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How to Start a Financial Advisor Business


Starting a financial advisor business is an opportunity to share your knowledge and expertise to help clients reach their financial goals and, of course, to earn a living for yourself. If you’re a newly minted financial advisor, you might decide to start your own firm versus working for someone else. Or you might feel that the time has come to leave your current firm behind and strike out on your own if you’re already an established advisor. Knowing how to start a financial advisor business the right way can set you up for success later.

Are you looking to expand the marketing of your financial advisor practice? Try SmartAsset AMP, a holistic client prospecting and marketing automation platform.

How Hard Is It to Start as a Financial Advisor?

Getting started as a financial advisor requires a certain investment of time and money. There are the legalities of establishing a business to sort out first. Once you’ve gotten the business formation squared away, the next step is figuring out how to scale and make your venture profitable.

Some of the biggest challenges new financial advisors face include:

  • Attracting prospects and acquiring new clients
  • Developing a marketing strategy that leads to conversions
  • Maintaining accurate records and managing the books
  • Building out a network and fine-tuning their brand
  • Balancing expenses against revenues to maintain positive cash flow
  • Meeting regulatory and compliance requirements

Understanding those challenges is important for developing the mindset necessary to start a financial advisor business. As a new financial advisor, your first year may have its challenges, so it’s important to set realistic expectations. Setting some first-year financial advisor goals can make it easier to define the direction you want your new business to take.

How to Start a Financial Advisor Business

When starting a financial advisor business, proper planning is essential, just like with any other type of business. If you’re unsure about what to do first, having a checklist to follow can help. Here are the major steps that everyone must go through to get their advisory business off the ground.

Step 1: Create a Business Plan

Your financial advisor business plan outlines how you will run your business, your goals and expectations. A good business plan should include:

  • A description of the services that you plan to offer
  • Details about how the business will operate
  • Plans for marketing the business
  • An analysis of the competition and where your business will fit in the marketplace
  • Financial projections

Writing a business plan is an opportunity to define your business’s mission and who you want to serve. Before you proceed with the planning process, make sure to identify your target audience.

Do financial advisors need a niche? Technically, no. There are some benefits, though, to niching down. When you target clients from a specific group or financial background, you can better differentiate yourself from other businesses.

Step 2: Name the Business

Picking a name for your new financial advisor business may seem small, but it’s important for many reasons. The name you choose can impact how clients perceive your business. It can also help you stand out in a competitive market.

First, your business name should be representative of the brand image that you’re hoping to cultivate. Having a strong brand can make your business easier to remember and stand out from other competitors.

Your business name also matters for marketing. If you plan to set up a website, blog or social media account for instance, then it’s important to make sure that you’ll be able to secure domain names or usernames that match your business name. You’ll also need to verify that your business name is not already registered in your state and that there are no trademarks or copyrights in place that could bar you from using it.

Step 3: Legally Form the Business

how to start a financial advisor business

Once you have a name, you’ll need to decide how to structure your new advisory business. There are several options to choose from, including:

Each one has advantages and disadvantages. For example, a sole proprietorship is the easiest business entity to set up but it offers the least liability protection if you’re sued. If you’re unsure which structure might be best, talking to an accountant or other tax professional may be helpful.

After you’ve decided on a structure, you can take the next steps to register the business. What you’ll need to do can depend on where you’re opening your advisory firm, as each state has different rules. To get a federal tax identification number, apply with the IRS. You also need to register your business with the Securities and Exchange Commission.

Considering what type of business insurance you might need at this stage is a good idea. You can also open a business checking account and a business credit card once you’ve registered your new company.

Step 4: Start Marketing Your Business

Marketing is crucial for businesses to reach potential clients by informing them about your identity, services and location. Some of the ways that you might choose to market your business include:

Initially, it may take a certain amount of time to gain traction with social media or a website. If you have the budget to outsource those marketing tasks to an expert, it may be worth the money to do so if it allows you to see faster results.

You can also focus on networking and building relationships with other financial advisors. Each new connection you make could be an opportunity to boost your visibility or connect with prospects down the line.

Step 5: Create a Client Acquisition Strategy

A financial advisor business needs clients to be successful. Client acquisition should be one of your top priorities once you’ve gotten some of the smaller wrinkles of starting a new advisory business ironed out.

To create a client acquisition strategy, start by identifying your target audience and understanding the value you can provide to them. If you know that, then it becomes easier to formulate a plan for attracting the clients that you want to work with. Some of the ways you might do that include:

  • Cold-calling or cold-emailing
  • Participating in community events that prospective clients are likely to attend
  • Asking for referrals
  • Engaging with prospects on social media

You can also use a digital tool to make this step easier. With SmartAsset AMP, for instance, you can get leads in your email and decide which ones you’d like to pursue. It can be a simple and effective way to connect with prospects and potentially save time.

Here’s one more tip. If you don’t have an elevator pitch yet, then you may want to work on creating one. An elevator pitch is meant to offer prospects a short but sweet introduction to your business.

Step 6: Monitor Your Progress

As mentioned, setting some financial advisor goals for your first year can help you define the targets that you want to aim for. Tracking your progress regularly can make it easier to adjust your plan so that you’re more likely to reach your goals.

For instance, if one of your goals is to acquire 50 new clients your first year then you might schedule a weekly or monthly check-in to see how well you’re doing. Or you might plan a quarterly budget review to look at how much income you’ve generated versus what you’ve spent to decide which investments are working and which ones aren’t.

Step 7: Focus on Scaling Your Business

Once your firm is up and running, you can start focusing on ways to grow your business. Ultimately, adding new clients and more assets under management are how financial advisors scale their businesses. Of course, this growth shouldn’t come at the expense of the services you provide to existing clients so balance is key.

Consider investing in your lead generation systems and adding more advisors to your staff. Also, consider deepening your own expertise by pursing professional certifications, like the Certified Financial Planner (CFP®) or chartered financial consultant (ChFC) designations.

Professional certifications can boost your firm’s credibility, and help you expand the services that your business offers. For example, an accredited estate planner (AEP) can improve a financial planning firm’s estate planning services and bring in more clients.

Bottom Line

how to start a financial advisor business

Starting a financial advisor business can have its share of obstacles but seeing your business succeed can be well worth the headaches. The more planning you do upfront, the easier it becomes to set the stage for a business that’s equipped to grow and thrive.

Tips for Growing Your Financial Advisory Business

  • Make it easier for clients to find you. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
  • Expand your radius. SmartAsset’s survey shows that many advisors expect to continue meeting with clients remotely, which is a trend that’s grown in recent years. Consider broadening your search and working with investors who are more comfortable with holding virtual meetings or spacing out in-person meetings.

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