Does any of this sound familiar? Running a financial planning practice takes you into a lot of chicken-and-egg situations, where it seems like you have to have something already before you can get access to it. But here's the good news: There are solutions for many of these blind alleys in your business growth.
For instance? When you decide to drop your licenses and become a full-time independent RIA or leave an established firm to go out on your own, you have to be able to put the new client assets you attract into the hands of a custodian. But if your AUM is under $10 million when you knock on the doors of the established back-office providers, they either turn you away or charge high rates for services that their other advisory affiliates are getting for free.
So how do you get started? One option few advisors know about is Shareholders Service Group in San Diego. SSG runs a custodial platform like larger competitors Schwab and TD Ameritrade, custodying assets for 900 RIA firms around the country. Some of those firms have more than $1 billion under management, but SSG has maintained a policy, since inception, of opening its doors to new advisors even if their AUM happens to be $0 million.
"We know that advisors don't go through the hassles of setting up an operation and registering if they're not serious about being in the business," says SSG CEO Peter Mangan. "So we don't think there is a lot of risk in taking advisors who are just starting out. In our experience, they tend to grow."
SSG gives the novice advisor full access to all of its systems, so you can open client accounts, manage assets, run billing and reporting just like the 20-partner firm down the street. The staff will also answer basic questions, like how to set up a compliance system or a CRM, and provides a database of outside vendors. Then you can piggyback on its omnibus contracts with Black Diamond, Allbridge and other reporting and software systems, essentially borrowing SSG's scale. These services, which normally would require a $15,000 annual commitment, are available for $100 a month for an advisor with few clients and a small number of trades.
Mangan says that it's just good business to help an advisor get up to speed in a hurry, because it means SSG participates in the growth. "It's not uncommon for an advisor to start out with zero assets and end up with $40 million to $50 million within two or three years," he says. This open-door policy also generates favorable word-of-mouth marketing. SSG achieved 25% growth last year in RIA relationships, mostly with established firms.
After you start out, and begin to attract clients, you hit another chicken-and-egg situation: You need to hire staff in order to free up your time from servicing existing accounts so you can bring in additional new business. But you don't have enough revenues to justify taking on a fixed cost that might exceed your current profits.
HIRING OFF-SITE HELP
Your best solution is to click on the Virtual Solutions For Advisors website's Virtual Staff tab. "You can hire a person on site at a $35,000 salary plus benefits and try to keep him busy every day, or you can hire a virtual assistant for $1,500 a month," says Jennifer Goldman, co-founder of the site. "You do the math. And when you outsource, you don't have to deal with emotions, sick leave and all that. You get a team of people vs. one person, at a fraction of the cost."
What can these off-site employees do around your office? On the Virtual Solutions site, you'll find a list of virtual receptionists. You forward your phone to a line at their office. When somebody calls, the receptionist answers with whatever script you choose: "Hello, you've reached Usually Reliable Financial Advisors; this is Susan. Can I help you?" If the caller asks for you, the virtual receptionist will route the call to your office. Callers can leave messages with the virtual employee or be routed to the voicemail system. To schedule an appointment, the receptionist will send the client to a calendar option installed on your website.