Thinking of starting a Financial "Coaching" part time business (funds, pay)
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So, I just graduated with an MBA and I started thinking about what I can do with my newly found spare time.
I've always been financially responsible and I think I want to start a part time business. One where I could act as a financial coach to help people understand how to balance their monthly budget, so they can have money left at the end of the month and have a plan to get our of debt and live a financially leaner life.
This is something I've ben doing since I was 15 and I want to help others have control over their lives and financial destiny.
I do not plan on being a financial advisor (I will not select stocks for them or give legal advice) I merely plan to help them (for a monthly fee) to understand the importance of balancing their monthly budget and will walk them through a custom budget spreadsheet. I only plan on giving basic broad advice on investments (i.e. invest in a mixture of diversified mutual funds, having savings as a n emergency fund, save for your 'goals', etc.)
Is there anything I need to know before I do this? Am I required to get any type of certification and could anything go wrong, from a legal or insurance standpoint? Keep in mind I will not be managing their money for them, or purchasing stocks or other investments, I just plan to teach and coach them.
you better check your state laws to see what you can do and what you can not do without licensing.
my opinion is unless you were a certified financial planner skilled in every aspect so you can pull all the pieces together into one cohesive plan people would be wasting their time and money.
I am not some kid. I've been doing my plan since I was 15 years old and constantly listen to, read about, and research the best personal finance approach. I've been completely debt free since 2004 and had amassed $100,000 in liquid assets well before my 30th birthday.
My profession was significantly affected by the recent recession, and it was my plan that allowed me to only to recover but get me to a point where I could cash flow my entire graduate school tuition. I did this without cashing in 1 cent of my mutual funds and with the current hot string of the stock market, those have continued to increase.
I am currently helping others, with my plan, to come up with an aggressive game plan to tackle student loan debt, understand cash flow, and predict certain monthly expenses..... so they can get to point where they can also win on their own.
I am looking for clients who also WANT to win. I am NOT looking for clients who have to be convinced of anything. I am looking for those that lack the organization or planning type personality.
This is where I can come in and help and I would say it is anything but a waste of their time! people I have worked with would definitely disagree with you.
I am in Texas, so if anyone has knowledge of the laws that would be great. I am thinking there are no laws for 'helping' someone balance their monthly finances, come up with a game plan, and teach financial fundamentals.
I will NOT be selling any investments (stocks, multual funds, insurance policies, hedge funds, futures, etc.)...I only plan to coach.
To be honest folks need full blown cfp's most of the time . They need a full comprehensive plan that includes tax planning, investing and financial planning all in one.
If folks don't have the money to do the above odds are they will not part with any money either to hire you.
Not going the whole gamut leaves you kind of like the free public defender in the financial world.
I would love to do that myself as i receive so many e-mails from city data folks looking for guidance.
But in order to do it right i really need my licensing and certifications to do the whole ball of wax.
To be honest folks need full blown cfp's most of the time . They need a full comprehensive plan that includes tax planning, investing and financial planning all in one.
If folks don't have the money to do the above odds are they will not part with any money either to higher you.
Not going the whole gamut leaves kind of like the free public defender in the financial world.
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 savy 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.
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 savy 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.
These services aren't that much different than those of a personal trainer or diet coach. Everyone knows what to do but a lot of people don't do it. Everyone knows in order to save money you have to spend less than you earn. Same with calories.
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.
Knowing several triathletes, I can tell you that's not true at all.
For many people, it's their first venture into real sports after a lifetime of couch potatoing.
I like your idea. My warning to you is that it's something many of us already do for free for our family and friends. I have even had coworkers talk to me about life strategy with finances, etc. This is very much in the realm in which people can get a lot of free advice from people who have been successful with their own finances.
Even amongst my peers (higher salary folks), we keep each other abreast of good investments, low interest rates, better insurance deals, etc.
So you may be competing with "for free" or a 10 dollar book from Dave Ramsey.
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...
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