How To Start a Financial Advisory Business

Today we talk about how to start a Financial Advisory business or a financial services business of any kind.

Welcome back to the channel guys if you’re new here my name is josh and what’s pivotal to this video is that you understand that i have been in the financial services business for like almost six years now and i think probably around four of those years i was running my own company in the space and i always had this dream of running my own business that was always

The goal from day one because i wanted to be in control of my schedule i wanted to be in control of my income streams but unfortunately for me my passion was finance and finance unlike let’s say technology or marketing you can’t just start a company there’s a lot more that has to be done you know if you’re a software person or you’re like technology you can

Build an app and throw it on the app store you don’t need permission to do that you can build a piece of software and put it online and charge a subscription if you want to run a marketing company just start advertising on instagram and people will start to come to you you don’t need to pass all these regulations and deal with lawyers and compliance and all these

Complicated plumbing and infrastructure that you might need in another business like finance and so for me it was a lot more difficult to get started in this business than it is in most businesses and those were my main concerns if you’re a financial advisor or someone who’s in the financial industry you can probably really empathize with the fact that there’s a

Lot going on behind the scenes right one of the big things that was always front of mind for me is like compliance and regulation and am i going to get in trouble and end up in court if i do something wrong am i like in serious trouble another thing i was worried about is brand awareness like people want to invest or work with someone in an established company

With an established brand and i was going out on my own when people trust my brand and at the end of the day if you’re running your own company the buck kind of stops with you and if you’re working for somebody else and a client has a massive issue where something very horrible happens you can always kind of push that upstream to your managers and they’ll kind

Of take care of it and put up the fire but if you’re running out your own business and something horrible happens who are you going to rely on who are you going to go to and these are things you might be thinking if you’re thinking about going out on your own or starting your own thing and trust me those are all the exact same things i was thinking too but over

Time i started to meet the right people and make different connections that allowed me to get more clarity on how i might be able to start my own thing because that was the dream after all and what i actually found is that it was a lot simpler than i had imagined before i go any further into any of this there’s a massive threshold that we have to get over before

We discuss anything about starting your own business and i know a lot of people watching this are either financial advisors or aspiring advisors or people who are in school to become an advisor we have to manage the first massive question which is do you have demand in the first place now if you’re an existing advisor you might have a book of business you might

Have a book of clients that you’re currently with some larger company and you want to go independent i totally get that but you might also be someone who doesn’t have any clients yet and you’re thinking of trying to start a company right off the hop without really knowing if there’s that demand so first and foremost before we go through all the infrastructure of

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How to start an independent company i think it’s important to realize that you need to have demand first and that might sound obvious but the last thing you want to do is delude yourself into thinking you can easily start a company and jump through all the hoops and do all these things that you have to do to get started just to realize that you know you thought

You had demand and you don’t really so that’s the first thing you need to make sure you have willing customers who are going to buy your stuff now that i’ve cleared the air on that it’s important that we get to the point that we’re all wondering which is what is the underlying infrastructure or the plumbing of like an investment company how do you even get

All this stuff set up it sounds extremely complicated well the first thing that you have to do which is going to determine how you set up a company is define what is your specialty like within financial services there’s a million things you could do i’d say probably the three or four main ones would be financial planning help people do actual projections and

Plans and using software to help people achieve their goals investments which is getting people savings into a place where it’s actually growing and helping them generate returns and building investment portfolios there’s insurance which is about selling people way too much stuff that they don’t need so you can make a massive commission and maybe protect some

Of their life and disability and things like that and lastly things like mortgages financing other products like that now for the sake of today i’m gonna really hone in on what it is that i do and i would say that first and foremost for me is probably investing and financial planning those are like our biggest services so i want to talk about the plumbing

That’s required to build a business like that once you’ve defined where you want to specialize you’ll realize why that’s so important right away because the biggest thing you need to do whether you’re going to start your own business or not is have the right license and credentials whether in the u.s or you’re in canada you’re going to need different licenses

To distribute different products if you’re doing financial planning you’re probably going to need some sort of planning credential like a cfp i think that’s probably the one you’d want to go for if you’re going to be doing investments you’ll need a series 7 in the u.s or the csc in canada or other things like that and for insurance you’re going to need your own

Provincial or state qualifying exam to actually sell and distribute insurance so once we’ve thought about do we have demand and we thought about what do we specialize in now you actually have to go and study and get the right credentials you see this isn’t as easy as just starting a business there might be a couple of years of education you have to go through

Just to get the licensing for the most confusing thing of all where are we going to get distribution that’s the massive question when i was an independent advisor i knew that i had this big company behind me and when we needed to do insurance or investments all the infrastructure was in place that we were connected with the stock exchange and with custodians

That would allow us to buy and sell and invest and insure people on our clients behalf but then when you’re on your own you’re like how does all this work like this makes no sense i don’t really understand what’s lying underneath and i think that is where most people get stuck is they see that as the most complicated thing and they kind of stop right there and

Think that just must be too too mind-numbing to ever understand so i’m just not even going to give it a try if you know what your specialty is you can know exactly where you want to hone in and this is where i need you to kind of stay with me for a second and this is technical so please like leave a comment below if you’d like to know a little bit more about

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What i mean by these but the great thing is is that many many people have gone independent before you other people have left a big company to start their own and there are other people who have actually built a business to help you leave and start your own i think a lot of people don’t understand that many businesses and even most businesses are just a collection

Of other people’s businesses kind of recombined and repackaged and sold again so if you take a marketing agency as an example you know they’re using adobe photoshop which is adobe’s company and they’re booking clients with calendly which is a different company and they’re using g suite like gmail to do communications it’s just a company that’s using a bunch of

Other companies and when you’re building a business yourself what you’re finding is you’re going to be leveraging a lot of what we call b2b software or b2b infrastructure you’re going to be looking at other companies who are going to help you build your company if you’re hoping to specialize in financial planning that is actually the most simple of all things

Because all you really need is a cfp and you need financial planning software that allows you to build a product for a client and in that case the product is just a plan it’s a projection it’s something that helps them organize their financial life and turn all the chaos into something that can resemble a plan or something they can actually take action towards

Right now when it comes to insurance that’s a little trickier because you might have these massive insurance companies all over your country and you have to find out okay how am i going to get my client insured by one of these companies and the b2b company or business that you might use is actually called an mga this is one of the things that blew my mind i

Don’t actually have to go to all these massive insurance companies metlife and new york life and canada life and all these different places and actually get a contract with them i could go through a company called an mga that would get me contracted with every major insurer so i didn’t have to do that individually so what i did is i found a local mga i got on

Board with them and boom we were in business we were able to do insurance because we had the right licenses we had the right credentials and there’s another step that i’m going to have to mention but we had the pieces in place to kind of get this moving and lastly the most complicated is for sure the investment side because think about how complex investing is

When you want to invest in something there’s some company out there like amazon and they have to go public by going to a big investment bank and ipo and getting those shares into people’s hands and it had to make its way to the stock exchange and then into people’s portfolios and there’s all this abstract notional stuff going on and we don’t really see much

Of it but the great thing is is there’s a business to business platform involved in helping independent advisors get linked up with the stock market and invest on behalf of their clients and these are called independent dealer networks or independent custodians and what these companies actually allow you to do is take an existing business of financial advisory

Clients and migrate them over to something that is more independent away from a large company and if you think for some reason that i’ve built all the plumbing it’s like absolutely not what i have built is all of the relationships and connections between my business and other businesses that give me access to the world of insurance give me access to the world of

Financial planning give me access to the worlds of investments so i can do these things on behalf of my clients without having to get knee-deep in all of the crazy complexities of the financial world now the interesting thing you’ll find once you’ve maybe got in touch with some dealer networks or some mgas or different financial planning software companies that

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Will allow you to do this business you’ll find that all of them require that you’re incorporated you can’t just walk up and sign a contract you need a corporation a legal entity to sign the contract so what that means is as a structure it might sound really complicated but you’ll have to go to a lawyer they’re going to draft a bunch of documents that actually

Say that you have a legal entity called a corporation and you are the sole shareholder and from there you’ll have to get a name for the corporation maybe your brand name or whatever you want to be held out as and then you’ll open up a corporate bank account and so now what we have is a structure of an actual business that is separate from yourself personally

That can sign contracts and be involved in deals like this and that is going to be required i have never seen someone do this sort of business in a way where they’re not incorporated it’s mostly required for the kind of contracts you have to sign so to quickly recap we need to first find if we have demand from there we try to find where we’re gonna specialize

And once we know where we’re going to specialize we get the right credential or license to operate in that field and once we have the correct credential or license we have to actually incorporate we have to get a business set up with a legal name and bank account that will allow us to get contracted with mgas or financial planning companies or market dealers

That will actually link us to the world of investments that are already existing so once we have all these things in place we kind of have the foundation of how an independent financial advisory business would run now beyond this everything is up to you the rest of this is just client facing what can we do in our business to make the user experience better is

There a way we can develop a mobile app for them is there a way that we can give a better illustration of the work we’re doing by using other software or can we use zoom to be digital do we want to have a storefront these are all optional things that are more or less your choice in how you run your company you can decide if you want to be more digital if you want

To be more analog you can decide how you want to hold yourself out with your marketing and your brand and if you want to be involved on social media those are all the details those are kind of the sprinkles on the cake if you would say but the real foundation is about getting incorporated and getting yourself linked up with the right relationships and the right

Partners to actually give you access to the world of capital in the world of financial products anyways guys thank you so much for watching this video i think this is the video i wish was out there for me four years ago and if you’re someone who’s four years behind me getting into this career for the first time or wanting to go independent make sure to hit that

Subscribe button because there’s going to be more videos coming out where i’m going to be providing insight into how i did this and more stories and more tales on what it took to actually get a business moving in this industry so make sure to hit that like button as well and turn on post notifications for more videos just like this one every single week until next time you

Transcribed from video
How To Start a Financial Advisory Business By Josh Olfert