Advice Lifestyle

How to Open Your Own Wealth Management Firm

Written by Frank Kremer

The wealth management industry is a steadily growing powder keg of opportunity. Those in the financial field are often enticed by the idea of opening a wealth management firm, and it’s no surprise why—research shows there’s over $46 trillion in private wealth in the United States, providing plenty of opportunity for savvy investment professionals.

The Costs Involved

Starting your own practice isn’t an inexpensive endeavor. There are numerous regulatory requirements that you must abide by, and these can prove to be quite costly. You’ll first be tasked with compliance, which involves setting up an ADV and a state licensure. This can cost several thousands of dollars upfront, with recurring costs coming in around $2,000 each year. You’ll need to consider marketing costs, the lack of income when you lose current clients because of the move to a new firm, and things such as insurance, websites, banking, and other essential ad hoc purchases as your business gets its feet on the ground.

Don’t Go It Alone

The demand for wealth management firms is high, and this demand has created a cottage industry of businesses seeking to help independent advisors get themselves set up with their own businesses. Companies like HighTower Advisors were created to help individuals break free of their current employment at a large firm; they provide you with the advice and guidance you’ll need on a variety of subjects, including licensing issues, compliance procedures, and even finding and negotiating a solid lease for your new firm. While these services can be quite costly, many have found the investment to be worth, as professionals can help you avoid legal action on the part of your former employer, and make sure your business setup is done completely by the book.

Embrace Technology

Those in the finance industry are now tasked with keeping up with technology; it seems every quarter new software arrives, touted to change the landscape of finance and accounting in one fell swoop. The industry must constantly refine the way it operates, and software is becoming an increasingly important facet of the business. There are a variety of tools that you can use to improve your inter-business practices and make your services more lucrative. From payroll accounting software to client billing technology, there are plenty of helpful tools at your disposal. When embracing technology, it’s also important to consider the ways you can make your firm’s services more applicable to the digital age. Consumers want to be able to access their information digitally, and need to be able to communicate with their wealth management team through a variety of channels.

Invest In Your Employees

Work with interns and entry-level employees that come in at lower salaries, then invest in their skills. As they navigate their careers, you can help them advance in opportunity and create loyal bonds that see your company excelling. One easy way to invest in your employees? Encourage them to get certified, and facilitate their efforts with study materials and resources, cover exam fees, and provide immediate bonuses and salary hikes for those who successfully receive varied distinctions. Wealth management firms can benefit greatly from employees that are CFA charter holders. Invest in CFA exam prep for any employee considering taking this grueling test; the CFA Institute recommends that test-taking candidates dedicate at least 250 hours to each portion of the exam, totaling 750 hours overall to complete all three portions of the exam. Incorporate these study hours into office schedules. Remember that the overall success of a business lies on the shoulders of its employees. The more accomplished and experienced your team, the more you’ll be able to charge quality clients.

Opening your own wealth management firm can be a daunting challenge, but provides a bevy of profit opportunity for the right individual. Consider these aspects of the wealth management industry before taking the leap.

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Frank Kremer

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