Okay, so you want to become a self-employed financial planner or mortgage adviser.
And why not?
We are without a doubt entering a hugely exciting phase in the financial planning profession, with the exit of nearly 7,000 financial planners in the next 5 years it’s going to leave a huge gap in the market for new financial planning companies to prosper, and one thing I can say with confidence is the next generation of business owners have never had it easier when starting your own financial planning or mortgage company
Many entrepreneurial spirited financial planners and mortgage advisers want to break from the shackles of being employed to becoming the head of their own firms. It may be getting to the point within your career where you strongly believe you can do the job better and, avoid the pitfalls and challenges you’ve seen other companies fall at.
Or quite simply you just want to be master of your own destiny and feel that being employed doesn’t fit your personal and professional values, life goals, or family commitments, take Sarah Tucker AKA the mortgage mum! Her whole business model is set up around mums managing their work-life around their family commitments, smashing the stereotype of the typical mortgage company which in turn attracts a different type of client, double whammy!
So, you are keen to go it alone but where do you start?!
Well, the good news is that it has never been easier to start up your own financial planning or mortgage company. With outsourced paraplanning, administration, and compliance support along with affordable support services like personal assistants, marketing and social media executives, and new time-saving technology to catapult your business to the next level.
Not to mention, DIY website platforms and lead-generation companies specifically focussed on financial planning and mortgage clients…to name a few!
Throughout my time being the director of Recruit UK and host of the financial planner life podcast, I’ve spoken to thousands of companies of all different shapes and sizes. So here is a 4-point list of things to consider, to make your new company a roaring success:
- Creating your business plan
- Deciding whether you’re going to be a registered individual, appointed representative or, directly authorised
- Office space or working from home
- What sets you apart from the other firms?
- Create a business plan
Planning is the key to running a successful financial or mortgage company. Those who don’t have a good structure and plan, are usually those who fail.
The first thing I would suggest to do is when creating your business plan, look at how you’re going to generate business within the first 3, 6, 9, and 12 months, and what you want it to look like at each stage. Let’s face it, no clients no income! At this stage you need to be brutally honest with yourself, start with segmenting clients, introducers, and prospects into A, B and C.
A – Advocates, strong client relationships: Know them on a personal level and they buy into you and your values. They will 100% follow you.
B – Current shorter-term relationships – building trust.
C – Prospects, focusing on the people you would like to work with.
This helps with forecasting income at this stage, it’s worth taking into consideration any restrictive covenants you have in place with your current employer. This could be non-solicitation or non-dealing clauses. It’s imperative to look into this before the move because breaking these restrictions can cause you all sorts of unnecessary setbacks. Not to mention, costly lawsuits. Therefore, seek legal advice when it comes to introducing any existing client relationships.
I had a great chat with Gregg Moss from Eleven.2 FP about this on the financial planner life podcast, check it out here.
“With restrictive convenience always air on the side of caution because it’s something that could ruin your life.”
Greg Moss Eleven.2 FP on Financial Planner Life podcast
Want to learn more about restrictive covenants? See episode 33 of the Financial Planner Life podcast with Greg Moss.
- Deciding whether you’re going to be a registered individual, appointed representative or, directly authority
When you’re starting out, it can feel like you’re being pulled in many directions, and making the decision to be a registered individual, directly authorised, or an appointed representative can be difficult. So, let’s consider the perks and pitfalls of each.
Smaller or new financial adviser firms often choose to become an appointed representative or registered individual of an already FCA-authorised firm, rather than becoming FCA-authorised in their own right. Predominantly because of escalating requirements and the growing cost of compliance.
An appointed representative is basically a firm that carries out regulated business on behalf of another directly authorised one. They must still meet all FCA requirements and be thoroughly assessed and competent, but they don’t hold regulatory responsibility themselves. Instead, it’s the directly authorised firm that takes regulatory responsibility and is ultimately accountable. It acts as a kind of protective umbrella network and provides many benefits – especially when it comes to hidden costs, compliance, risks and regulatory changes.
Another option is to become a registered individual. Rather than being an appointed representative or directly authorised, a registered individual works for a directly authorised company on a self-employed basis. As a registered individual, a percentage of all your work is sometimes provided by the umbrella firm, which can be handy if you are new to the industry or if you are good at writing business but not so skilled when it comes to marketing. All regulation and compliance issues are taken care of, too – leaving you free to focus on winning new clients and writing new business.
Becoming directly authorised can be a lot of work and can be very time-consuming. Your time, particularly within the first 6 months will predominantly be used up developing your business, finding, and training staff, etc. This can delay you from getting on with actually giving financial advice and winning clients.
Recruit UK recently put out a post on LinkedIn to find some insider tips for financial planner company start-ups. Here’s what some directly authorised advisers had to say:
“I used simplybiz to go DA straight away. I’m solo. They assist all the way through and once you’re authorised. Definitely recommend it.”
Oliver McDonald, Co-founder & Director at Engage Wealth Management
Taylor Beavis, Director & Financial Adviser at Universe Financial Advice adds:
“I’m DA. I love it. BUT you have to be ready for a LOT of hard work and for the challenge. If you want to sit back and let someone else do the processes, procedures and compliance…network is your best bet I would say…and there are some fab ones out there!”
*Want to know more about the differences and perks of being a registered individual, appointed representative or, directly authority? See our previous article, DA, AR, or RI – which is the best route for your business?
- Office space and working from home
Don’t think having an office is the be all and end all of running a business. Plenty of people start out from home. A question you need to ask yourself when in the planning process of your start-up company is: Can I function using zoom and other online platforms and networks?
It’s easier now, more than ever to start your own financial planning or mortgage company from home. Take it from James Wallis, owner of Aristotle Financial Planning. He tells the Financial Planner Life podcast about starting up his own company from home amid the pandemic. Here’s what he had to say:
“When you start a business you have an idea of how everything is going to be. Then a global pandemic hits and you can’t see any of your clients and you aren’t allowed in the office. So, you just have to adapt. I was fortunate as I was able to bring some existing clients with me but I wasn’t able to see them. So everything was done remotely, video telephone, post but in some ways, it helped because it made everything quicker as everything was done digitally.”
James Wallis, owner of Aristotle Financial Planning
With the pandemic came huge digital milestones which now enable remote and hybrid roles to thrive. So, when setting up your own company, don’t just consider the roles that are easily done from home, but the work-life balance that is now more important than ever to your employees. Having an office space is not the be-all and end-all of a successful business.
Top tip: If you do choose to go down the working-from-home route, make sure you take into consideration your employee’s mental wellbeing. Look at your wellbeing policy and make sure you can offer your employees all the support they need to work from home and thrive within their working environment- mentally and physically!
For more information on working from home, see our article, Financial planners, Paraplanners and Working from Home
- What sets you apart from the other firms?
Differentiating yourself from other firms will help you create a strong brand and wider network. Think about your goals, working ethos and values, picking a niche, and understanding your market.
Richard Weatherburn told the Financial Planner Life Podcast about how important it is to pick your niche and understand your target market.
“I never understand why financial advisers all seem to scrap around for the same 1% clients. We focus on people who aren’t already working with a financial adviser. We aren’t stealing business from anybody; we are just helping people that didn’t realise they needed help in the first place. Your bricklayers, plumbers who don’t get any sick pay, so they need income protection. They’ve got kids, so they need life cover, they haven’t got a workplace pension, so they need a pension. They are all earning decent money, and they are certainly profitable to take on as clients, then they introduce you to 10 others who are in the same position.”
Richard Weatherburn of 313 Wealth Management
A great way of reaching your niche audience is to aim for those who you can relate to. The mortgage mum, Sarah Tucker is a fantastic example of this, and she emphasises that authenticity is key. On the Financial Planner Life podcast, she explained to me about how she has never paid for advertisement. Her selling point is just her, being herself and therefore appealing to like-minded mums and women, inspiring them to understand their mortgages more than the “suited and booted man of the past”.
This will help you plan out how you want to convey your online presence. Think about your network, what makes them tick and what they need from you to gain solutions and inevitable generate leads for your business.
So…I hear you thinking, what now?
If you are at that point in your career where you would like to start up your own financial planning or mortgage company. Reach out to recruit UK we can help you make the rig
ht decision around being a registered individual, appointed representative or the directly authorised route and of course, introduce you to the best of the best in the market.
“Finally, just do it! If you never do it, you’ll always spend time wondering what could have been. There is nothing worse than living life wondering, what if? The worst thing that could happen with me is that, I go into an employed advisory role, which is still not a particularly bad position to be in.”
James Wallis, owner of Aristotle Financial Planning