How to Start a Financial Consulting Firm

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Our guide on starting a financial consulting firm covers all the essential information to help you decide if this business is a good match for you. Learn about the day-to-day activities of a financial consulting firm owner, the typical target market, growth potential, startup costs, legal considerations, and more!

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Start a financial consulting firm by following these 9 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your financial consulting firm. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

STEP 1: Plan your Business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

  • What are the initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Luckily we have done a lot of this research for you. Skip on ahead to the Business Overview for more detailed answers to all your questions.

Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

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STEP 2: Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your financial consulting firm is sued. Consider using a registered agent service to help protect your privacy and stay compliant.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

STEP 4: Open a business bank account

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7: Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

STEP 8: Define your brand.

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

STEP 9: Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Business Overview

A financial consulting firm helps individuals and small businesses manage and grow their wealth. You are more likely to service individuals than large corporations, but your small business should be prepared to do both. Clients will look to you for detailed financial information, informed financial forecasting, and ways to invest to achieve their short-term and long-term goals.

Who is this business right for?

This business is best for someone who understands finance inside and out. Prior experience working as a consultant for another firm is ideal, but any experience in investment and wealth management is helpful. A formal education in subjects such as finance can give you a solid knowledge base to work from, and certifications in particular kinds of financial advising will help you further your skills.

What happens during a typical day at a financial consulting firm?

There are several daily activities in the life of a financial consultant. You may spend time prospecting for new clients, helping your existing client base (which ranges from reviewing their portfolios to meeting with them in person), filing paperwork (such as compliance reports and the records of your clients) and using various software and other methods to conduct financial planning.

What is the target market?

Younger clients, such as those who are completing college degrees and/or coming into their inheritances, may be curious about financial planning for the first time. They are more likely to be open-minded about the advice you give and, if they like the results you deliver, may actually become lifelong clients.

How does a financial consulting firm make money?

Two ways that financial consultants make money are to take a percentage of the sales charge (basically, a commission) made by the client when they invest and to receive a “trail” from some of the operating expenses of an investment such as a mutual fund. Other consultants are paid by certain fees they charge clients, and some consultants become fee-only advisors.

What is the growth potential for a financial consulting firm?

The growth potential for this business is immense. The Bureau of Labor Statistics projects this field to grow by thirty percent between 2014 and 2024, aided in part by rising life expectancy and the increased need for financial planning.

What are some skills and experiences that will help you build a successful financial consulting firm?

For better or for worse, most of the skills you need will come from your formal education. Becoming a financial consultant typically means getting a particular certification, such as the CFP (Certified Financial Planner). Getting something like a CFP requires a four-year degree followed by additional certification training and the successful completion of a Board Exam. After you have completed this rigorous training, however, you will have all of the necessary preparation and skills to get started.

What are the costs involved in opening a financial consulting firm?

The costs of opening this business are somewhat deceptive. Once you have the appropriate license, there is virtually no cost to opening this business: many financial planners start out working from home and meet clients at their place of work, their homes, or other venues. On the other hand, a four-year degree is mandatory for most certifications, and that has an average cost of $40,000 for the degree alone (for in-state, public colleges). If your college coursework was not already Board-certified, then you may spend between $1,000 and $4,000 to take additional classes for a certification like the CFP, and an additional $595 to take the exam. Because of its importance, many people opt to take review classes or buy review materials, and this cost can range from $400 to $1400. After passing, you need to work full-time in a relevant field before you can meet the experience requirement of the CFP. Thus, while the costs of opening the actual consulting business is almost nothing, the education and certification required can easily be $90,000 or more, and there is the significant time investment working for someone else before you can work for yourself.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

What are some insider tips for jump starting a financial consulting firm?

Two related tips are to figure out your own niche and to figure out your best audience. For instance, you may have more success focusing only on portfolios, or only on wealth advising. This allows you to become a true authority in one area rather than trying to do it all. Similarly, you need to identify a target audience: someone focusing primarily on retirement will primarily serve older clients, and it's important to understand their concerns and values. Finally, don't neglect traditional networking: attend as many trade shows and other professional events as you can.

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Growing Your Business

How to promote & market a financial consulting firm

This is a job where you are mostly rooted in your own local community, so it is wise to advertise via certain traditional means such as newspapers and radio, especially when you are first getting started. Increasingly, though, clients are finding their advisors online, which makes it important that you have clean and professional-looking accounts on things like Facebook, Twitter, and LinkedIn. You should also have a professional-looking website. Once you get comfortable doing so, online venues are a great way to showcase your personality (such as a quirky sense of humor) which can help you stand out from the pack.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

Now that you know how to meet clients, how do you get their business and keep them? One way is to speak their language. Most clients don't want you to throw tons of jargon and special terms at them. They want to know key terms and facts, and they want them explained in an accessible way. Don't forget to leverage networking—communities are built on connections, and the simple fact that so-and-so is your colleague or close friend may make a client feel instantly more connected with you. Retaining clients after this is arguably the easy part: this is a results-oriented business, so as long as you are helping their wealth grow, they will continue to use your services.

How and when to build a team

Most consultants prefer to work on their own because it significantly reduces the overhead, allowing them to functionally work from home and on the road as opposed to leasing a separate office. If, however, you've successfully built your brand and have more prospective clients than you can handle, it may be time to take on a small team and to eventually build a firm. However, both sharing clients and paying for this lease and utilities will cut into your profits, so it's important to make sure that you will profit from this move.

Legal Considerations

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a financial consulting firm. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.

Two of the simplest steps that will protect your business, and yourself, are to:

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.
A smiling man sits at a computer and learns about corporate veils


To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Services Contract

Financial consulting firms should require clients to sign a services agreement before starting a new project.  This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example of one such services agreement: (try to make this industry/business specific)

Certificate of Occupancy

A financial consulting firm can be run out of an office. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a location:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a financial consulting firm.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued. 
  • If you plan to purchase or build a location:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for your business’ location to ensure your financial consulting firm will be in compliance and able to obtain a CO.

Earning Potential

How much can you charge customers?

How much you charge clients depends on your payment model. If you are being paid via fees, then it is reasonable to charge them between .75% to 2% of the collective assets that you manage. Commission costs have a greater range, ranging from 1% to 8.5%. With both fees and commissions, you typically charge lower percentages for higher amounts on transactions. It should be noted that many clients, firms, and consultants have become wary of commission-based models, as there is always the possibility of an advisor encouraging and investment that is good in the short term for the advisor but not in the long term for the client.

What are the ongoing expenses for a financial consulting firm?

If you work from home, then your ongoing expenses for this position are virtually non-existent. Most of your actual financial planning is conducted via the computer that you already have, and you do not need to pay for expensive overhead or utilities. Your most regular fees will be the gasoline cost of meeting with clients and the cost of meetings such as business lunches, both of which are potential tax write-offs for you.

How much profit can a financial consulting firm make?

The Bureau of Labor Statistics estimates that the median pay of this job is over $90,000 a year. Your actual profit may be higher or lower based on your payment model and number of clients.

How can you make your business more profitable?

Make sure that you are reading relevant trade publications and other sources that let you keep your finger on the pulse of industry changes. Make sure that you show genuine interest in the lives of your clients whenever you speak—this makes their time with you feel more like a valued relationship. Finally, always volunteer with professional organizations when you have the time—it's great networking, great PR, and a great learning opportunity.

Next Steps

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