Starting as a Fee-only planner and a few other?

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Aug 18, 2008 8:50 pm

I plan on starting the CFP program at NYU.  Ideally, I would like to set-up shop (from home first) and work as a fee-only planner.  I currently work full-time in an unrelated field, however, I’ve been investing and reading-up on finance related issues for the past 20-years.  Do I need a license to charge people for financial/tax planning?  Do I need to register?  Has anyone done this?

Aug 18, 2008 9:13 pm

Just to add to the above:  I retired from the Army as a Lt. Colonel after 22-years of service (I have a decent pension coming-in).  I have made numerous connections during that time and am well known in my area;  I can definately bring the business in.  Just wondering if this is the right approach.  The EJ, knocking door-to-door is not for me. 

Aug 18, 2008 9:18 pm

What is your definition of “fee-only”?

Aug 18, 2008 9:27 pm

What is your definition of “fee-only”?

  Not selling anything.  Just charging an hourly-fee to advice on insurance, 401ks, IRAs, pension, tax-planning, etc.  I did this for free in the military (I would lecture on mutual funds, stocks, etc) and I have no doubt that people would pay me $100-$150/hr for this service.  I'm trying to decide how to start though (after I complete the CFP course).
Aug 18, 2008 10:37 pm


First of all, you get a free pass from me to do as you want, as you have been out protecting those of us not quite as brave. Thank you for your service

A few comments:

I have seen MANY former military personnel do well in this business (they tend to be regimented and do the work).

On the other hand, I have seen probably more fail out because they didn’t “need” the money because of their sizable pension, and just got lazy. I’m not criticizing, it’s just sort of a fact (I live in a heavy military area).

Without any formal background in some investment related field, or without some sort of book of clients from the brokerage industry, it’s tough to hang out your shingle and say you’re selling advice. Most fee-only planners/advisors started in the brokerage field or as a staff person at an RIA firm (registered investment advisor).

Keep in mind, you have to “Sell” your self and sell yourself. You are turned off by the Jones “door knocking” thing, but how exactly do you think you will get clients? You still have to go out and find them, pitch them, and close them on your services. Until you have been the business for many eyars, people do NOT just see your advertisement in the weekly free paper and come running to your office. And despite how you may feel, shelling out a few thousand dollars for a “plan” may not be some people’s idea of what they want to do with their money (especially the people you know). In my opinion, it’s far easier to land a bunch of 100K 401K rollovers in the first few years than get people to pay you out of pocket for “advice”.

Keep in mind, this is only based on your desire to start as a fee-only planenr from scratch. There are many fee-only planners out there doing it, but you shoudl research how many of them got their start. Again, I am willing to bet most started in some sort of broker role and transitioned with a client base.

However, at least having the CFP gives you a bit of credibility. But if I am not mistaken, you need to be affiliated with an RIA (be an IAR) if you choose to actually manage people’s assets, which you will likely want to do in order to maximize your income potential.

You might just consider finding an RIA in your area and see if you can get hired.

Aug 19, 2008 1:48 am

Frank - in order to be a CFP, you will need 3 years working in the industry.  If you are not going to do implementation and actually manage investments, but purely provide advice on a per hour charge, it is my understanding you would be under the reguations of the state you are doing the work in.  Thus if you are in NY you would need to explore what New York laws say.  If you wanted a client who lived in say, New Jersey, then you would need to meet the New Jersey laws. 

Aug 19, 2008 5:18 am

Frankie,  I think that it's the wrong approach. 

There are a couple of sayings that I like: "You have to learn for your clients and not on your clients."  Another one is: "You don't know what you don't know".   The CFP will barely give you a beginner's level of knowledge in some of the areas in which you will be giving advice.   If you are going to be charging for advice for things like tax planning and insurance, shouldn't you become an expert in those fields first?  People are going to be paying for your expertise, so make sure that you actually possess it.   I think that you need a plan to come up with the expertise that you need.
Aug 19, 2008 7:54 am

Thanks for all the advice.  I’m only in the beggining stages of my next career move and would gladly take advice from those who have gone before me.  Part of my problem is I don’t want to do this full-time yet (I’d like to get established before I do) and the EDJs, MLs, RJs, etc all require that I work full-time.  Are there any large firms that would take me in on a part-time basis and allow me to get my series 7?

Aug 19, 2008 8:05 am

Frank, you appear to be confused.  If you want to do fee only planning, your Series 7 is not only not needed, but will probably be a detriment since you’ll have a broker/dealer.

Aug 19, 2008 8:37 am

Frank, part time is a tough option in this business.  The only firms that allow that are hack firms (Primerica, Wadell Reed, etc.).  And those are S6 or S7 firms.

  And if you want to do fee-only part-time, I just don't know how you will find time to start and grow a business, and then actually do business.  The only successful part-timers I know of in this business did it full-time for 20 years first, then culled their book down to a managable level, then just slowly started cutting back.   This might not be for you unless you want to commit to it as a real career.