Business Overview

A financial advising business helps people set financial goals and plan out a course of action to realize it. Financial planners who work for the business help clients by analyzing budgets, investments, insurance, and other financial products. They make plans for clients and serve a vital role in today’s world, since they have advanced knowledge of both basic and complex financial concepts. They can also teach their clients how to make their own financial plans and act as a coach or guide.

Most people find finance inherently difficult to understand, so a financial planning business bridges the knowledge gap while providing extensive support and tools for clients. The best financial planning businesses don’t just sell products and services. They transform peoples’ lives and get them to think seriously and deeply about money and how it impacts their life and the world.

Who is this business right for?

A financial planner is usually the individual who owns a financial advisory firm. To sit in the CEO’s chair, you must be comfortable working long hours, have a passion for all things financial, and have a special interest in human psychology. 

Many financial decisions are not just about the numbers. They are about the client’s behaviors and how he or she views the world. For example, some investors are concerned about the environment and may eschew investments in fossil fuels, regardless of the mutual fund’s or stock’s long-term return to investors.

Other investors may be more concerned with protecting their principal and earning a conservative rate of return. These investors might only be willing to invest in bonds and bond funds, annuities, permanent life insurance, and conservative bank products.

Some clients may not be comfortable investing their money at all or may not be ready to. Others may need help reigning in spending, or they may be so focused on saving money that they’re living an unhappy life and are coming to you for advice on what to do. Understanding the psychology of different types of people and how each of your clients relates to money will enable you to gain their trust and best serve their long-term financial interests.

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

Financial planners do a lot of different things during the day. One of the most important tasks is prospecting and marketing. Even large financial firms need to constantly bring in new clients and service existing ones.

Many firms focus on “assets under management” or “AUM”. The more assets under management, the more the firm makes. Thus, most marketing efforts are geared toward bringing more assets to the firm.

Whether that’s making phone calls every day to existing clients (or new prospects), sending out direct mailers, or giving talks and lectures or holding seminars, the principal advisor in a firm is busy.

A financial planner also meets with clients or oversees meetings with his or her top advisors (who meet with clients). A financial planner also sends faxes, drafts financial plans for clients, does a multitude of calculations on financial planning software, and spends time keeping tabs on the financial markets.

What is the target market?

The target market for most financial planners is middle-income. However, some advisors find that the upper middle-class or high net worth market is more worthwhile. Bottom line: choose a market that can afford your services and that has money to invest.

How does a financial planning firm make money?

Financial advisory firms make money by charging clients for financial advice, comprehensive plans, and modular plans. Many advisories also charge a fee for managing investments. The fee is usually a percentage of the assets held under management.

What is the growth potential for a financial planning firm?

A financial planning firm can be small or large. Many firms are one-person operations. However, some financial advisors grow their firms into multi million-dollar companies. Blue Ocean Global Wealth is one example of a large planning firm. Edelman Financial Services is another example of a firm that grew into a household name.