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Running a financial advisory practice involves more than helping clients achieve their financial goals. It also means being “business savvy” in a way that enables you to fulfill your own dreams.

You have recognized that although you are and individual you are running a business with the aim of achieving goals that are no different from those of your clients.

Therefore, you should set expectations for yourself, just as you would for your clients. The following tips can help you run your practice as a successful business:

1. Start with a Plan

All new financial advisors must have a plan that allocates sufficient funds to cover start-up costs for items such as registration, staff, rent, computers, equipment, insurance and other operational expenses.

You can create a pro-forma financial statement that projects potential revenue and expenses over defined periods. This step can give you a sense of how much revenue you would need to break even.

Make sure that you have enough money in the bank to run your practice until you begin to make money.

business plan diagram on black board

2. Identify your Ideal Client Profile

Identify people who you prefer to work with or those who you see as your ideal clients profile. Advisors who work with “ideal clients” usually enjoy more satisfaction in their work and have greater success. Typically, ideal clients share common characteristics, values, goals and behaviours, or they might belong to a niche or a specific profession. This way you will be able to create a more targeted marketing plan.

3. Be Realistic about Profitability

Many advisors fail to recognize that it takes time to become profitable once they start up their practice. Their most important goal is to hit the pavement running, trying to generate revenue. Everything else is secondary.

But they should remember that it takes time to build a client base — and some clients might not be ideal or profitable. Therefore, you must not assume that acquiring clients and generating revenue will automatically lead to immediate profitability.

4. Aim for Consistent Revenue

A consistent revenue stream is ideal, but not always achievable, given varying market and business conditions.

One strategy is to design a fee structure that is aligned with achieving a consistent flow of revenue. You may wish to streamline the client acquisition process by creating a model that meets varying client objectives, with a variable fee structure. This can provide a greater degree of certainty when it comes to client acquisition and revenue generation.

5. Maintain a Viable Service Model

Consider what services you will offer and the cost of such services relative to their profitability.

Some add-on services, such as tax preparation, might be necessary to provide some clients with the services they want. But you must ask yourself whether a sufficient number of clients need those add-on services before you invest the time and money to offer them.

As a result, you may wish to engage in collaborative arrangements with third parties to provide such services in a seamless manner to your clients, while retaining the ability to tell clients that you offer them.

6. Understand the Intangibles

The time you have to manage and grow your business is limited. This means “picking your battles” and “setting your priorities.”

Motivate yourself as no one else is going to do it for you. It is also recommended that you mentor your staff to align their values with yours.

Managing your time is therefore essential. You must recognize that time is money and that time management is directly correlated to the profitability of your practice.

Explore our blog section to get more tips, tricks and useful information in the financial advisory.

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