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What To Do Before You Open a Financial Planning Business

By Taylor Liao, CFP

Every year, I have many colleagues pass the CFP examination and earn their certification. For some of them, the CFP certification is just an extra certification that they may never use. But for others who are full of passion about starting their own financial planning practice, I have written this blog with real-world knowledge and tips on getting started in the financial planning business.

Unrealistic Expectations

The biggest mistake I made when I started financial planning was that I didn’t fully understand what the process entailed. I had 20 years of experience in sales and thought it would be easy to adapt and be familiar with the practice. I also thought my existing clients would transition with me and pay advisory fees for financial planning. I was wrong. The difference between theory and practice was startling. The financial planning profession in Taiwan has such low recognition; even now, the public is just starting to understand what financial planning is. Compared to other financial services, financial planning is unique and takes time to get comfortable with.

Maybe you are considering leaving your current job to become an independent financial planner. If so, be prepared for clients to pay you based on how much they believe in you and your profession. Clients who work with salespeople don’t have to like their services, as long as they like the product. Salespeople are representatives of big companies with well known names and brands. If you are an independent financial planner, the brand is you.

My advice to start up financial planners is to be humble first and develop your skills. Communication skills, specifically, are very important because you have to explain to new clients what financial planning is, why you chose it as a career and why they should choose to work with you. With the financial planning profession being so young in Taiwan, we need to put more effort into educating clients.

Stick to the Principles of CFP Professionals

If you decide to keep your financial services job and practice financial planning, it is very important that you maintain the principles of CFP professionals. When you work for a bank or insurance company, your job is to sell financial products, but do not forget to put the client first. Do not use financial planning as a weapon to sell more products without doing any planning for the client first. Of course it is fine to sell the client products after you have done planning for him or her. The difference between financial planners and salespeople is that we sell a solution, not a product. Your recommendations should be objective and fair to the client. If the only solution you offer to your clients is buying a product from you, then you are not sticking to the principles of CFP certification.

In fact, the first question you should ask yourself when considering starting a financial planning practice is, “Can I do financial planning without selling any products?” If your tendency is to focus on product selling, then you won’t have much room to improve yourself in the financial planning areas. On the contrary, if you focus your efforts on making your advice valuable to the client, then you will find ways to improve your skill set and knowledge.

A Workable Business Model

The hardest part of getting started is turning your knowledge into a business. Many CFP certificants who have recently passed the exam are full of energy and passion and want to start practices right away. These people need to realize that the public is skeptical of financial planning and it takes time to build a client base. Unfortunately, I have observed several financial planners attempt to run a financial planning practice and fail because of this naïve approach.

The reason I think these individuals failed is that they didn’t have any experience running a business and they didn’t put enough thought into their business model before getting started. A business model includes a development plan, cash flow analysis, stockholder management plan, etc. The business development plan must be practical, taking into account where clients will come from, how much advisory fees will be, etc. The current market makes it a challenge to succeed in financial planning, but it is much more viable if you have a thoughtful plan.

Anyone wanting to start a financial planning business must be aware of the fact that financial planning is not well-established yet. For example, the public doesn’t use the keywords “financial planning” or “financial adviser” when they use search engines. After much personal trial and error, my solution is to develop the market with education, especially in the enterprise employee sector.

Finding Clients

My company built a website, http:/, for the public to build a basic financial plan in 10 minutes through an easy- to-operate process. We hope this website will bring to our attention people who are interested in financial planning. I also started developing clients through an EAP (Employee Assistant Program). EAPs offer different types of counseling such as psychological, law, and/or financial planning to employees as a benefit. My company is a part of an EAP, providing the training course and financial planning counseling to the enterprises here. Through this channel, I have the opportunity to teach many employees about financial planning. I’ve only been doing this program for a few months but I believe it is a workable program to generate new clients.

Addressing where clients are going to come from is a very important step in starting a financial planning firm and it is a good idea to have several channels. Our efforts aren’t extremely successful yet but I know our approach is on the right track.

The biggest piece of advice I can give is to discover your business model before you do anything else. I also recommend joining a CFP professional association and discussing your idea with other members; you could learn a lot from them.

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