How to Start your own Financial Planning Firm

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.

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Learn how to start your own Financial Planning Firm and whether it is the right fit for you.


Start a financial planning firm by following these 10 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 guide to starting your financial planning firm. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Check out our How to Start a Business page.

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:

Luckily we have done a lot of this research for you.

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

Starting a firm requires you to become a registered investment advisor (RIA), registered with your state. You will spend between $10,000 and $20,000 for basic startup costs. Some of these include office rent, your legal documentation (including your form ADV client brochure and fee disclosure), and fees for your vendors. You’ll also need a good contract with a custodian.

What are the ongoing expenses for a financial planning firm?

Ongoing expenses include office upkeep and business liability insurance, rent, errors and omissions insurance, account maintenance fees for a custodian, and labor costs for any staff you retain.

Who 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.

How much can you charge customers?

The typical fee for assets under management is between 1% and 2%. A typical comprehensive financial plan will cost between $1,800 and $10,000, depending on the client and his or her needs.

How much profit can a financial planning firm make?

A financial planning firm can be very profitable. Most firms have profit margins exceeding 10%, and the most successful ones have profits margins exceeding 20%.

How can you make your business more profitable?

Make your firm more successful by specializing in a specific type of financial planning. For example, you could choose to specialize in education planning, retirement planning, financial planning for millennials, or even non-investment planning.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Financial Planning Firm Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

  • Your state's business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability.

It's very important to secure your domain name before someone else does.

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STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your financial planning firm is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can start an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

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

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

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You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.

Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

Small Business Taxes

Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).

You can learn more about small business taxes in these guides:

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

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.

Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.

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.
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Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.

Open net-30 accounts

When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.

Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.

Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.

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Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!

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.

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.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a financial planning business. 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.

For information about local licenses and permits:

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Learn more about General Liability Insurance.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Recommended: Learn what business insurance for your Financial Planning Firm will cost.

Business Insurance for
Financial Planning Firm

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.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.

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How to promote & market a financial planning firm

Promote your business in your local community using business cards and attend networking events. Let friends, family, and business associates know that you’ve opened a new firm.

How to keep customers coming back

Most clients are reluctant to leave a financial planning firm. However, you can increase the likelihood that they won’t leave by offering clients an immersive experience. Develop a unique culture that fits with your target market.

For example, if your target market is primarily millennials, or younger clients, consider offering perks that they might enjoy.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.

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Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.

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Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.

Start A Financial Planning Firm In Your State

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

Is this Business Right For You?

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.

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Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

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

Financial advisors typically have at least some formal education and training in financial planning. Some colleges, like the American College, are set up specifically for this purpose. The specific skills needed by a financial planner include basic and advanced money management skills, the ability to explain complex financial concepts in simple terms, and a deep understanding of financial math, financial markets, and its relevance to human life.

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.

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Take the Next Step

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.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

  • Funding
  • Events
  • Guides
  • Support

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

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

Jump starting your business is easier if you’ve already owned or operated an RIA. Getting clients from existing business or moving clients over from your old broker-dealer relationships will help. Sometimes, however, this cannot be done. Leverage your relationships in your local community.

How and when to build a team

Build a team as soon as you can afford to do so. It doesn’t have to be immediately, however. Most professional financial planners can manage up to 200 to 250 clients without hiring help.

Next Steps

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