Originally posted on XY Planning Network. For the original version click here.
When you’re getting started in the financial planning business, everything can feel overwhelming. You may not know how to determine whether or not your practice is successful – which can be a huge stressor! After all, the whole point of starting this journey is to find success in some form at the end, right? Here’s the thing: stop worrying. When you’re in your business every single day, it’s difficult to see “success” flags when they might be waving right in front of you. Likewise, it’s also easy to miss red flags. I love it when I see advisors flying their sparkly, bright success flags high and proud. But how do you track those successes? And what warning signs should you be watching for?
The Big Sparkly Success Flags
There are some pretty distinct things to look out for both on the positive side of the success spectrum and on the negative side. Let’s focus on the positive side first – those are the benchmarks I like to see people meeting.
Success Flag #1: Willingness to Ask For Help
Nobody does this by themselves. A willingness to ask for help is the first step towards success. The more you can surround yourself with a network of advisors and coaches who can contribute to your journey, the better off you’ll be. When you feel like you need a lifeline, don’t be embarrassed or think you’ll just buckle down and figure it out on your own. Of course there will be moments that you’ll learn from your mistakes, but if you don’t need to – why go that route? Reach out to people who you know have already been there, done that, and be open to their advice!
Success Flag #2: Relentlessly Searching for Experts
This circles back to the idea in Success Flag #1. You should always be looking for people who know more than you do. Even though it might feel like you’re spending tons of time working in your business, make sure you make time to get involved in knowledgeable groups, too. Connect with ACP, Garrett Network, XY Planning Network, NAPFA, FPA, Facebook groups for advisors, and any other groups you feel are pertinent to you and your practice. Engage with other members, ask your questions, and answer the questions of others when you can. Constantly seek out more information, you’ll be better for it.
Success Flag #3: Sharing What You Have
When you’re just getting started, you might feel like you have almost nothing to offer to other advisors. But if you’re willing to share what you’ve got, however little that may be, that’s a great start. Right now, it’s more about the sharing mentality. If you start your practice out with the idea that you’ll always share your knowledge and help others, that mentality will positively serve you as your practice grows. The more you share what you know with others, the more they’ll share with you!
Success Flag #4: Having a Realistic View of the Future
It’s tough to have a solid view of your practice’s future if you’ve never done this before. Still, it’s important to keep your view realistic. Let’s start by expecting to spend 3-5 years building a business that pays you a real wage. Here’s what the year-to-year breakdown will probably look like:
- Year One: You might be digging a hole and spending your savings on your start up. That’s kind of expected. Don’t be crushed that it’s happening. Instead, plan on spending this money ahead of time so you can manage your budget effectively.
- Year Two: Here’s where you start filling in the hole. That being said, you probably won’t be taking a kick-butt salary home just yet. Focus on staying on track and keeping your finances in check.
- Year Three: Look at you, buying groceries with your paycheck! You may not quite be where you were when you took your entrepreneurial leap, but it’s a start!
- Year Four: Here’s where you’ll start hitting your stride. Just keep on climbing – things can only go up from here!
The Red Flags and Warning Signs
Hey, nobody’s perfect. The important thing is to be able to recognize your flaws. Being aware of the negative paths you might be heading down is one of the best ways to be successful in the early years of your practice. Recognize the red flags, but more importantly, learn how to avoid them is key.
Red Flag #1: Thinking You Don’t Need the Money
I don’t have anything against hobbyists, but it’s hard to be successful when you don’t have a motivating drive. I cringe when I hear new advisors say, “Well, I don’t really need the money.” A little bit of hunger will light a fire under you, and it will keep you propelling yourself forward when things get rough.
Red Flag #2: Having No Savings
The opposite of not needing the money in the early years is needing all the money. Earlier we went over the success flags that I love to see. Like I mentioned, years one through three-five can be financially exhausting as you start your own practice. If you don’t have a safety net, it can be an incredibly stressful path. Make sure you have a savings to fall back on before taking the plunge – preferably enough to get you through the startup years and then some. Additionally, any added money stress is a total confidence killer. When you’re trying to start your own business, confidence is key. Skip anything that’s going to cut you down.
Red Flag #3: Being a Penny Pincher
Yes, starting a financial planning practice is financially tricky. But do you know what’s trickier? Not having the tools you need to grow when you need them. Some things are expensive, like different software or group memberships. But if they’ll free up more time for you to do what you do best – plan! – or if they’ll add value to your practice, they’re probably worth spending a little extra on. Don’t hold your wallet too tightly.
Red Flag #4: Being a Sally Spender
On the flip side, you don’t need to buy every single new tool or technology that gets pushed in front of you, either. You could have the most amazing technology package in the world, but if you don’t have the client base to support it, then it doesn’t amount to a hill of beans. The best way to go about the spend/save balance is to carefully evaluate everything you purchase. Spend money on things you think will have a legitimate ROI.
Red Flag #5: Lacking Confidence in Your Value
There is absolutely a learning curve when you start your financial planning practice. But that doesn’t mean you should let these initial touch-and-go years derail your confidence. You got into this industry because you’re passionate about financial planning. You bring so much value to your clients. You have your education. Regardless of whatever your designation status may be, CFP, CPA/PFS, candidate, or in the midst of your education - you know so much more that the average Joe! You bring a network of colleagues you can rely on and your drive to improve the planning profession and your clients' lives. Don’t undersell yourself.
Red Flag #6: Being Over Confident
The opposite of that last extreme is being overconfident. I always get a sticky kind of feeling when I meet a brand new advisor who shuns advice or is super cocky about having it all together. News flash: Literally nobody has it all together when they’re just starting out. I have seen far too many of those same over confident “gurus” come back, tail between their legs, saying they wish they’d listened a little more. So, what’s the takeaway here? Be confident, just not so confident you forget to listen to people who know more than you and can help you find success.
Red Flag #7: Not Having a Support System
This is the biggest red flag I’ve seen so far, which is why I’ve saved it for last. It doesn’t matter who your support system is made up of. It can be friends, family, a partner, a spouse, or colleagues. You will need them. The road to success is rough and long. You want people to be there when you need them. You also want people to be there when you’re ready to celebrate your wins! Loners who don’t have a ton of support tend to have a tough time. Seek people out and nurture those relationships from the beginning.
The more self-awareness you can bring to the table, the better off you’ll be. It’s okay to admit where you’re falling down, and it’s equally okay (more than okay!) to celebrate when you’re doing something well. Don’t get so wrapped up in your own business that you forget to acknowledge your successes or forget about the things you need to improve on. I want to see all of you fly your sparkly, glitter-covered flags of success. Let’s get you on the path to make that happen!