Offering Financial Services to Clients in This Market?
Are you nuts?
December 18, 2008
by Neal Frankle, CFP
If you aren't in the financial services industry, you are probably counting your blessings. Its tough watching people you care about lose so much so fast. Its also not fun fielding all those frantic calls.
So why would anyone consider getting into this business now?
To answer that, I think it's important to remember why you why you do what you do. And if you are like most professionals I know, you do it because you want to help your clients.
You don't need me to tell you this but your clients have never needed your help more than they do today.
How to Enter the Financial Services Business
Basically you have four different models to choose from. Each has its benefits and drawbacks.
One of the downsides to this plan is that it can be expensive. It costs money to buy an investment firm. Often, a financial advisory firm sells for two times the gross revenue. Also, if you take this path, you assume all the risks associated with the investment firm and the new services you will offer to your existing CPA clients. If you haven't taken steps to become an expert in the field of investments, this could hurt you tremendously. This option costs you time and does not insulate you from frantic investors.
However, this does requires a significant time commitment on your part as well. Also, this choice may require you to invest in additional expertise and expanded infrastructure, assuming some Wealth Management Insider readers are experts in the accounting field, and not necessarily the investment field. Distractions may keep you from delivering your core competencies to your clients and that could mean you lose tax clients rather than gain investment clients. Also, this path keeps all the risk inherent in the investment business squarely on your shoulders.
As good as this sounds, this path is not without its downsides. First, it does require a very close philosophical, cultural and professional match between you and your partner. It will take time to find the right partner but its time well spent.
Determine the Right Model
Now that you are familiar with the different models, how do you decide which is right for you? I feel that you have to ask yourself a number of questions before you can answer that:
ConclusionYou have alternatives in entering the investment business. Your clients desperately need your help today. Spend time thinking about what you want to get out of it and what you want your clients to get out of it before you make your decision. For many practitioners, a strategic partnership may be the most attractive alternative. If you do go this route, be ready to invest time searching for the best fit.
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Neal Frankle is the author of Why Smart People Lose a Fortune: 5 Steps to Restoring Your Wealth and Sanity. He helps affluent clients establish and implement a safety-net strategy to protect their wealth. He also helps other professionals, such as CPAs, do the same for their clients. If you would like a free monthly e-newsletter (written especially for CPA’s to use with their clients so they make better investments) please e-mail Neal.
* The material in this article is general information and not meant to provide specific investment, tax or legal advice. Investing in the stock market involves risk.