How to Start a Financial Consulting Firm

A financial consulting firm helps individuals and small businesses manage and grow their wealth. You are more likely to service individuals than large corporations, but your small business should be prepared to do both. Clients will look to you for detailed financial information, informed financial forecasting, and ways to invest to achieve their short-term and long-term goals.

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Start a financial consulting firm by following these 10 steps:

Plan your Financial Consulting Firm
Form your Financial Consulting Firm into a Legal Entity
Register your Financial Consulting Firm for Taxes
Open a Business Bank Account & Credit Card
Set up Accounting for your Financial Consulting Firm
Get the Necessary Permits & Licenses for your Financial Consulting Firm
Get Financial Consulting Firm Insurance
Define your Financial Consulting Firm Brand
Create your Financial Consulting Firm Website
Set up your Business Phone System

We have put together this simple guide to starting your financial consulting firm. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

What will you name your business?
What are the startup and ongoing costs?
Who is your target market?
How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Financial Consulting Firm Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

Your state’s business records
Federal and state trademark records
Social media platforms
Web domain availability

It’s very important to secure your domain name before someone else does.

What are the costs involved in opening a financial consulting firm?

The costs of opening this business are somewhat deceptive. Once you have the appropriate license, there is virtually no cost to opening this business: many financial planners start out working from home and meet clients at their place of work, their homes, or other venues. On the other hand, a four-year degree is mandatory for most certifications, and that has an average cost of $40,000 for the degree alone (for in-state, public colleges). If your college coursework was not already Board-certified, then you may spend between $1,000 and $4,000 to take additional classes for a certification like the CFP, and an additional $595 to take the exam. Because of its importance, many people opt to take review classes or buy review materials, and this cost can range from $400 to $1400. After passing, you need to work full-time in a relevant field before you can meet the experience requirement of the CFP. Thus, while the costs of opening the actual consulting business is almost nothing, the education and certification required can easily be $90,000 or more, and there is the significant time investment working for someone else before you can work for yourself.

What are the ongoing expenses for a financial consulting firm?

If you work from home, then your ongoing expenses for this position are virtually non-existent. Most of your actual financial planning is conducted via the computer that you already have, and you do not need to pay for expensive overhead or utilities. Your most regular fees will be the gasoline cost of meeting with clients and the cost of meetings such as business lunches, both of which are potential tax write-offs for you.

Who is the target market?

Younger clients, such as those who are completing college degrees and/or coming into their inheritances, may be curious about financial planning for the first time. They are more likely to be open-minded about the advice you give and, if they like the results you deliver, may actually become lifelong clients.

How does a financial consulting firm make money?

Two ways that financial consultants make money are to take a percentage of the sales charge (basically, a commission) made by the client when they invest and to receive a “trail” from some of the operating expenses of an investment such as a mutual fund. Other consultants are paid by certain fees they charge clients, and some consultants become fee-only advisors.

How much can you charge customers?

How much you charge clients depends on your payment model. If you are being paid via fees, then it is reasonable to charge them between .75% to 2% of the collective assets that you manage. Commission costs have a greater range, ranging from 1% to 8.5%. With both fees and commissions, you typically charge lower percentages for higher amounts on transactions. It should be noted that many clients, firms, and consultants have become wary of commission-based models, as there is always the possibility of an advisor encouraging and investment that is good in the short term for the advisor but not in the long term for the client.

How much profit can a financial consulting firm make?

The Bureau of Labor Statistics estimates that the median pay of this job is over $90,000 a year. Your actual profit may be higher or lower based on your payment model and number of clients.

How can you make your business more profitable?

Make sure that you are reading relevant trade publications and other sources that let you keep your finger on the pulse of industry changes. Make sure that you show genuine interest in the lives of your clients whenever you speak—this makes their time with you feel more like a valued relationship. Finally, always volunteer with professional organizations when you have the time—it’s great networking, great PR, and a great learning opportunity.

Want a more guided approach? Access TRUiC’s free Small Business Startup Guide – a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

One crucial aspect that cannot be overlooked when starting your financial consulting firm is the importance of establishing a solid business foundation. While sole proprietorships and partnerships are the most common entity types for small businesses, they’re a far less stable and advantageous option than LLCs.

This is because unincorporated business structures (i.e., sole proprietorships and partnerships) expose you as an owner to personal liability for your business’s debts and legal actions, while LLCs protect you by keeping your personal assets separate from your business’s liabilities.

In practice, this means that if your financial consulting firm were to face a lawsuit or incur any debts, your savings, home, and other personal assets could not be used to cover these costs. On top of this, forming your business as an LLC also helps it to appear more legitimate and trustworthy.

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FORM YOUR LLC

Note: If you’re interested in more information before getting started, we recommend having a look at our state-specific How to Start an LLC guide (DIY) or our in-depth Best LLC Services review (for those opting for a professional service).

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It’s really easy and free!

You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

Separates your personal assets from your company’s assets, which is necessary for personal asset protection.
Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

Separate personal and business expenses by putting your business’ expenses all in one place.
Build your company’s credit history, which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a financial consulting firm. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

Services Contract

Financial consulting firms should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example of one such services agreement: (try to make this industry/business specific)

Certificate of Occupancy

A financial consulting firm can be run out of an office. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a financial consulting firm.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your financial consulting firm will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers’ Compensation Coverage.

Find out what types of insurance your Financial Consulting Firm needs and how much it will cost you by reading our guide Business Insurance for Financial Consulting Firm.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a financial consulting firm

This is a job where you are mostly rooted in your own local community, so it is wise to advertise via certain traditional means such as newspapers and radio, especially when you are first getting started. Increasingly, though, clients are finding their advisors online, which makes it important that you have clean and professional-looking accounts on things like Facebook, Twitter, and LinkedIn. You should also have a professional-looking website. Once you get comfortable doing so, online venues are a great way to showcase your personality (such as a quirky sense of humor) which can help you stand out from the pack.

How to keep customers coming back

Now that you know how to meet clients, how do you get their business and keep them? One way is to speak their language. Most clients don’t want you to throw tons of jargon and special terms at them. They want to know key terms and facts, and they want them explained in an accessible way. Don’t forget to leverage networking—communities are built on connections, and the simple fact that so-and-so is your colleague or close friend may make a client feel instantly more connected with you. Retaining clients after this is arguably the easy part: this is a results-oriented business, so as long as you are helping their wealth grow, they will continue to use your services.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

All legitimate businesses have websites – full stop. The size or industry of your business does not matter when it comes to getting your business online.
Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2024 to find the best phone service for your small business.

Recommended Business Phone Service: Phone.com

Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it’s fair pricing.

Is this Business Right For You?

This business is best for someone who understands finance inside and out. Prior experience working as a consultant for another firm is ideal, but any experience in investment and wealth management is helpful. A formal education in subjects such as finance can give you a solid knowledge base to work from, and certifications in particular kinds of financial advising will help you further your skills.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a financial consulting firm?

There are several daily activities in the life of a financial consultant. You may spend time prospecting for new clients, helping your existing client base (which ranges from reviewing their portfolios to meeting with them in person), filing paperwork (such as compliance reports and the records of your clients) and using various software and other methods to conduct financial planning.

What are some skills and experiences that will help you build a successful financial consulting firm?

For better or for worse, most of the skills you need will come from your formal education. Becoming a financial consultant typically means getting a particular certification, such as the CFP (Certified Financial Planner). Getting something like a CFP requires a four-year degree followed by additional certification training and the successful completion of a Board Exam. After you have completed this rigorous training, however, you will have all of the necessary preparation and skills to get started.

What is the growth potential for a financial consulting firm?

The growth potential for this business is immense. The Bureau of Labor Statistics projects this field to grow by thirty percent between 2014 and 2024, aided in part by rising life expectancy and the increased need for financial planning.

Not sure if a financial consulting firm is right for you? Try our free Business Idea Generator and find your perfect idea.

Take the Next Step

Find a business mentor

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

Funding
Events
Guides
Support

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a financial consulting firm?

Two related tips are to figure out your own niche and to figure out your best audience. For instance, you may have more success focusing only on portfolios, or only on wealth advising. This allows you to become a true authority in one area rather than trying to do it all. Similarly, you need to identify a target audience: someone focusing primarily on retirement will primarily serve older clients, and it’s important to understand their concerns and values. Finally, don’t neglect traditional networking: attend as many trade shows and other professional events as you can.

How and when to build a team

Most consultants prefer to work on their own because it significantly reduces the overhead, allowing them to functionally work from home and on the road as opposed to leasing a separate office. If, however, you’ve successfully built your brand and have more prospective clients than you can handle, it may be time to take on a small team and to eventually build a firm. However, both sharing clients and paying for this lease and utilities will cut into your profits, so it’s important to make sure that you will profit from this move.