A Store That Sells Financial Advice?

6 May 2013 · 29 comments

A good friend emailed me looking for financial advice the other day. Pam wrote:

A friend of mine is getting married this summer and…blah blah blah. [The main story/question in Pam's email isn't germaine to this article. Plus it's private.]

My friend really wants a financial planner-type person to help them, but she realizes those people really are for people with money to invest (and ultimately pay the financial planner) and her issue is a shortage of money.

Are there neutral party, financially educated people to advise those who are trying to make good decisions but need some help to see all the implications? Where should she look?

Responding to Pam, I was reminded of a business I wanted to start several years ago, just after I sold Get Rich Slowly. At that time, I had a number of friends and family asking for financial advice. It occurred to me that there was a market for a new kind of financial professional. Here’s what I envisioned:

  • I’d open a storefront in a small space in some sort of high-traffic area like a strip mall.
  • My store would sell personal-finance related material, including a library of high-quality books, magazines, and software. (Yes, I know the market for PF software has now vanished.)
  • The store would also offer workshops and classes about personal finance topics, including budgeting and investing.
  • One special focus of the store would be financial education for children. Another would be entrepreneurship.
  • The main feature of the store would be financial advice. People could drop in and/or make an appointment to chat with me about their financial problems. I’d listen to their situation, and then offer suggestions.

As I was writing to Pam this morning, I realized that this idea excites me even more today than it did four years ago. My skillset is well-suited to a business like this. I’d love to give it a go. There are, however, some problems.

  • First, I’m wary of the legal implications. I’d do my best to give sound financial advice, but what if a person took my advice (on investing, for example) but then lost a bunch of money. What’s my liability? Worse, what if they did not take my advice but still blamed me for losing a bunch of money. What then?
  • I’ve never owned a storefront before, and I’m not sure how much it would cost to run a place like this. (This is a minor concern, though.)
  • I’d love to offer my services for free and only charge for books and software, etc. In reality, this model probably wouldn’t work. I don’t need to make a lot of money with this venture, but I do need to make enough to break even. And, ideally, I’d make enough to live on.
  • I’m fortunate to have a free and easy lifestyle right now, one where I’m able to do what I want when I want. If I had a store, I’d have to be present when the store was open. (This could be solved by just being open whenever I wanted, but then that creates headaches for customers.)

I like the idea of creating and running some sort of “money store”, but I’m not ready to actually do anything about it. Maybe I should do some research. I could find out the legal ramifications of giving financial advice. I could figure out what sorts of products I could offer. I could learn how much it would cost to lease a space for the store.

Who knows? Maybe a couple of years from now, you’ll be able to walk into a store called Get Rich Slowly in your neighborhood…

Note: Do businesses like this already exist? Where do you find them? If you were Pam, where would you send her friend for financial advice?

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Giving Without the Expectation of Return - More Than Money
30 July 2013 at 08:18

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1 Cathy 6 May 2013 at 11:46

So physical buildings are so 20th century. And tie you down, as you pointed out.

Have a website to sell the stuff and direct people there. If they want to meet you in person, arrange for something like a library or Starbucks. Then if it doesn’t work you’re not stuck in a long term lease. If it takes off like gangbusters, you can always rent a space.

The financial concern is real, and probably needs some sort of lawyer involved.

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2 Tyler Karaszewski 6 May 2013 at 12:07

The big problem with this idea is that if you do a decent job nobody will come back after visiting you the first time.

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3 jamie 6 May 2013 at 12:13

LearnVest essentially sells Financial advice to middle income people. They are a website and service and not a storefront model and I cannot attest to the quality of the advice, but I’ve always thought it was a smart business idea.

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4 Linda 6 May 2013 at 12:29

Why do you think that a person needs to have big bucks and money to invest to consult with a financial planner? Aren’t we advised over and over to see a fee-based financial planner, not one who makes money mainly by selling financial products?

I started seeing a fee-based financial planner nearly three years ago, and I’m not rolling in big bucks. We do a check point every year to make sure I’m on target with the advice or if I need to make any adjustments. I did end up buying one financial product through him (long term care insurance), but only after I shopped around to verify it was a good deal. All the other advice he gave me involved me working with companies I already had a relationship with: my insurance provider, retirement fund provider, etc.

I like Cathy’s comment, too, with ideas on how you can consult that don’t involve renting office space. I would also say that you could book Skype or video chat appointments with potential clients, too, which means you could hold the meetings from home!

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5 Kitty 6 May 2013 at 13:10

I would forego the strip mall/physical location portion of the idea. Any property owner lease requires minimum business hours open (unless negotiated out of the lease), they need you creating foot traffic for others and vice versa. What is so common today is web version teaching/consulting with phone chats or Skype. Then you could keep it lower cost to your clients and lower overhead (and responsibility for you). I would try that version first to get all the kinks worked out before ever considering opening a brix/stix location. I have seen many providers of well-being type teaching offering services via web, I have got to assume they are reasonably successful. Why wouldn’t this work for PF. Also you could do group seminars (ie. 10 folks not huge classes) and what I have seen is the group gets to forum with each other and discuss high points – so it create a virtual location for paying students either restricted to that given class or all other students of all classes to learn from each other.

As far as liability, you need to figure out your business model first and then talk to insurance person about Professional Liability insurance at a minimum. You should have discussion with an attorney to get insight into creating an LLC to distance your assets from this endeavor.

Best of luck in whatever road you take.

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6 Rebecca 6 May 2013 at 13:36

Could it be a “pop-up” business? Does Portland have temporary art projects in vacant downtown stores? You might be able to apply for a space, if you made it a nonprofit project.

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7 bethh 6 May 2013 at 13:52

Well, there’s no reason you couldn’t take the course work to be a certified financial planner, is there? I investigated it at one point and one hump is that you have to work x hours as a planner to become certified, I think, but I’m not sure. I agree that doing appointment-based consults might be better than a storefront, though of course each model means your offerings are visible/available to a different subset of the population.

The liability concern is real but I imagine it could be worked around with waivers, an LLC, and a good lawyer’s advice.

To answer your other question, I’ve heard of people getting free financial consults from their churches or faith groups. I don’t know how pervasive it is but may be worth mentioning to your friend.

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8 Stephen at SE 6 May 2013 at 13:54

I’ve had the exact same thought myself! It seems like there is a market for a store or product like this. It was actually my desire to find somewhere exactly like you have described and work there. Surprisingly, there are actually a lot of places and programs that do this already. In Georgia, the state funded extension services offers information like this (non-for profit version). And in our town, Athens, GA, we have a non-for profit “aspire” clinic that offers financial counseling, budgeting and has information and tools for people to take. They are always looking for volunteers or professional to help lend their services! I’m looking forward to volunteering there. I love to write about personal finance but something about helping in person is really enjoyable to me.

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9 chacha1 6 May 2013 at 13:55

Not even close to an expert here, but I *believe* that as long as everything is stated as hypotheticals and the client does not disclose any personal financial data, the advisor is not liable. Liability starts when a client hands over money and says “do something with this for me.”

Not an expert, though.

That said, I think what you really want to do is be a teacher, so maybe you should look at this as a series of short lectures/workshops that could be delivered through the city’s Parks & Rec department.

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10 Michael 6 May 2013 at 13:56

“Yes, I know the market for PF software has now vanished.”

Magazines and books, the other two items in your hypothetical inventory, aren’t far behind…

Also, I agree with the other comments about doing this sort of thing online — similar to what you’ve already been doing, but with more in the way of information products, personal contact, etc.

If desired, you could also sell your time in the form of Skype chats, phone calls, or whatever. Or do it in person for locals. But still, no real need for a permanent, physical location.

And yes, educate yourself about any necessary licenses or certifications. This would depend to a large extent on exactly what you decide to offer.

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11 Paul Williams 6 May 2013 at 15:29

Legal ramifications: If you give specific investment advice, which includes even simple advice like telling someone to put 60% in stock and 40% in bonds, you’ll need to register as an investment adviser, comply with all record-keeping requirements, and you’d want to buy liability insurance. (Your business entity won’t protect you much because this is considered professional liability. You’re not protected from mistakes due to professional advice simply by having an LLC or corporation.) Also, if you do this online, which is a good idea, you’ll need to register with the SEC instead of the state unless you limit your services to only people living in your state.

Bethh: Yes, you need to work either for 3 years on your own or 2 years as an apprentice under another CFP certificant before you can become a CFP certificant. However, you don’t need this to start giving advice. You just have to pass the Series 65 exam if you’re going to be fee-only (no commissions). It’s a pretty easy exam. The CFP certificate just shows that you know what you’re talking about (somewhat) and have experience.

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12 Elizabeth 6 May 2013 at 16:02

Just to warn you, J.D, the mark-up on books is small compared to other merchandise and you’ll find it a challenge to be able to compete with the prices on Amazon. (I used to work in retail.)

Have you ever thought of offering courses online? A friend of mine is taking courses from Udemy.com. People can set up and teach their own courses online.

I’d visit a place like this, so I think it’s an interesting business idea! Keep us posted.

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13 Dylan 6 May 2013 at 17:40

I want to open a cafe or coffee shop where all the baristas are CFPs or AFCPE accredited financial counselors. I have several versions in my mind ranging from free advice (tips appreciated) to monthly memberships. I just worry the “latte factor” would put me out of business.

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14 Dylan 6 May 2013 at 17:43

Actually, JD, I think I just want you to open such a coffee shop and hire me to work there. :)

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15 Michael 7 May 2013 at 05:03

Dylan, I love the idea. :-)

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16 Michael 7 May 2013 at 05:32

P.S. Not sure it would be sustainable, but it sure would be cool…

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17 KSK 7 May 2013 at 05:02

Just a few ideas: You could model your business after the model used by life coaches. Market yourself as a “financial life coach”. You could have a series of online classes that people could subscribe to monthly (much like the online classes at lynda.com, also look up the online classes from artmentor.com), and offer the one-on-one financial life coach services by Skype or in person.

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18 Vanessa 7 May 2013 at 06:57

Right now if a friend asks for financial advise, not necessarily targeted towards specific investment, I ask them to listen to Dave Ramsey or Suze Orman. Usually people have issues with overspending spouse or deadbeat child.

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19 Debi 16 May 2013 at 06:09

Dave Ramsey is especially good for beginners and people who need to dig out of debt. I also listen to Ric Edelman weekly. Fun, good common sense approach to personal finance. I’ve also sent e-mail questions to him twice and each time have been called back by his firm within hours and have bounced ideas off of a financial planner and gotten good advice with NEVER a sales pitch to invest with his firm. I’d highly recommend listening to his pod casts on line.

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20 L. Buck 7 May 2013 at 07:54

I’ve also had similar thoughts to those that J.D. has expressed, although I don’t have nearly the experience and background that he has. Mainly I think about how I am in decent financial shape, and wonder how there can be so many people around who are so deep in debt. I feel like I should/could be able to do something to help them out at least a little, just by talking with them. I thought some about becoming a Credit Counselor at a non-profit agency. Does anyone have knowledge about the daily work life of these kinds of people? Is it rewarding? Would this be a possibility? I’ve Gotten Rich Slowly. Now what? It seems like time to pass some of this knowledge along.

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21 Kevin 7 May 2013 at 09:41

I thought about this idea too, but the regulations on investment advisers are so convoluted I gave up after talking to a couple planners and an old college professor of mine who was entering the field. I’m a CPA so that throws another wrench into the works as far as our professional standards go. I didn’t even want to sell products, my model would have been charge by the hour or by deliverable (plan to get out of debt, etc).

Dave Ramsey gives specific investment advice, does he have to register as an adviser?

The main problem with this business model of course is that people who really need the advice don’t have the money to pay – I suspect that is why church/nonprofit sponsored courses like Financial Peace are so popular.

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22 Diane Friedman 7 May 2013 at 11:06

When I first started my business as a Budget Advisor/Money Coach, I had similar thoughts about having a storefront. However, I have an office and either meet clients there or via phone/Skype. Since I am neither a CPA or an attorney, I found out that you cannot talk about any type of investments without having credentials. As Paul Williams wrote, you need to pass the series 65 and become a Registered Investment Advisor. What makes me different is that I do not take any money-under-management. This makes reduces your filing requirements with the states and/or SEC.

BTY- If you have less than 10 clients in a state, there is no need to register in that state. My business is in NJ and while I do have clients in other states, I have not reached more than 10 in any one state.

I do agree that many people who need the help often don’t have extra money to pay for your services. My services have been paid by family members (parent, grandparent) or friends. Financial blunders are quite common among high wage earners. Some clients making well into the six figures have consumer debt which makes me loose sleep!

While, I do get many inquiries on my services, the conversion rate is low. Mostly, the excuse is, “I will try it on my own, again.” What they are really saying is that they don’t understand the value of the services and do not understand that having good fiscal skills will save them money in the long run. Sometimes, these same people come back to see me in a year or so. Usually in worse shape.

JD, you have a strong following and probably many, many more contacts than I do. So if you were to launch something, I would venture to guess that lots of people would be lining up to talk to you.

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23 bethh 7 May 2013 at 15:25

This has been such a useful string of replies! Thanks J.D. for posting the question, and thanks everyone for chiming in.

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24 Kathleen, Frugal Portland 7 May 2013 at 15:59

I love it! I see you as Lucy from Peanuts only at a farmers market booth instead of Pioneer Place.

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25 GE Miller 7 May 2013 at 18:59

Hmmm…

Instead of buying a physical location, which would be costly… maybe you could start a website. A blog, perhaps. Maybe… a personal finance blog. And you could call it…. become… weathy… gradually…. becomewealthygradually.org. Yeah, that’s the ticket!

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26 Katherine 9 May 2013 at 15:00

J.D.! Do a pop-up! Get a good lawyer to help you sort out the legal issues (I’m sure it’s just a matter of having someone sign some sort of disclaimer), then look for temporary space. Forget the people who are like, “Retail is soooo 20th century.” Pop-ups are the future of brick-and-mortar.

Check out Storefront.is. San Fran-based company, but they’re all about helping people in search of temporary retail space connect with landlords who are offering it. It’s such a cool concept that even for the matter of publicity vs. being a full-on business idea, I’m sure it would be a success. (In fact, it’s a great way to promote a book release….)

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27 Bridgette 10 May 2013 at 08:19

I think you can do this while maintaining your freedom by usinga set up similar to how zenhabits provides the habit changing courses throgh the web with google meet ups and written material. Basically providing all of the services you mentioned mostly throughthe internet and scheduling outside classes/meetings as needed. Excuse the typos

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28 MA 3 September 2013 at 10:26

Great discussion!
I have also wanted a store (or service) like you mention. I have offered services to others in town for financial freedom, just to help out. I am a business owners and people are always asking for advice. It seems most people are intimidated by money issues and want someone else to do it for them, or tell them what to do. I am interested in helping in schools and with a younger generation. I think this is a great idea and really needed.

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