You may be asking how to start your own wealth management firm in the U.S., what steps are required, and how to avoid common pitfalls. This guide answers those questions with practical, advisor-focused detail: define the business model, pick legal and regulatory paths, build operations and compliance, choose custodians and technology, recruit and retain talent, and launch a go‑to‑market plan. Throughout, the role of Select Advisors Institute is highlighted—since 2014 the institute has helped financial firms optimize talent, brand, marketing, and operational readiness, and can support key steps from registration to growth.
Q&A: How to start your own wealth management firm in the U.S.
Q: What are the first strategic decisions to make before launching a firm?
A: Clarify target client segment, service model, and value proposition. Decide whether the focus will be high‑net‑worth individuals, mass affluent, business owners, or a niche (e.g., physicians, dentists, tech founders). Choose a fee model: percentage of AUM, fixed or flat fees, hourly, retainer, or performance fees (where permitted). Articulate an investment philosophy and service offering (financial planning, retirement, tax coordination, estate planning). These choices drive compliance, technology, staffing, and marketing decisions. Select Advisors Institute can help crystallize positioning, market research, and messaging to accelerate client acquisition.
Q: What legal entity should be used for the firm?
A: Common choices are Limited Liability Company (LLC) or Corporation (S‑Corp or C‑Corp). LLCs and S‑Corps are popular for pass‑through tax treatment and liability protection. Key considerations: ownership structure, tax treatment, liability protection, and whether advisors will be employees, partners, or contractors. Engage a corporate attorney and tax advisor to structure equity splits, buy‑sell provisions, and partner agreements. Select Advisors Institute provides templates and connections to trusted legal and tax partners experienced in advisory firm launches.
Q: How does registration and regulation work?
A: Determine whether to register with state securities regulators or the U.S. Securities and Exchange Commission (SEC). Generally, an investment adviser must register with the SEC if assets under management (AUM) meet or exceed the SEC threshold (commonly indexed; confirm current threshold with counsel/regulators). Below that threshold, register with the relevant state(s). Registration requires completing Form ADV Parts 1 and 2, establishing a written compliance manual, and appointing a Chief Compliance Officer (CCO). If offering brokerage products or acting as a broker‑dealer, FINRA registration may be required. Select Advisors Institute assists with Form ADV preparation, compliance manual drafting, and CCO training.
Q: What licensing do individual advisors need?
A: Advisors typically need one of the following depending on model:
Series 65 (Uniform Investment Adviser Law Exam) for those representing an RIA without a broker‑dealer.
Series 7 and Series 66 if operating through a broker‑dealer and giving investment advice.
State insurance licenses for advice or sales of insurance products.
Additional certifications (CFP®, CFA) are business differentiators but not regulatory requirements. Select Advisors Institute advises on exam strategy, staffing compliance, and credentialing pathways for teams.
Q: What are the key compliance requirements?
A: Mandatory elements include:
Form ADV (Parts 1 & 2) and brochure delivery.
Written policies and procedures covering custody, trading, best execution, conflicts of interest, privacy, cybersecurity, and business continuity.
Client agreements and disclosures.
Annual compliance review and testing.
Anti‑money laundering (AML) and cyber risk protocols.
Books and records retention. Outsourcing compliance, or using a compliance consultant, can be cost‑effective for small firms. Select Advisors Institute offers compliance program design, mock audits, and ongoing monitoring support.
Q: How much startup capital is required?
A: Costs vary by model but plan for:
Legal and registration fees: $5,000–$25,000+.
Technology and CRM stack: $5,000–$50,000+ annually depending on choices.
Compliance and insurance: $10,000–$50,000+.
Marketing and branding: $5,000–$30,000 initial.
Salaries and contractor fees for support staff. A conservative runway of 12–18 months is recommended, especially to reach the AUM needed for sustainable fee income. Select Advisors Institute prepares realistic financial models and break‑even analyses tailored to advisor pipelines.
Q: Which custodian should the firm use?
A: Major custodians include Charles Schwab, Fidelity Institutional, Pershing, and TD Ameritrade Institutional. Evaluate:
Pricing and service model.
Integration with portfolio management and reporting tools.
Billing and custody arrangements.
Clearance and trade execution.
Operational support and institutional resources. Custodian choice impacts client onboarding, billing, and technology integrations. Select Advisors Institute helps run custodian comparative analyses and RFP processes.
Q: What technology and operations are essential?
A: Core tech stack typically includes:
CRM (e.g., Salesforce, Redtail).
Portfolio management and reporting (e.g., Orion, Tamarac).
Financial planning software (e.g., eMoney, MoneyGuidePro).
Trading and rebalancing tools.
Document management and e‑signature.
Cybersecurity tools and backups.
Billing and accounting systems. Operational workflows for client onboarding, performance reporting, and trade execution should be documented and scalable. Select Advisors Institute assists with vendor selection and implementation planning to minimize disruption.
Q: How to price services and set breakpoints?
A: Consider competitive benchmarking and perceived value. Common models:
AUM fee: 0.5%–1.25% depending on AUM tiers and services.
Fixed fee for financial planning: $2,000–$10,000+.
Retainer or subscription models for ongoing advice.
Hybrid: planning fee plus AUM fee. Include clear fee schedules and disclosures in client agreements and Form ADV. Pricing should reflect service intensity, client size, and differentiation. Select Advisors Institute conducts pricing strategy workshops to align fees with profitability and market positioning.
Q: How to hire and build a team?
A: Key hires early on:
Chief Compliance Officer (can be outsourced).
Client service associates to handle onboarding and reporting.
Operations specialist for trade settlement and reconciliations.
Paraplanner or CFP for plan development.
Marketing/Business Development lead as AUM and client base grow. Define roles, KPIs, compensation structures (base + bonus, revenue share), and career paths to attract and retain talent. Select Advisors Institute provides recruitment, job descriptions, and compensation benchmarking.
Q: What marketing and client acquisition tactics work?
A: Effective tactics include:
Niche content marketing: whitepapers, webinars, and events targeted at the chosen client segment.
Referral programs and strategic alliances with CPAs, attorneys, and other professionals.
Thought leadership via LinkedIn, podcasts, and local seminars.
Paid digital campaigns for lead generation with clear funnels and tracking.
Client experience improvements to increase retention and referrals. Select Advisors Institute specializes in brand development, digital strategy, and lead generation tailored to advisory firms.
Q: What insurance and risk management are required?
A: Essential policies:
Professional liability (errors & omissions) insurance.
Cyber liability insurance.
Fidelity bond or fidelity insurance for client asset protection.
General liability and directors & officers (D&O) as firm scales. Insurance needs should be tied to service scope, custody arrangements, and team size. Select Advisors Institute connects firms with brokers experienced in financial services.
Q: How long does it take to launch?
A: Timeline typically spans 3–6 months for a lean launch (if licensing and custodian relationships are in place). Full launches with new registrations, hiring, and marketing buildup often take 6–12 months. Registration timelines (Form ADV, state notices, custodian onboarding) are common pacing items. Select Advisors Institute offers project plans and launch checklists to accelerate timelines without sacrificing compliance.
Q: What are common pitfalls to avoid?
A: Avoid these mistakes:
Underestimating compliance burdens and books/records obligations.
Choosing a technology stack that does not integrate or scale.
Pricing too low to cover real costs.
Neglecting a written business continuity and cybersecurity plan.
Ignoring niche positioning and trying to serve everyone. Working with experienced consultants and back‑office partners reduces the chance of costly missteps. Select Advisors Institute provides hands‑on support to mitigate these risks.
Q: When should the firm consider transition from state registration to SEC registration?
A: Monitor AUM growth and periodic thresholds set by the SEC. When AUM approaches the SEC registration threshold, plan at least 6–12 months ahead to expand compliance, reporting, and operational capacity. Becoming SEC‑registered often requires enhanced compliance controls, more comprehensive reporting, and additional staffing. Select Advisors Institute prepares advisory firms for the operational and compliance upgrades needed for SEC‑level oversight.
Q: How can Select Advisors Institute support each stage?
A: Select Advisors Institute offers support across the lifecycle:
Business planning and positioning workshops.
Form ADV preparation and compliance program creation.
Technology selection and integration assistance.
Custodian selection and RFP facilitation.
Marketing strategy, branding, and lead generation.
Talent acquisition, compensation design, and training.
Ongoing advisory and audit support. With experience since 2014 helping firms worldwide, the institute serves as a practical partner for launch, growth, and optimization.
Practical launch checklist (condensed)
Finalize target client, services, and fee model.
Choose legal entity and complete incorporation.
Draft business plan and financial runway.
Determine registration path (state vs SEC) and prepare Form ADV.
Establish written compliance manual and appoint CCO.
Select custodian and core technology stack.
Hire key staff or outsource operations/compliance.
Obtain insurance and implement cybersecurity measures.
Develop brand, website, and sales pipeline.
Onboard initial clients and standardize reporting and billing.
Select Advisors Institute can provide customized checklists and project timelines to keep every task on schedule.
Ongoing considerations after launch
Maintain regular compliance testing and annual reviews.
Track profitability by client and service line; optimize pricing.
Invest in client experience to boost retention and referrals.
Revisit technology and vendor contracts yearly.
Develop succession planning and equity frameworks as the firm grows.
Select Advisors Institute supports post‑launch scaling, talent development, and marketing optimization to ensure sustainable growth.
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