptional Service

No matter how well you promote your business or how many customers you attract, a profitable business can only be built by acquiring repeat business of loyal customers by providing excellent services. It is important to give your clients exceptional service if you want to earn their confidence and loyalty in your financial advising firm.

One major step is to start by listening attentively to their needs, providing personalized advice, and proactively communicating with them about changes in the market or their financial situation.

To provide the best services in your network, you will need to stay informed about market trends, investing practices, and legislative developments.

Types of Financial Advisors

Financial advisors are experts who assist individuals and businesses with various financial decisions. There are several types of advisors in this industry, each with a distinct focus on financial planning and management.

1. Investment Advisors

Investment advisors, or registered investment advisors (RIAs), provide personalized investment guidance and manage portfolios according to their client’s financial goals and risk tolerance levels.

2. Financial Planners

Financial planners provide full financial planning services, including retirement planning, tax strategies, estate planning, and budgeting. They create customized plans tailored to meet individual financial objectives.

3. Wealth Managers

Wealth managers usually serve affluent clients, offering comprehensive wealth management services that go beyond basic financial planning. They manage various aspects of their clients’ financial lives, including investing, taxes, and estate planning.

4. Certified Financial Planners

These advisors hold the Certified Financial Planner designation and are educated in all aspects of financial planning, such as investment management, insurance, retirement planning, and estate planning.

5. Chartered Financial Analysts

CFAs specialize in investment analysis and portfolio management. They are highly knowledgeable in areas such as equity research, fixed-income analysis, and alternative investments.

6. Financial Advisors for Small Businesses

These advisors focus on providing financial guidance tailored to the unique needs of small businesses, offering assistance with business financial planning, cash flow management, and employee benefits.

7. Insurance Advisors

These advisors are experts in guiding a variety of insurance products, such as disability, health, and life insurance. They help you plan a safety net if things go south!

8. Retirement Advisors

These advisors help individuals plan for a financially secure retirement, offering guidance on retirement savings strategies, Social Security planning, and retirement income distribution.

How Much Does it Cost to Start a Financial Advisor Business?

The cost of starting a financial advisor business can vary vastly depending on various factors such as location, business structure, services offered, and regulatory requirements.

Here’s a breakdown of potential expenses involved in launching a financial advisor business:

1. Licensing and Registration Fees

Financial advisor licenses and registrations typically involve application fees, exam fees, and ongoing renewal fees. Costs can vary based on the type of licenses required and the regulatory authority overseeing financial services in your area.

2. Office Space and Equipment

Renting office space and purchasing furniture, computers, software, and other office equipment can be a significant starting cost for your business. Office rent can vary widely based on location, size, and amenities, with estimates ranging from $1,000 to $5,000 or more per month in urban areas.

3. Technology and Software

Investing in technology and software is essential for managing client accounts, conducting financial analysis, and communicating with clients. Software for financial planning, customer relationship management (CRM), and other specialist tools can be costly. But once you have settled the basics of your business finances, it is a worthy investment.

4. Professional Fees

Hiring professionals such as lawyers, accountants, and consultants for legal and regulatory compliance, business formation, and financial planning advice can add to the initial costs of starting your business. The cost of professional services might differ significantly depending on how complicated the needed services are.

5. Marketing and Advertising

Marketing & advertising initiatives are essential to raise brand recognition and attract new consumers. Costs for marketing can include various factors like website development, branding materials, digital marketing campaigns, and networking events. You can start slow and invest as required.

6. Insurance

Getting your professional liability insurance and business insurance is essential for protecting your business and clients. Costs for insurance premiums vary based on coverage limits and the type of services offered but can range from $1,000 to $5,000 or more per year.

7. Training and Continuing Education

Training and the latest programs are a must to keep your business updated with the latest trends. Costs for training programs, certifications, and conferences can vary widely depending on the provider and the level of education required.

Final Words

Starting a financial advisor business can be rewarding and profitable, but it also requires careful planning, dedication, and the right tools.

If you are still wondering how to start a financial advisor business, these essential steps and strategies can help you kickstart your journey toward success in the financial advisory industry.

By defining your business goals, selecting the appropriate legal structure, obtaining necessary licenses, and investing in tools like Moon Invoice’s efficient invoicing platform and customizable financial advisor invoice template, you can lay a solid foundation for your business’s growth.

FAQ’s

Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.