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Do you want to start financial advisor business?
Do you want to start a financial advisor business? Well, there are many benefits of starting this financial advisor business plan, the biggest one of which is the extremely low initial investment required for its startup. Secondly, you can also start it from your home, or a small office or even a virtual location and can still make huge profits.
The only problem associated with this business plan for a financial advisor is that it is never easy for startups to find high-paying clients in the initial run. So, it is highly recommended that you prepare a comprehensive financial consultant business plan which will not only help you attract good clients but will also establish the basis of your company’s operations and future decisions. If you are wondering how to write a good business plan for financial advisor, here we are providing you with the business plan for a financial advisor business startup named ‘Martin Financial Services’.
Executive Summary
2.1 The Business
Martin Financial Services will be a licensed and registered financial advisory company aimed at solving all your financial problems by providing exceptional financial advisory and consultation services. The company will be owned by Nick Martin, a renowned financial expert, and the company’s main office will be located in Downtown Chicago.
2.2 Management
The success of a startup heavily depends on its staff and management that’s why Martin planned it before developing his financial advisor business model. The company’s management will comprise of sales executives, financial analysts, and insurance consultants.
2.3 Customers
This sample business plan for a financial advisor position also outlines what are the main target customers for a financial advisory firm. Martin Financial Services will provide financial consulting services to individuals, organizations, and businesses located in Chicago.
2.4 Business Target
Our target is to balance the initial cost of the startup with earned profits and to achieve the net profit margin of $10k per month by the end of the first year.
Company Summary
3.1 Company Owner
Martin Financial Services will be owned by Nick Martin, a business graduate from the University of Illinois. Martin has more than ten years’ experience of working with various financial organizations including Wells Fargo and Equifax.
3.2 Why the Business is being started
The financial advisor business plan is being started with the purpose of making profits in this industry while also providing quality services.
3.3 How the Business will be started
Before starting your own financial advisor business, you have to plan everything beforehand otherwise you have very lower chances of succeeding in it. Martin Financial Services is a well-planned venture and its exceptional planning will become one of the reasons behind its success. The company will be started in a leased office in Downtown Chicago. In addition to computer systems and usual office inventory, professional financial software will also be procured. The startup summary is as follows:
The detailed startup requirements are given below:
| Start-up Expenses | |
| Legal | $55,300 |
| Consultants | $0 |
| Insurance | $32,750 |
| Rent | $32,500 |
| Research and Development | $32,750 |
| Expensed Equipment | $32,750 |
| Signs | $1,250 |
| TOTAL START-UP EXPENSES | $187,300 |
| Start-up Assets | $0 |
| Cash Required | $332,500 |
| Start-up Inventory | $32,625 |
| Other Current Assets | $232,500 |
| Long-term Assets | $235,000 |
| TOTAL ASSETS | $121,875 |
| Total Requirements | $245,000 |
| START-UP FUNDING | $0 |
| START-UP FUNDING | $273,125 |
| Start-up Expenses to Fund | $11,875 |
| Start-up Assets to Fund | $15,000 |
| TOTAL FUNDING REQUIRED | $0 |
| Assets | $23,125 |
| Non-cash Assets from Start-up | $18,750 |
| Cash Requirements from Start-up | $0 |
| Additional Cash Raised | $18,750 |
| Cash Balance on Starting Date | $21,875 |
| TOTAL ASSETS | $0 |
| Liabilities and Capital | $0 |
| Liabilities | $0 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $0 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $0 |
| Capital | $0 |
| Planned Investment | $0 |
| Investor 1 | $332,500 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $695,000 |
| Loss at Start-up (Start-up Expenses) | $313,125 |
| TOTAL CAPITAL | $251,875 |
| TOTAL CAPITAL AND LIABILITIES | $251,875 |
| Total Funding | $255,000 |
Services for customers
Considering the economic demands of today’s world, there are countless firms that are providing financial advisory services. You can do some research about them and find out what services they are offering to their customers. You can also find many financial advisor business plan free templates on the internet or you can take help from this sample business plan for financial planners. Deciding your services is extremely important since the planning of other subsequent components depend on it.
Martin Financial Services will offer a variety of financial advisory and consulting services to its clients from United States. Our main services include:
- Insurance and Tax Consulting
- Accounting and Financial Services Consulting
- Budgeting and Financial Planning
- Financial Auditing
- Estate Planning
- Income Tax Preparation
- Mortgage, Pension, Retirement and Investment Advisory Services
- Asset Management
- Wealth Creation and Wealth Management
- Investment (Business Portfolio) Management
Marketing Analysis of financial advisor business
The most important component of an effective financial advisor business plan is its accurate marketing analysis that’s why Martin acquired the services of marketing experts to help know how to write a business plan for financial advisor and develop a financial advisor marketing plan template. The success or failure of a business plan for a financial advisor totally depends upon its marketing strategic business plan which can only be developed on the basis of accurate marketing analysis. Marketing analysis is a must-do thing before you develop your financial advisor business plan. If you are starting on a smaller scale, you can do marketing analysis yourself by taking help from this business plan for a financial advisor or any other financial advisor business plan template available online.
5.1 Market Trends
For finding the marketing trends before starting your business plan for a financial advisor, you can take help from this financial advisor business plan example or any other financial advisor business plan template free available online. This financial advisor marketing plan example also contains information about current industry and market statistics of financial advisory services. Financial advisory industry is one of the booming industries of the United States. Currently, the industry generates more than $56 billion annually with around 121,000 businesses employing more than 215,000 people across the United States. Furthermore, the industry grew by 8.1% over a course of 5 years from 2012 to 2017. This increase is attributed to the economic development and the increase in other industries of the country, thus creating more demand for financial consulting and advisory services.
5.2 Marketing Segmentation
It is very important to analyze the market segmentation of the future customers of your services before you start your business plan for a financial advisor because a successful and efficient marketing strategy can only be developed after we completely know our potential customers. Our target market is the residential community as well as the corporate sector located in Chicago however, we will primarily focus on our clients from business sector. Our experts have identified the following type of target audience which can become our consumers in future:
The detailed marketing segmentation of our target audience is as follows:
5.2.1 Corporate Sector:
The biggest consumer of our services will be the corporate sector located in the Downtown Chicago ranging from small startups to established multinational companies. This group includes product manufacturers and distributors, real estate owners, hotels, restaurants and food companies, IT and software development firms, branding and advertising agencies as well as many other industries. These businesses will frequently need our advisory services for insurance and tax consultation, asset management, budgeting and financial planning, as well as investment management and auditing.
5.2.2 Institutions & Organizations:
Our second target group comprises of various institutions and organizations located in Manhattan including government organizations, schools, colleges, universities, non-profit organizations, religious and cultural institutes as well as social bodies. This group will also need our financial advisory services for addressing all their financial needs as well as in their budgeting and auditing.
5.2.3 Individuals:
Our third target group consists of individuals including both the employed and retired persons belonging to all age groups. This group will mostly need our services for getting advice and consultation related to mortgages, pension, retirement and investment.
The detailed market analysis of our potential customers is given in the following table:
| Market Analysis | |||||||||
| Potential Customers | Growth | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 | CAGR | ||
| Corporate Sector | 48% | 22,334 | 32,344 | 43,665 | 52,544 | 66,432 | 10.00% | ||
| Institutions & Organizations | 18% | 11,433 | 13,344 | 16,553 | 18,745 | 20,545 | 13.43% | ||
| Individuals | 34% | 18,322 | 19,455 | 20,655 | 22,867 | 24,433 | 15.32% | ||
| Total | 100% | 52,089 | 65,143 | 80,873 | 94,156 | 111,410 | 9.54% | ||
5.3 Business Target
Our main goal is to become the best financial advisory service in Chicago within next 10 years. This goal is not something that can be achieved easily. For achieving this goal, we will have to increase our revenue, create an exceptional clientele and establish a name across the country. Our main goal of the business plan for financial planner can be divided into three main business targets, which are as follows:
- To achieve the net profit margin of $10k/month by first year, $15k by second year, and $25k by third year
- To balance the initial cost of the startup with earned profits by the end of the first year
- To start an online financial advisory service by the end of the first year
5.4 Product Pricing
Product pricing is one of the most important factors in deciding the strategy for a business plan for a financial advisor. After considering the market demands and our current competition, we have priced all our products in the similar ranges as of our competitors.
Strategy
Like marketing analysis, sales strategy is also an important component of financial advisor business plans so it must be given proper attention before you think about creating your own financial consultant business plan.
6.1 Competitive Analysis
As mentioned earlier, there are more than 121,000 financial advisory companies in the United States, so we can say that we have a tough competition ahead. In addition to that, many international and local banking companies also financial consultation services to their customers, thus making this field even more competitive. Although we have a lot of competitors, we hope to surpass all of them by providing exceptional quality services and unparalleled customer experience.
6.2 Sales Strategy
- We will carry out a large-scale advertising campaign on social media sites
- We will offer a 20% discount on our advisory and consultation services for the first three months of our launch
- We will arrange free financial consultation seminars in various organizations and companies and will thus promote ourselves
6.3 Sales Monthly
Our monthly sales from target groups are forecasted as follows:
6.4 Sales Yearly
Our yearly sales from target groups are forecasted as follows:
6.5 Sales Forecast
Our forecasted sales are given in the following column charts.
The detailed information about the company’s forecasted sales is given in the following table.
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Accounting & Financial Consulting | 187,330 | 260,320 | 258,240 |
| Insurance & Tax Consulting | 802,370 | 815,430 | 823,540 |
| Budgeting & Financial Auditing | 539,320 | 770230 | 1,002,310 |
| Mortgage, Pension & Retirement Consultation | 265,450 | 322,390 | 393,320 |
| Investment & Asset Management | 1,435,320 | 1,250,430 | 1,762,450 |
| TOTAL UNIT SALES | 3,229,790 | 3,418,800 | 4,239,860 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Accounting & Financial Consulting | $140.00 | $150.00 | $160.00 |
| Insurance & Tax Consulting | $600.00 | $800.00 | $1,000.00 |
| Budgeting & Financial Auditing | $700.00 | $800.00 | $900.00 |
| Mortgage, Pension & Retirement Consultation | $650.00 | $750.00 | $850.00 |
| Investment & Asset Management | $140.00 | $120.00 | $100.00 |
| Sales | |||
| Accounting & Financial Consulting | $214,800 | $274,000 | $333,200 |
| Insurance & Tax Consulting | $120,050 | $194,500 | $268,500 |
| Budgeting & Financial Auditing | $50,110 | $71,600 | $93,000 |
| Mortgage, Pension & Retirement Consultation | $139,350 | $194,600 | $249,850 |
| Investment & Asset Management | $62,350 | $72,300 | $82,250 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Accounting & Financial Consulting | $0.70 | $0.80 | $0.90 |
| Insurance & Tax Consulting | $0.40 | $0.45 | $0.50 |
| Budgeting & Financial Auditing | $0.30 | $0.35 | $0.40 |
| Mortgage, Pension & Retirement Consultation | $3.00 | $3.50 | $4.00 |
| Investment & Asset Management | $0.70 | $0.75 | $0.80 |
| Direct Cost of Sales | |||
| Accounting & Financial Consulting | $98,300 | $183,000 | $267,700 |
| Insurance & Tax Consulting | $66,600 | $119,900 | $173,200 |
| Budgeting & Financial Auditing | $17,900 | $35,000 | $52,100 |
| Mortgage, Pension & Retirement Consultation | $19,400 | $67,600 | $115,800 |
| Investment & Asset Management | $27,700 | $69,200 | $110,700 |
| Subtotal Direct Cost of Sales | $294,100 | $699,400 | $1,104,700 |
Personnel plan
Personnel plan is an important part of a business plan for financial advisor services since it gives an estimate about the staff you require along with their salaries. Martin has developed the following personnel plan for his company.
7.1 Company Staff
Martin will act as the General Manager of the company and will initially hire following people:
- 1 Accountant to maintain financial and other records
- 2 Sales Executives responsible to market and discover new ventures
- 6 Financial Analysts to provide advice on various financial matters
- 2 Insurance Consultant to provide consultation on insurance services
- 2 Customer Representatives to interact with customers
- 1 Front Desk Officer to act as a receptionist
All employees will be hired by following strict testing procedures and all of them will undergo 2 weeks training prior to onboarding.
7.2 Average Salary of Employees
The estimated salaries of the staff required are given in the following table. These salaries can deviate slightly but the total sum will nearly be the same.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Accountant | $85,000 | $95,000 | $105,000 |
| Sales Executives | $85,000 | $92,000 | $109,000 |
| Financial Analysts | $166,000 | $173,000 | $180,000 |
| Insurance Consultants | $95,000 | $105,000 | $115,000 |
| Customer Representatives | $63,300 | $70,000 | $76,700 |
| Front Desk Officer | $20,000 | $23,300 | $30,000 |
| Total Salaries | $429,300 | $463,300 | $510,700 |
Financial Plan
Just like the other plans, you must also prepare a detailed financial plan covering all financial aspects of your financial advisory startup. The financial plan should present a detailed map of the costs of startup, inventory, payroll, equipment, rent, utilities and how these costs will be covered by the earned profits. Also, make sure to carry out a detailed profit and loss analysis of your startup venture. While developing the financial plan, you can take help from various financial advisor business plan examples available online so as to know which things to include in it. Martin has developed the following financial plan for his company.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 11.00% | 12.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 26.42% | 27.76% | 28.12% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
| Brake-Even Analysis | |
| Monthly Units Break-even | 5530 |
| Monthly Revenue Break-even | $159,740 |
| Assumptions: | |
| Average Per-Unit Revenue | $260.87 |
| Average Per-Unit Variable Cost | $0.89 |
| Estimated Monthly Fixed Cost | $196,410 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $309,069 | $385,934 | $462,799 |
| Direct Cost of Sales | $15,100 | $19,153 | $23,206 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $15,100 | $19,153 | $23,206 |
| Gross Margin | $293,969 | $366,781 | $439,593 |
| Gross Margin % | 94.98% | 94.72% | 94.46% |
| Expenses | |||
| Payroll | $138,036 | $162,898 | $187,760 |
| Sales and Marketing and Other Expenses | $1,850 | $2,000 | $2,150 |
| Depreciation | $2,070 | $2,070 | $2,070 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $4,000 | $4,250 | $4,500 |
| Insurance | $1,800 | $1,800 | $1,800 |
| Rent | $6,500 | $7,000 | $7,500 |
| Payroll Taxes | $34,510 | $40,726 | $46,942 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $188,766 | $220,744 | $252,722 |
| Profit Before Interest and Taxes | $105,205 | $146,040 | $186,875 |
| EBITDA | $107,275 | $148,110 | $188,945 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $26,838 | $37,315 | $47,792 |
| Net Profit | $78,367 | $108,725 | $139,083 |
| Net Profit/Sales | 30.00% | 39.32% | 48.64% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $40,124 | $45,046 | $50,068 |
| Cash from Receivables | $7,023 | $8,610 | $9,297 |
| SUBTOTAL CASH FROM OPERATIONS | $47,143 | $53,651 | $59,359 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $47,143 | $53,651 | $55,359 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $21,647 | $24,204 | $26,951 |
| Bill Payments | $13,539 | $15,385 | $170,631 |
| SUBTOTAL SPENT ON OPERATIONS | $35,296 | $39,549 | $43,582 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $35,296 | $35,489 | $43,882 |
| Net Cash Flow | $11,551 | $13,167 | $15,683 |
| Cash Balance | $21,823 | $22,381 | $28,239 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $184,666 | $218,525 | $252,384 |
| Accounts Receivable | $12,613 | $14,493 | $16,373 |
| Inventory | $2,980 | $3,450 | $3,920 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $201,259 | $237,468 | $273,677 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $12,420 | $14,490 | $16,560 |
| TOTAL LONG-TERM ASSETS | $980 | $610 | $240 |
| TOTAL ASSETS | $198,839 | $232,978 | $267,117 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $9,482 | $10,792 | $12,102 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $9,482 | $10,792 | $12,102 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $9,482 | $10,792 | $12,102 |
| Paid-in Capital | $30,000 | $30,000 | $30,000 |
| Retained Earnings | $48,651 | $72,636 | $96,621 |
| Earnings | $100,709 | $119,555 | $138,401 |
| TOTAL CAPITAL | $189,360 | $222,190 | $255,020 |
| TOTAL LIABILITIES AND CAPITAL | $198,839 | $232,978 | $267,117 |
| Net Worth | $182,060 | $226,240 | $270,420 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 4.35% | 30.82% | 63.29% | 4.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 5.61% | 4.71% | 3.81% | 9.70% |
| Inventory | 1.85% | 1.82% | 1.79% | 9.80% |
| Other Current Assets | 1.75% | 2.02% | 2.29% | 27.40% |
| Total Current Assets | 138.53% | 150.99% | 163.45% | 54.60% |
| Long-term Assets | -9.47% | -21.01% | -32.55% | 58.40% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.68% | 3.04% | 2.76% | 27.30% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 25.80% |
| Total Liabilities | 4.68% | 3.04% | 2.76% | 54.10% |
| NET WORTH | 99.32% | 101.04% | 102.76% | 44.90% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.18% | 93.85% | 93.52% | 0.00% |
| Selling, General & Administrative Expenses | 74.29% | 71.83% | 69.37% | 65.20% |
| Advertising Expenses | 2.06% | 1.11% | 0.28% | 1.40% |
| Profit Before Interest and Taxes | 26.47% | 29.30% | 32.13% | 2.86% |
| Main Ratios | ||||
| Current | 25.86 | 29.39 | 32.92 | 1.63 |
| Quick | 25.4 | 28.88 | 32.36 | 0.84 |
| Total Debt to Total Assets | 2.68% | 1.04% | 0.76% | 67.10% |
| Pre-tax Return on Net Worth | 66.83% | 71.26% | 75.69% | 4.40% |
| Pre-tax Return on Assets | 64.88% | 69.75% | 74.62% | 9.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 19.20% | 21.16% | 23.12% | N.A. |
| Return on Equity | 47.79% | 50.53% | 53.27% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4.56 | 4.56 | 4.56 | N.A. |
| Collection Days | 92 | 99 | 106 | N.A. |
| Inventory Turnover | 19.7 | 22.55 | 25.4 | N.A. |
| Accounts Payable Turnover | 14.17 | 14.67 | 15.17 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 1.84 | 1.55 | 1.26 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.02 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $120,943 | $140,664 | $160,385 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.45 | 0.48 | 0.51 | N.A. |
| Current Debt/Total Assets | 4% | 3% | 2% | N.A. |
| Acid Test | 23.66 | 27.01 | 30.36 | N.A. |
| Sales/Net Worth | 1.68 | 1.29 | 0.9 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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