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Posted by Jessica on December 13, 2006, 4:22 pm
Hi There, I am looking into becoming a Financial Planner. I have been
doing alot of research, and I have been hearing alot latley about a
paticular business model:
Get 100 Clients all worth 1 million+, and then charge them 1% per year
Does anyone follow this? How/Where do you find these clients?
Thanks!
Jessica
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Posted by Gil Faver on December 13, 2006, 4:48 pm
yes, its thinking like that that keeps me managing my own millions.
> Hi There, I am looking into becoming a Financial Planner. I have been
> doing alot of research, and I have been hearing alot latley about a
> paticular business model:
>
> Get 100 Clients all worth 1 million+, and then charge them 1% per year
>
> Does anyone follow this? How/Where do you find these clients?
>
> Thanks!
> Jessica
>
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Posted by kastnna on December 13, 2006, 4:49 pm
Its not that simple, but we do something similar. The practice you
speak of is fee-based asset management as opposed to commission based.
It is not as simple as round up the money and then sit back and be rich
perpetually though.
We do comprehensive financial planning (CFP certified) and provide
advice for a fee just like lawyers and CPAs.
We use mostly ETFs and we rebalance the accounts quarterly, semi
annually, or annually. The clients allocations are personally tailored
to the client based on risk tolerance. We employ modern portfolio
theory software and monte carlo analysis to determine proper
allocations. We also provide quarterly review meetings, monthly market
newletters, and an in-depth annual report on each clients investments.
In exchange, we are paid 75 to 100 bps annually (paid quarterly).
Fee-based may not be perfect (people claim we get paid repeatedly for
nothing), but it is reassuring to our clients to know that we are not
making trades to generate commissions. We also have no incentive to
support one fund or investment over another, becuase we do not receive
a commission. The important part is to show your client that you
provide value over and above the returns on his investment. Anybody,
with enough research, can pick the same investments we do and achieve
the same success. Its the reporting, analysis, updating, rebalancing,
and constant monitoring that make our services worth it.
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Posted by on December 13, 2006, 6:25 pm
Let's turn this around and look at it from the point of your target
market. If you had $1M+ to invest, how would you pick a FP to manage
your money? I can tell you what I'd do. I'd ask friends, relatives and
professional acquaintances about their finances, whether they have a FP
looking over their money and how well they've done. After getting such
recommendations, I'd then call up this pool of FPs and ask them to
present their ideas and track records.
Basically, there are no shortcuts. You don't just pass the FP exams and
get issued a portfolio of 100 x 1M clients. You start by working with
friends, relatives, professionals you do business with -- perhaps at
little or no fees the first year -- and help them grow their portfolios
from 4/5 figures to 6/7 figures. Maybe part of your strategy is to
offer other services like tax returns that give you a good segue into
FP services. After enough years, you will have glowing recommendations
from your network that'll land you new clients with bigger initial sums
to invest.
Good luck.
Jessica wrote:
> Hi There, I am looking into becoming a Financial Planner. I have been
> doing alot of research, and I have been hearing alot latley about a
> paticular business model:
>
> Get 100 Clients all worth 1 million+, and then charge them 1% per year
>
> Does anyone follow this? How/Where do you find these clients?
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Posted by John A. Weeks III on December 13, 2006, 9:00 pm
> Hi There, I am looking into becoming a Financial Planner. I have been
> doing alot of research, and I have been hearing alot latley about a
> paticular business model:
>
> Get 100 Clients all worth 1 million+, and then charge them 1% per year
>
> Does anyone follow this? How/Where do you find these clients?
Two points...
1) how many people have $1-million+ to invest? I get it isn't
that many compared to the population as a whole. I doubt that
there are enough to go around for each CFP to have 100.
2) I have a rule where I never take advice from someone who
is broker (or less wealthy) than I am. What is your net worth?
If it isn't $1-million+, how do you expect someone who is in
the $1-million+ bracket to take you seriously?
-john-
--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
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