Kitces Roundup: Best Posts for Financial Advisors Looking to Start a Firm

9 min read
February 18, 2015

Considering starting your own firm? More and more financial advisors are exploring this path -- and with networks like XYPN that provide the necessary technology platform, compliance support, and other tools that make it possible to run a successful business, it's becoming an increasingly realistic option for advisors who want to serve their ideal clients, their way.

While starting your own financial firm is possible, there's still a lot of information out there about how to do it. It can get overwhelming, especially if you don't know where to start.

We're here to make it a little easier for you. We've rounded up 25 of the best posts from XYPN co-founder Michael Kitces' blog for financial advisors looking to start a firm. Enjoy!

Getting Started

Financial Advisor’s Guide To Establishing A Next Generation Financial Planning Firm

"If you're a newer advisor that recently started your own practice, or are thinking about going out on your own, this should be helpful to you as a starting point for solutions to consider and some ideas about what's important to focus on. And even if you're an existing advisor with an established practice, you may still be inspired to make a few changes or additions to your own suite of tools!"

Setting Up An RIA And Starting A New Financial Planning Practice On Less Than $10,000

"Taking a leap to start your own financial planning practice can be a scary proposition. Not only is there the stress of starting up the business and figuring out how to market and find your own clients, but there's also the responsibility of making a huge number of key decisions about the business model and companies and services to engage, and just the outright cost of setting it up in the first place."

The Biggest Trap Financial Planners Face When Marketing Themselves

"As financial planning continues to grow, just being a financial planner is no longer the differentiator it once was. Instead, advisors who want to grow and succeed from here must differentiate themselves further, by demonstrating to a certain target clientele why that advisor is truly more focused, more specialized, and more capable than the competition."

How To Find Your Niche As A Financial Advisor

"How do you find or choose a niche in the first place? In truth, there are many paths to finding a niche, from focusing on a passion, to an area where you already have an affinity or connections, to your existing clients or even former colleagues in a prior line of business. For those who truly have "no idea" what to do, the easiest path may simply be to start taking anyone you know out to lunch, asking them what their needs and issues are, and beginning to define a vision for your business accordingly. By asking people what's important to them and unique about their concerns, you can find a niche of your own, and may even discover that your interviewees become the first people to refer clients to your new business."

What Is The Philosophy Of Your Financial Planning Firm?

"In a world where financial planning is guided by a standardized process but a lot of leeway about precisely what financial planning recommendations are crafted and implemented, the reality is that two well-intentioned financial planners can come up with remarkably different solutions for clients depending on their views and perspective. Whether it's the active vs passive debate, or permanent insurance vs buy-term-and-invest-the-rest, some planners just tackle client problems in a materially different manner than others."

Filling The Income Gap When Starting A New Financial Planning Firm

"While these income gap fillers won’t necessarily fully resolve the issue – especially since the greatest challenge may simply be finding and getting clients in the first place – they can go a long way to at least partially bridging the gap and making it easier to survive the launch of a new firm."

XY Planning Network and the Future of Getting Paid For Financial Planning

"This month marks the launch of XY Planning Network, a new Turnkey Financial Planning Platform (TFPP) designed to help younger Gen X and Gen Y advisors who want to deliver financial planning to their Gen X and Gen Y peers, with a monthly retainer fee model that allows them to actually get paid for the advice itself and supports an ongoing financial planning relationship, without the sale of products or requiring AUM. Notably, this provides a path not only for younger consumers to finally have access to a financial planner, but also an important new career path for younger advisors who want to grow and develop a business serving their Gen X and Gen Y peers."

Will Monthly Retainers Be The Next Big Business Model In Financial Planning?

"Through a combination of business refinements and the efficiencies of technology is beginning to emerge: a monthly retainer model, structured like a 'financial planning subscription' that may finally open up financial planning to the middle class with a sustainable, profitable business model.

Looking for a roadmap to start your own independent RIA? Check out our  comprehensive guide to starting your firm!

Working with Clients

Three Financial Planning Business Models To Effectively Serve Gen X And Gen Y Clients

"The reality is that it's actually quite possible to build business models that can effectively serve at least a fairly wide swath of Gen X and Gen Y, whether on an AUM basis by serving the "emerging affluent" clients that larger RIAs reject, an ongoing retainer basis to provide as-needed guidance in an ongoing planning relationship for the cost of a gym membership and cable TV, or even using a more "traditional" comprehensive financial planning business model that simply combines a modest level of assets-under-management with implementing the basic life and disability insurance which those in their 20s, 30s, and 40s will need anyway."

Best Practices In Client Communication For Financial Advisors

"Communicating with clients effectively has become increasingly challenging in today’s world, not because it’s difficult to find a way to communicate with clients but because there’s often uncertainty about how much communication is appropriate, and by what means/channels. Are in-person meetings best, or are phone calls preferable? Is email better than a phone call? Where do one-to-many communications like newsletters and social media fit in?"

Financial Planning For Gen X And Gen Y Clients: Focus On Human Capital First

"In the future firms that are aiming to serve younger clientele should consider adding "career asset management" services, and advising clients on their career decisions, and not focus too heavily on "just" the financial products clients need to purchase or the assets they have available to manage. In fact, such services may be especially conducive to an ongoing retainer-style financial planning engagement, and become a way for advisors to bring value to the large number of underserved Gen X and Gen Y clients. And of course, clients who are effective maximizing their human capital in the early years may even become the clients with the most financial assets in the future, too!"

How Do You Nudge Clients Towards Their Financial Planning Goals?

"A common challenge in financial planning is getting clients to actually implement the recommendations they've been given to help themselves progress towards their financial planning goals. While in theory, rational human beings should easily be able to take the necessary steps to improve their situation - especially once an expert has provided a list of recommendations and required action items to do so - the reality is that we're far less rational in practice."

Using Social Proof To Help Clients Make Better Financial Planning Decisions

"In uncertain situations, we often look for social cues about what to do based on what everyone else is doing. This kind of "social proof" can be highly effective in helping us to navigate what to do in the absence of proper information."

Growing an Online Presence

Growing a Planning Firm In The Digital Age: The Rise Of Inbound Marketing

"As the digital age reaches financial planning, an entirely new marketing opportunity emerges: inbound marketing. The basic principle: instead of blasting out solicitations hoping you happen to hit a prospective client like finding a needle in a haystack, create content that is useful, relevant, and interesting for your target clients, and let them find you."

When A Prospect Searches For You On The Internet, What Do They Find?

"The inspiration for today's blog post was a recent conversation I had with another planner, who shared a great deal of trepidation about how when something appears on the internet 'it never goes away,' and his concern about the potential that someone might say something bad about him online, where it would be immortalized forever. 'It may be there forever,' I replied, 'but it won't matter if no one can find it. In fact, do you even know what your prospective clients would find if they searched for you?'"

3 Reasons Financial Planning Firms Might Consider a Blog

"In practice, it seems there are three primary reasons that most financial planning firms consider a blog: drip marketing for prospects, a communication tool for existing clients, or Search Engine Optimization (SEO) enhancement for your overall website. Fortunately, once you know which of these reasons matches the purpose for your blog, you can figure out what kind of content to create for it, to whom the blog updates should be distributed, and whether having a blog even makes sense for your firm in the first place."

3 Easy Ways Financial Planners Can Get Started On Twitter

"As social media continues to rise in the digital age, financial planners are increasingly getting involved on platforms like Facebook and Twitter. However, fears and misconceptions about social media - along with a general uncertainty about exactly what the point is and why planners should get involved - have dramatically slowed advisor adoption. Yet the reality is that there are several simple and clear ways that platforms like Twitter can be used to create value for financial planners."

5 Financial Advisor Blogging And Social Media Strategy Lessons I’ve Learned (The Hard Way)

"After having built on this for a little over 3 years now, I’m sure there are many lessons left to learn, but I present here my own top 5 “lessons learned” so far in the world of social media and blogging, particularly as it pertains to the strategy of how to use it to build your business."

In The Future, The Best Firms Won't Find New Clients; The New Clients Will Find Them

"The best firms are beginning to take the key actions now that will be necessary for success, from better defining target clientele, to creating relevant content and distributing it, to beefing up the raw aesthetic quality of their websites so they leave a good impression - so that in the future, they won't have to find new clients, because the new clients will find them."

Sustaining a Successful Business for Financial Advisors

The Value Of Advisor Study Groups – Not Just Studying Financial Planning, But Mastermind Your Business And Career

"In the world of financial advisors, the purpose of study groups is not necessarily about 'academic' study, but more commonly focuses on practice management and career development issues. And as advisory firms grow and business issues arise, advisor study groups are becoming more and more popular, although with their bent towards advanced concepts and topics they are perhaps better dubbed 'Mastermind' groups instead!"

How Do You Measure Success And Quality In A Financial Planning Firm?

"What should we be using to evaluate and measure the success and quality of a financial planning firm? After all, if we can't even measure it, how can we possibly manage it and work towards improving it? Would a better alternative be to look at client satisfaction surveys? What about the percentage of recommendations that are implemented? Or the time horizon it takes for them to be implemented? How do you measure the quality and success of your financial planning services for your clients?"

What Are The Key Performance Indicators (KPIs) For Your Financial Planning Firm?

"As a financial advisory practice grows, it becomes increasingly important measure and track more information about the business, so it can be managed as a business. As the saying goes, “if you can’t measure it, you can’t manage it.” Building a financial dashboard of “Key Performance Indicators” (KPIs) that track key metrics of the business, its growth, and its clientele, can give you the information you need to make better practice management decisions. It's not necessarily about harnessing the "big data" insights of an entire industry, but simply the "small data" opportunities of better understanding your own business!"

Fixing The Weakest Links In Your Referral Growth Strategy

"Advisor surveys continue to show that the #1 marketing strategy for most firms is to grow through referrals. Unfortunately, though, most firms still get modest results at best, leading them to double down on their referral efforts by asking clients for referrals even more. A recently released book by marketing consultant Stephen Wershing, however, suggests that the optimal path to success is actually to go the opposite direction - "Stop Asking For Referrals" and instead focus on creating the environment that makes it easier for clients to refer, by understanding what it is that drives clients to refer in the first place."

Financial Planning and Building An Advisory Firm With An Abundance vs Scarcity Mindset

"This mindset of abundance versus scarcity is not unique to clients; in fact, as financial planners our view about the world also shapes our behaviors. For instance, some become active as volunteers in the industry to get involved, give back, and even network for referrals, while others see little purpose in getting involved in a professional association with 'the competition' – even though the reality is there are still more than enough clients out there for everyone."

Best Practices In Time Management & Productivity Tips For Financial Advisors

"For all those financial advisors who feel like they are struggling with their time management and productivity in the face of an increasingly complex advisory business, there's good (or at least affirming) news: you are not alone. As the results of the latest FPA Time Management and Productivity Study show, only a mere 13% of advisors report that they feel in complete control of their time, while 3-in-4 advisors are working more than 40 hours a week, and more than 1/3rd are working 50+ hours every week."

Your firm, your terms. It can be done. Show me how.

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