Well nobody can tell you what’s best for you, and everyone’s circumstances are different. That said, there is much to think about when you are considering a move into the world of being a self-employed adviser. We work with some of the UK’s leading financial planning firms, and have roles for employed and self-employed advisers, and so our aim is to assist individuals considering their options.

Firstly, self employment is not easy. Many advisers are seduced by the high pay out rates on offer and they think about their current revenues and calculate their potential pay out. However, what many don’t realise is how difficult the first two years can be. If you’re lucky and you have loyal clients, this initial period can be made easier, but most employees have restrictive covenants, meaning they can’t speak to clients for a period of time. Our advice is to halve your expectations around revenue or double how long you think it will take to get there.

Most people won’t be in a position to be directly regulated and will therefore join an established business or network. Advisers need to weigh up what they get when they pay away some of their revenue. It may be great that you get to keep 70% of your revenue, but if you get very little in return, is it as good value as the firm that pays 40%? Things to consider are:

1. Will you receive admin and/or paraplanning support?
2. Will you be given leads?
3. Who pays for marketing initiatives?
4. Who pays your PI cover?
5. Can you earn revenue by referring business to colleagues with different specialisms?
6. How good is the quality of their systems?
7. Do you pay for the use of meeting rooms?
8. Who pays for stationary?

These are just a small list of things to consider.

You also need to ask searching questions of yourself. If you won’t be receiving leads, then are you an entrepreneur? Do you like searching for new business and what is your plan for consistently bringing on new clients? Are you organised? You will probably be responsible for producing accounts and therefore will need to be organised in keeping records. If the answer is no, then is this for you? You also need to asks questions about your own working habits. Whilst working from home may sound appealing, you may not actually be the sort of person who enjoys working alone or can even motivate yourself to start work. Of course, the other thing to consider is the financial implications. It will often take a personal investment to get your new business (this isn’t a job) off the ground, and how comfortable would you be seeing your savings diminish until you start making money? You also won’t receive a pension and will be responsible for your own benefits. The life of an entrepreneur isn’t for everyone, but can be enormously rewarding for those individuals who are successful.

Generally, successful self-employed advisers often have a loyal client following or they are tenacious business developers. It isn’t a career decision for the fainthearted and not to be advised if you don’t know where your clients will come from. After all, there are lots of high paying roles in financial advice providing leads, and so being self-employed isn’t the only road to riches.

We hope this brief guide helps, but please contact Kelly Biggar from our Investments & Advice team should you want to discuss anything we raise here in more detail.