Hello readers,
This is a post I authored over a year ago, clearly I was on the verge of starting a corporation, and now that I have, this old post is interesting. Much of the below is involved in our business, though much of it is not. A couple of changes we made are: Number 1: we decided on a long term plan out of the gate to lower costs to end users through lower supply chain costs. Number 2: Fee only is always the way to go when deciding to help customers the best way possible. Number 3: Our approach is to attract users not with fancy staff, office spaces, and websites, but with a solid, unbeatable reputation. Most clients DO NOT care about fanciness, and the ones that do should probably not be your clients... You will be happier that way. This is the post:
As I consider starting a financial planning practice, let me count the ways they can differ from one another. This list will actually be a template that I refer to while I get ready to open my shop. This will likely only be interesting to the financial people out there, and even then it will be a stretch to call it interesting.
Name? – The constraints for a name put forth by the SEC and FINRA (if required) will need to be followed to a T. Otherwise, studies have shown that the name itself isn’t important, but the connotation is. In general, the most notable names highlighted in studies are names of partnerships that combine the last names of old white guys (not making this up)
Fee only or fee based? – You will need to choose one of these routes. Fee only is widely observed as having less conflicts of interest. Compliance of FINRA will drive any advisor crazy and potentially cost you business after handing over the disclosures to a client.
Clearing corporation? – This is a critical step. You will likely see Pershing as being very easily accessible for Registered Investment Advisors less than $15 Million or so of AUM. However, if you are above this threshold, you can choose from other corporations. The big difference in these corporations are the securities accessible on the platform, the fees charged per transaction/account, and what other companies offer the same platform. You can call wholesalers of securities on the platform to better understand the offerings.
Compliance with annual check in. This should be fine unless you retain agency (commission) status. In that regard, you need to upgrade to the plan giving you full access for all the pleasantries that will come up. RIA Registrar is an inexpensive option for RIA’s
Office space? – So many blogs about people working from home. This works, but generally if you aren’t trying to build a significant practice quickly. Otherwise, a financial practice can grow very quickly with success, and it gets precarious when your colleagues have to step over your dog in the living room to get to your office. Also studies show that a client meeting at your office builds rapport quicker, and that cannot be downplayed. I suggest co-work spaces with available conference room.
Financial planning software – you have many options in this category. I have usedf Sungard with great results but it is not interactive with clients on their end. Moneyguidepro allows you present value calculations, monte-carlo analysis, confidence levels for goals, and all is equally changeable by the consumer. There are a ton of tips and tricks for MGP. eMoney is similar, and has enhanced record keeping and functionality. Be cognizant of the annual price difference and the law of diminishing return. Typically, investment companies will be able to do detailed security analysis (i.e. Blackrock Aladdin)
Who to hire? – You should get an assistant that understands finances and has capability to speak with clients about needed documentation, setting appointments, and doing record keeping. This person ideally is someone that is always available and plans to be on staff for your entire career. You can find a virtual assistant at upwork.com to handle this discipline. You don’t necessarily need to get a real live person, as clients have been surveyed as not partial to live or virtual. After all, it just comes down to customer service.
Website? – This is the personal detail and every website will be different. The highest net worth clients will want to know you have presence, but not that it is compelling or interactive. This is just for the purpose of google. Therefore, wordpress is perfectly acceptable. To take it to the next level, do some SEO work.
More to follow and this will be edited over the next couple of years.