Starting a Business as a Financial Advisor
Have you ever asked yourself "Will I have enough money when I get older?" or "Will I ever be able to retire?" These are questions millions of people ask themselves every day-financial hotlines hear these inquiries from everyone from millionaires to people who are financially pressed. And Alan Greenspan's ominous warning about the Social Security system needing "reform" swelled these concerns for most of the 77 million members of America's boom generation, who, financial planners say, are saving just one third of what they'll need to retire comfortably.
As a result of these underlying trends, people have a pressing need for and are seeking knowledgeable and objective professional financial advice. Paula Hogan, a Milwaukee-based certified financial planner, confirms: "Baby boomers are asking for advice." And while financial planning used to be a service primarily for the wealthy, financial planners are now serving middle class clients, too, a relationship that's most often initiated during a time of some major change like a marriage, a promotion or a death in the family.
While insurance companies and other major concerns are marketing financial planning services, the field is still mainly populated by independent practitioners. People with backgrounds in accounting, law, insurance or banking have a leg up because they usually have some knowledge of financial planning and financial products. But the key characteristics needed, regardless of your prior background, are these:
- The willingness to develop technical expertise and be a junkie for information because you must stay informed to keep up with a changing field and be a trend spotter for your clients
- Good listening skills
- The ability to initiate and develop long-term client relationships
- Personal trustworthiness and the ability to convey that in the manner you present yourself
You'll also need credentials because virtually all states and the federal government regulate what financial planners do-providing investment advice or selling securities or insurance. Licensed accountants and attorneys are able to deal with most aspects of financial planning with their existing licenses.
Because financial planning is a personal service, the key to building a practice involves generating referrals from professionals such as lawyers and accountants and, later, satisfied clients. Face-to-face networking in organizations as well as participating in business referral organizations are also important ways to jump-start a new practice.
If becoming a financial planner interests you, you can begin your research by reviewing the information available at the Web site (www.cfp.net) of the Certified Financial Planner Board of Standards, which provides a directory of education programs located throughout the United States.
Paul and Sarah Edwards are the authors of Best Home Businesses for the 21st Centuryand 14 other books.
For reprints and licensing questions, click here.