Breadth of coverage must be Jeffrey Rattiner’s specialty. After reading the updated version of Getting Started as a Financial Planner, I have the same comment to make as I made when I reviewed another Rattiner book, The Financial Planner’s Bible, last year.

At that time, I wrote: “Despite its light treatment of the topics, its breadth of coverage should be helpful to anyone who is serious about looking at all aspects of a business. Use it as a starting point in deciding what is important in your practice, then go and find other publications that explore the individual topic areas in more depth.”

In the case of Getting Started, however, it is probably more appropriate to take the broad-based, high-level view because the book is clearly directed at industry newcomers and wannabes. Most of us starting off in the business “don’t know what we don’t know,” so having a reference that touches on all the important things to learn and do in the early stages is a huge help.
That said, I’d also be willing to bet there are established practitioners who could benefit from this overview of the industry and the requisite considerations in building an enduring business.

For example, the author is emphatic about two trends he believes should form the philosophical foundation of any practice. The first is the notion of specialization — that is, that the field of financial planning will eventually separate from the provision of products. Financial planners will be recognized for their financial planning expertise rather than their knowledge of or access to products.

This segues into the second trend: financial planners will be compensated on a fee-for-service basis, charging for their time as do professionals such as lawyers and accountants. While the entire industry is unlikely to position itself along these lines in the short run, those contemplating coming into the business should certainly do some research among existing practitioners to get their sense of the tides of change regarding compensation. Then they can set up their new businesses to catch the right wave.

Rattiner also has it right with his “10 must-dos” for developing a financial planning practice, even though each of them is worthy of a book itself. They are:

1. select a practice structure — sole proprietor, partnership or corporation. The extensive references to U.S. laws ignore the fact that many financial advisors have little choice about how they structure their businesses because of Canadian regulations or dealer requirements. That said, if you are considering a pure fee-for-service planning practice with no product-placement requirements, the choice of structure could be important.

2. prepare a business plan. Ninety per cent of advisors we first encounter in our coaching do not have a proper, written business plan that defines their business objectives, analyses the market and the competition, outlines the organization, states policies and procedures, and maps out a strategy for success.

3. find a mentor. The suggestion here is to team with someone who has already established him- or herself in order to shorten the learning curve and minimize the risk of early disillusionment or failure.

4. get the credentials. Financial planning is a complex and evolving field that requires ongoing professional knowledge, development and qualifications.

5. create an advisory board. Invite qualified people who have an interest in your success to provide big-picture guidance.

6. build a team. Most new advisors think they have to reach a certain level of revenue before they hire support staff. The reality is that hiring the best help you can as soon as possible is an investment that quickly pays for itself.

7. use information technology. Contact management, databases, research, planning and report generation are all examples of essential technology.

8. develop a marketing plan. How much to
spend on which marketing activities and what results to expect are key components of a good marketing plan.

9. focus on compliance. Be sure to meet all regulatory requirements.

10. develop standardized procedures. Having systems in place to cover everything from client development through the planning regime itself to implementation of recommendations creates an efficient business.

The chapter I like the most was the one on building the practice infrastructure. It details the components of a good business plan, including the development of financial statements so you can keep score of how well you and your new business are doing. It continues to amaze me how many financial advisors do not treat their practices as businesses with a profit objective and, consequently, do not keep simple income statements or balance sheets.

@page_break@First published in 2000, this new edition includes updated references, charts and data. Also new are the three real-life case studies, which I don’t find particularly compelling. Everything else adds up to a book worth reading. IE

George Hartman is a coach and consultant with The Covenant Group. He can be reached at george@covenantgroup.com.