All too often, employed financial advisers who embark on the journey to self-employment are confused into thinking that the primary reason for self-employment is to just earn more money, which can cloud judgment when considering a suitable business model. For example, do financial advisers go the directly authorised (DA) route, join a network as an appointed representative (AR) or join an already established national organisation as a registered individual (RI)?
It is important to change this mostly misguided mindset of many advisers who are considering such a move from an employed position to a self-employed position. It is not exhaustive, but it will focus their transition based on three principles that they would otherwise not consider.
Change your way of life
The real reason to go self-employed is to change your way of life, from being reactive to your employer’s demands and their restrictive controls, to a life of having more freedom to control your own time. This means becoming self-sufficient; and control of your life, without the need to rely on others – a happier life of your choosing.
Most employed financial advisers have earned between £25,000 and £45,000 for many years, usually with a car allowance, office space provided, telephone costs paid and four weeks holiday per annum. Maybe even a pension contribution and other such added value benefits. They have managed to live on this income and allowances for many years without financial hardship. Their income as a percentage – typically less than 35% – of their given annual target. This begs the question, that when an adviser moves to self-employment why does he/she suddenly need (or expect) more money than their current salary? After all, they have been satisfied with this level of income for years.
There is no doubt that one aim is to earn more money, but this objective should be exactly that, an aim and not an immediate expectation. Don’t be drawn into expecting high levels of income in your first two years of being self-employed. Those that do earn higher income immediately will bathe in a false degree of achievement – remember the house of cards; quick to build yet easily blown away! You should plan to create a sustainable high level of income and to do so you should first become 100% self sufficient at a much lower level of revenue.
Principle 1: Be self-sufficient
Self-employment is about being 100% self-sufficient. This is your primary focus and the first measure of your success. It should be the first measure of your success. It should be the first item in your mind’s goal and the first aim you put into your business plan; a primary reason to leave employment. Being self-sufficient means, you are in control of your time, your own earning potential and hence your own destiny. Only when you have achieved self-sufficiency, can you then build your wealth.
Principle 2: Be proactive with your time
It is important to plan your first few weeks into self-employment and to contact as many people as you can to build your client list. Everyone you know, and everyone you don’t yet know is a potential client. Your valuable time should be spent on contacting everyone you know to obtain a meeting and to explain the move you have made to self-employment. This is your first step to being self-sufficient.
Thinking of going self-employed? Why don’t you book a Discovery Session to discuss your options? In these sessions we will delve deeper into your current situation, discuss your ambitions and identify the barriers that are preventing you from being happier and more successful. Click here to book yours.