Tips for Building a Financial Advisory Firm from Scratch

Building a financial advisory firm is challenging. It might require that you leave the job you already have, work to find and cultivate clients, figure out how to run the firm and so much more. The one mistake a lot of people make when starting a financial advisory firm is spending time and money on things that do not help their businesses move in a positive direction. By following some tips, however, it is possible to build a successful firm.

Create a Business Plan

Having a business plan will help you know what costs to expect in the first few years of running the business. Immediate needs include your start-up costs, such as getting an office space, and putting the right technology infrastructure in place.

Also, do not forget to research what insurance you will need, such as indemnity insurance, and plan for it too. Getting external help will also be important in the first stages. While you might have the financial skills to offer advice, there is likely another area in which your skills are deficient.

Whether it is in marketing, legal support or accounting, you will need to hire someone to handle the things you cannot or are not skilled enough to handle by yourself. This new hire(s) will have to be catered to in the cost breakdown of your business plan.

Find a Niche

Everybody has a different financial need or problem they would like sorted out. Finding a group of people with a particular problem is what is known as finding your niche. Your niche should be composed of people who have issues or problems that you have the skills to solve. Although you can diversify into two or three other niches as you grow, starting with areas of financial advice where you are strongest is always the best course of action.

Finding your niche will also make it easier to formulate a marketing strategy, streamline your sales process and grow your customer numbers. The one thing to remember is that your niche should not be defined as people who have a certain amount of money. Doing so will lead to disappointment because they may have needs that you cannot cater to. Additionally, the niche you choose should have long-term sustainability. If you offer too many services at once, even if they are all related in some way, it will lead to over-specialization and might not necessarily provide a path for growth.

Build Your Offer(s)

Once you have a niche and know who your ideal client is, it is time to build your product. Building your product simply means positioning your product as a solution to your clients’ potential problems. When you define your offers before you begin selling, you get the opportunity to communicate to your potential clients that you are the perfect fit for them. By knowing their pain points and already having solutions, you will differentiate yourself and be the perfect choice for your clients.

Consider Getting an Office

While it is possible to run your financial advisory firm from home, clients prefer firms that have a physical location. In many cases, your firm’s size does not matter as long as you have a base of operations.

Another benefit of getting an office is that it makes it easier to hire and accommodate the people you need. If you decide to run the firm from home, you might not be comfortable letting 2-3 people into your home. You may need to host physical meetings to strategize or meet a new client.

Put Your Marketing Strategy in Place

Marketing a financial advisory firm is not only about running ads on social or other media. It is about selling a relationship and the benefits of that relationship to your client. It is also about building trust so your clients can trust you with their money as well as believe you have their best interests at heart.

For people to trust you, they need to understand who you are. Your niche is the best place to start in defining who you want people to see you as. By sharing who you are, what you believe in, what you disagree with as well as your qualifications and experiences, you will be able to judge what works and what does not. The key here is to remain as genuine as possible. People can sense when you are not being fully truthful to them. So, only share what works and do not back away from answering direct questions.

When selling what you can offer your clients, you can start on LinkedIn. This is the platform on which you are most likely to find people with whom your message can resonate. Other channels such as posting YouTube videos, starting a blog or jumping in on conversations on different platforms can also help immensely.

Remember that different niches respond to different marketing strategies. So, try to understand where the people in your niche spend their time and get their information. You can then make yourself available on these platforms and channels with solutions to any issues they may have.

Take Advantage of Automated Services

Once you have a few clients coming through the door, having the right technology and automation options in place will make your firm run a lot more efficiently. For example, if you are taking advantage of the diversification an investment option like ETFs afford your clients, automating tasks like trading and portfolio rebalancing should free up some time that you can use to cater to your client’s personalized needs.

The use of an automated trading service should come in handy for your firm because it allows you to perform tasks that would otherwise be too tedious and time-consuming for you, especially when you are just getting started. Additionally, automated investing services like Wealthsimple offer unlimited human support if you need any help investing in ETFs. Wealthsimple develops powerful financial and investment tools that allow you to invest and trade in different assets including stocks and crypto.

Create Fans and Earn Referrals

One thing to note is that there are some aspects of your business that cannot be automated. Client experience, for example, cannot be automated and you have to create custom experiences for the different clients you have. Doing so will require that you go above and beyond what you would normally do but it will pay off in the future when clients start trusting you to handle bigger investment portfolios or referring you to their friends. Although catering to your clients in this way is not part of delivering the services your clients asked for, it is a critical part of growing your business.

Get Younger Clients

The world is generally trending towards younger citizens and with this comes a dramatic shift in the types of people who will be holding most of the wealth in a little while. It is important to get to these people before they go with other financial advisory firms.

Although they may not be in your niche right now, they are an important group to keep an eye on and try to offer them the services they need as your firm grows. The idea here is that you do not need to change any of your practices to shift towards this group. Instead, you can incorporate them gradually into your list of clients as time passes. The aim should be to stay relevant to, and in touch with evolving audiences and potential clients.

Build Professional Relationships

Building professional relationships is a critical step in building a successful financial advisory firm. It is a lot more important for new business owners who are trying to get more clients on their books. Attorneys and certified public accountants who are willing to partner with you could do a lot to boost your business.

Apart from bringing you some clients, they can also offer you invaluable advice and guide you through the early stages that are difficult and challenging for new business owners. Know that your needs will change as your business grows and you will need to keep building different types of professional relationships to guide you at the different stages you will find yourself in.

Learn to Deal with Client Issues

One of the most significant issues you have to grapple with is customer complaints. These are usually plentiful in any business and will be a lot more so when you are dealing with people’s money. It is important that you learn how to deal with these issues before they become bigger problems. All problems, issues and complaints must be dealt with in a timely and professional manner to ensure the success and stability of your business.

Starting a financial advisory business is both challenging and exciting. It allows you to service clients who want to tap into your expertise while knowing you are playing a crucial role in their financial future. Building a successful financial advisory firm from scratch is hard work but, if you follow the right steps, focus on providing the best services to your niche, and service your clients faithfully, there is nothing stopping your new business from soaring.

Photo by Sora Shimazaki from Pexels

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