How to Start a Financial Advisory Business

A financial advisory business is a company that will help small businesses and individuals manage and grow their wealth. You are more likely to help out individuals and couples rather than big companies, but you should be prepared along the way to do both. 

Once you get started, clients will look to you for detailed financial information, help with financial forecasting, and ways to invest in all their financial goals. When you are ready to start your own financial advisory business, some of the steps you should use include:

1.     Plan the Business

A clear plan is so important when you are ready to get your business off the ground. You need to really map out some of the specifics that come with your business such as:

  • What will be my costs, both the ongoing and the startup?
  • Who is the target market?
  • How much would you charge your customers?
  • What name of the business will be?

Think through all of these components ahead of time to help you plan things out and be prepared. This is a great way to help you get that business going without being lost from the beginning. 

2.  Form Your Legal Entity

There are different business structures that you can choose to use for your business. The one you choose will determine how much protection you get and the way you will file your taxes. There are different options like a sole proprietorship, partnership, LLC, and corporation. 

Establishing your legal business entity, if you choose to do this, is a good idea for a financial advisory business. It will help keep you from being personally liable if your firm is sued at some point. The person suing you will only be able to go after the company and not your personal assets. 

2.     Register for Taxes

As a new business, you will need to register for a variety of federal and state taxes before your business gets open. To do this, apply for your EIN. This will be used on your tax return and can differentiate you from your personal taxes. 

3.     Open a Business Bank Account and Credit Card

Using a dedicated business banking and credit account is essential for helping to protect your assets. When you mix the business and personal accounts, your personal assets will become at risk if the business is sued. 

Your business bank account and card can also help you to keep your expenses separate from what you do with your personal money. This can make life easier as you work on business and personal taxes at the end of the year. 

4.     Set Up Business Accounting

You should take the time to record all of your expenses and sources of income for the business. This can give you a better idea of the financial performance of the business so you know how things are going all the time. 

All businesses, especially financial advising ones, need to keep accurate and detailed accounts of their finances throughout the year. You will be amazed at how much this can simplify your annual tax filing. 

5.     Get the Right Permits and Licenses

If you do not get the right licenses and permits to operate your financial consulting firm, you may need to pay hefty fines and fees. You should visit your state’s SBA’s site to make sure that you are getting the right ones for your career choice. 

You should check with the town, city, or county clerk’s office to make sure that you are getting the permits that you need along the way. This can keep you safe and make it legal to run your business. 

6.     Get Your Business Insurance

While the business permits are important, you also need to have insurance in order to operate legally and safely. Good business insurance will help protect the financial wellbeing of the company in the event of a covered loss. 

There are different insurance policies that you can choose from and some insurance companies will offer personalized ones to help you get exactly what you want. If you are uncertain about which types of risks could come to the business, then a general liability policy is the best one to use. 

7.     Define the Brand

Your brand is basically what your company stands for and can help change the perception that the public has of you. A strong brand is a great way to help your business stand out from the competition. Using a logo and the correct marketing will help make this easier. 

As a financial advisor, you should become deeply rooted in your community. Do sponsorships and find other ways to promote yourself around the community to see the best results. 

8.     Create the Website for Your Business

After going through the other steps above, it is time to create the business website. It is important to create a good website for the business, something that will attract the customers and provide them with some of the information that your customers need. 

All legitimate businesses have websites. It does not matter how new your business is, if you want to be seen as a legitimate business, you need to have one as well. Link back your social media pages, but do not use these as substitutes for a good website.

There are different sites that you can use to create your own website. The process is easier to do than many assume and it is a great way to help reach your customers. Find the right web hosting and design the website with all the relevant information you need. 

Starting Your Financial Advisory Business

When you are ready to start your financial advisory business, there are a lot of steps that need to come together. By following some of the things above and considering how they will fit into your business, you will be ready to have a successful business that will bring in customers.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.