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I don't have much experience in this type of market (small-scale personal finance coaching that doesn't rely on investments), but what exactly is your business model for it? (if you want to share that IP on the Internet, lol)
I mean, how much would you charge one of these average American couples who isn't quite at the "need a CFP" level yet? $300 for a year? More/less ? If that's even close, do you plan to have 300+ clients over a given year you're helping*? I mean, if you spent 7 hours with each over the course of a year you'd have enough time for everyone, but will you be able to garner that volume of business? (I honestly have no idea... it seems like it would be hard but for all I know there's a huge demand and it would be trivial)
Since you're not taking a % of their managed assets (which is how many FA's make their money, and thus have minimum balance requirements to take you on as a client), will their be enough revenue purely from the coaching fees? Or would you need to supplement with seminars and the like?
* Not even factoring in expenses, which I imagine would be relatively low if it's mainly just spreadsheets and your time (and no office), but you still might have advertising dollars, gas, seminar event costs, etc. And then if you need an office...
This would be a part time job right now.
My initial strategy was to start with 3 clients so I can provide the needed attention without taking on too many clients in the beginning. I could possibly build up from that point once I see how it goes.
If they hire me, I would charge an initial fee to meet with them and talk about their current situation and then I would create a custom spreadsheet for them that they can easily understand and keep track of.
After that, I would charge a monthly fee. I would expect them to keep up with their spreadsheet on their own but I will be available via email and phone during the month if they have any questions. Once a month, I will visit with them, go over and review their 'month' and talk about their progress and introduce teaching moments. I will also and talk about a strategy going into the next month based on what we learned from the previous month.
Additional needed visits, beyond the one 'face to face' that comes with the monthly fee will be an additional charge. My goal is to teach them the fundamentals so they can someday do this on their own. While I know they can just keep up with the spread sheet without me, but with me I feel that they are gaining the knowledge that comes along with 'thinking' about their expenses proactively instead of having it just happen to them.
As I mentioned before, this is to help people organize their monthly budget so that they have disposable income to reach their goals in the future.
I think the people who could most use your services wouldn't be able to afford it, and those who can afford it, would need more than you are offering. Its a catch-22.
By all means, give it a try (do your research first, of course) but don't get your hopes up too high.
I think the people who could most use your services wouldn't be able to afford it, and those who can afford it, would need more than you are offering. Its a catch-22.
By all means, give it a try (do your research first, of course) but don't get your hopes up too high.
I sew what you are saying but I won't be targeting lower income people. I feel there are programs, and churches, available for lower income people that really want help.
I will be targeting people who make a decent income but have no idea where their money goes or who have never thought about having a game plan.
I plan to start this very small and build up from there.
They have to start somewhere...you don't hire someone to prep you for a triathlon if you haen't been in a gym or eaten healthy in 20 years. You start from step one.
My whole strategy will be to help them organize their finances so that they can do whatever they want in the future (hire cfp, save for a vacation, save for retirement, save for college, save an emergency fund, etc.) but without the basics in place, they might never get to those goals.
My plan is very focused. I am teaching them the fundamentals so they can move up and decide what their next step wold be.
I am not targeting the savvy professionals who need a cfp...I am targeting the typical America, with a steady job, who doesn't know where to start and is just simply overwhelmed with their current situation . I will teach them how to organize their life and then hopefully, over time, they won't need me anymore and can graduate to the next level. You have to start somewhere.
I think maybe writing a blog might be a better idea, although there are plenty of good pf blogs out there. I think this one is the most comprehensive, not just financially, but philosophically...but there are other good blogs out there, too.
Mathjak is correct. Most moderate income people don't want to pay for financial advice....(or at least not enough to give you a decent income), even though they may actually need it.
If I may be totally honest -- I see two major things wrong with this.
First -- what's the difference between you and the guys on TV or radio that do this? I can't see any, other than you coming to my house.
Second -- your target market of the more upscale generally doesn't need what you are selling -- or won't for very long. And if you aren't a CFP or an accountant, you can't take them much past the basics.
I like Mystic's idea of blogging, though -- I think you can start there and see if there is a market for what you are trying.
I hate to rain on your idea, but I could probably be doing so because I'm a lot like you -- I didn't need anyone to teach me the basics. I figured it out on my own.
I think the people who could most use your services wouldn't be able to afford it, and those who can afford it, would need more than you are offering. Its a catch-22.
By all means, give it a try (do your research first, of course) but don't get your hopes up too high.
that was my exact feeling. as most of you who follow my threads know, i enjoy helping people and getting them thinking for themselves instead of just accepting what is touted.
when i retire next year i intend to get my series licensing and start a part time business catering to helping baby boomers plan and understand retirement planning.
but i wouldn't think of doing it without proper licenses and knowledge of all aspects of planning.
as those who have e-mailed me for personal advice have found i really will not advise anyone individually other than general comments that may or may not apply to all.
why do you need all the pieces of the puzzle? well you may be very good at telling people how to budget and save money .
but we do not develop real wealth from saving the little bits of money we manage to save. after all a penny saved is a penny earned but it is still a penny.
we develop large amounts saved from the power of compounding gains on investments.
so without good investment planning skills teaching someone to save is only a half baked plan.
Last edited by mathjak107; 05-22-2013 at 02:41 AM..
I also wish you well if you continue with this.
I also am no more optimistic than others have been that you'll be able to get very far with it.
Basically what you have in mind is trying to instill some common financial sense in people that don't seem to have any.
In my experience, those that really want it, acquire it in a myriad and limitless (and free) manner of ways.
Those that need it most won't follow the (again, common sense) simplest recommendations because it would entail some sort of what they would consider deprivation.
I have tried to help a good handful that said they really wanted and needed to do something to improve their situation.
The first thing I had them to do is simply keep a log for only one month and enter every 'penny' they spend.
It identifies and makes it very apparent where money is being spent and as , if not more,important,'wasted' without even realizing it.
Not one...not one...has ever done it for more than one day.
Certainly there are people that are exceptions.....can you find enough that are willing to both comply and pay to make it worth your time and effort ?
Even if you wanted to do this as a free venture, it's easy to go from altruistic to disillusioned in short order
Nothing wrong with trying this but honestly, I don't see it working. What are your credentials to do this? You have none. MBA's are a dime a dozen and doesn't really make you an expert. I also agree that people that need your services the most, can't afford to use you and those that can aren't going to take advice from someone who's experience is "I'm good at this". I think the blog idea is a good one.
My initial strategy was to start with 3 clients so I can provide the needed attention without taking on too many clients in the beginning. I could possibly build up from that point once I see how it goes.
If they hire me, I would charge an initial fee to meet with them and talk about their current situation and then I would create a custom spreadsheet for them that they can easily understand and keep track of.
After that, I would charge a monthly fee. I would expect them to keep up with their spreadsheet on their own but I will be available via email and phone during the month if they have any questions. Once a month, I will visit with them, go over and review their 'month' and talk about their progress and introduce teaching moments. I will also and talk about a strategy going into the next month based on what we learned from the previous month.
Additional needed visits, beyond the one 'face to face' that comes with the monthly fee will be an additional charge. My goal is to teach them the fundamentals so they can someday do this on their own. While I know they can just keep up with the spread sheet without me, but with me I feel that they are gaining the knowledge that comes along with 'thinking' about their expenses proactively instead of having it just happen to them.
As I mentioned before, this is to help people organize their monthly budget so that they have disposable income to reach their goals in the future.
I say go for it. I don't think you would need to advertise yourself for having any professional credentials (honestly what does Dave Ramsey have?) Start out small; help some family or friends and charge a small fee for reviewing weekly or monthly expenses, setting up a budget, notifying them when they go over, etc. It's pretty easy to do, but I know people are terrible at sticking to a budget themselves and would benefit from external motivation. You aren't offering tax or investment guidance, but simpler, basic guidance on day to day living. I know people who could really use a service like this.
I'm a go get 'em type of guy, so I like a few others, say, give it a shot. It's not like you're throwing up a huge amount of start up capital and if you go belly up will be out your house.
I really think your target market should be recent grads, people about to business school, and those getting out of business school.
The main target, the recent grads, from my experience, don't know a single thing about finances, banking, budgeting, loans, mortgages, credit cards, etc. and those are the ones that after graduation will need to go through all of that, at the same time!!
The second group, those that are looking to go to graduate school, can gain from your advice on how to pay for graduate school with cash instead of loans. They will most likely also be in much need of maintaining their budget to pay for school, and or bills while working and going to school, or just going to school.
The third group, the recent grad school students would most likely need information on how to pay down debt. I'm sure most wouldn't know what you were talking about if you said, Just snowball all of your credit cards and other debts. Most grad school students, especially the ones that went straight to grad school out of undergrad still don't have that much in the sense of real world knowledge for these sorts of things either and would benefit greatly from paying off their debt.
These 3 groups really wouldn't benefit from a CFP as they really don't have any wealth built up, and anything that a CFP tells them now, most likely won't be relevant to them in a few years when they decide to change their whole life plan. People that benefit greatly from a CFP are roughly 35+ years old. They're steady in their career. They have a 401k, and some investments built up, but don't know if they are doing good enough, if they're even doing the right things, if they'll even be able to retire at this rate, etc. a 20-35 year old just starting off in their careers, need exactly the advice that you are looking to give.
Also, I really think that you should throw add in mortgages, auto loans, and that kind of stuff. I worked at a bank for a few years, and with all the questions I got from my friends that were older than me, and buying houses, new cars, etc., almost none of them had a bit of a clue for what they were doing.
Also, you can get "free" marketing on college campuses. You can print up some flyers and post them up around campus (with the school's approval). 1000 flyers for like 15 dollars? If you get 1 person, a .1% hit rate, that will pay for your marketing expenses in the first month. Also, maybe do a couple pro-bono and then word of mouth from them and that's free marketing.
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