Home Office Vs Outside Office Space And Credibility As A Startup Financial Planner

Home Office Vs Outside Office Space And Credibility As A Startup Financial Planner

Executive Summary

Many readers of this blog contact me directly with questions and comments. While often the responses are very specific to a particular circumstance, occasionally the subject matter is general enough that it might be of interest to others as well. Accordingly, I will occasionally post a new article, presenting the question or comment (on a strictly anonymous basis!) and my response, in the hopes that the discussion may be useful food for thought.

In this week’s article, we look at a question about whether it’s important and necessary to have a physical office space when you’re starting your financial planning practice, or if it’s just a waste of money. Can any advisor really establish trust and credibility with clients with only a digital presence, or is that limited to just younger advisors serving younger clientele?


Question/Comment: The key concern starting out is credibility. While some generation “Y” advisors are targeting a demographic that is open to virtual meetings, conference by phone, email and text everything, etc… I wonder how NOT having a physical office has affected their growth. Is there a plan to get one in the future? Is the decision to get an office heavily dependent on the type of client? Any feedback would be greatly appreciated.

What an interesting issue you’ve raised here! The question of office space for a newer (or any?) advisor is a challenging one. I’ve known planners who truly span the entire spectrum of views (and implementation) of this physical office question.

On the one end, as you note, there’s the truly virtual financial planner, and we’ve had one or two highlight how they set up their (virtual) practices previously on this blog. Clearly in that context, a home office works just fine. Your credibility will be judged by your virtual presence – website and similar digital materials – as well as what the client sees from your electronic communication, and perhaps your video chats. But no one will ever visit the actual office, so it’s really not a credibility marker. All you really need for a nice looking “office” is a good web camera, a nice shirt, and a background that won’t be embarrassing if clients happen to glance at the few feet of space beyond you that they can see to either side of your camera image!

The next step would be advisors who have physical client meetings and work from their home office. In my experience, this certainly isn’t the majority of advisors, but it occurs more commonly than you might think. From a practical perspective, it’s a low cost way to start up a newer advisory practice (you can rent a “real” office when there’s revenue to pay for it!). And frankly, for some advisors I think this is just part of the reflection of their practice and their personality. I knew of one advisor who was also into horticulture and had a beautiful rose garden (that her home office overlooked), and clients actually had to walk through the rose garden to reach her; while I suspect that turned off a few clients, it connected especially well with others, and she has a great practice. I’ve seen other advisors who advocate a frugal lifestyle and live/embody it for their clients with a frugal home office. And there are others who simply make the point that if doctor’s offices and dental practices can be run professionally from a home with a reasonable separation between living and work space, the same can be done for their advisory practice as well, especially if the general flow/layout of the house/yard is conducive to having clients/guests park and visit. And of course, you have to be comfortable actually working and being productive in your home; some people are fine with that, but I know others who really feel they need to be “out” of the house to really focus and put themselves into a “professional” state of mind (or the demands of children and family make an outside office space a necessity just to stay focused on work at all).

For those who don’t want to see clients in their home – for any number of reasons, from professionalism and credibility to simply because they don’t feel they can work productively at home due to distractions – the next common strategy is temporary office space. I’ve talked to many planners who rented out space in an executive office suite like Regus; when the practice is just starting and there are few clients and you really only need physical office space to see them a few days a month, it can be a very economical way to have “formal” office space. Some of these facilities provide additional office support as well, such as a formal (non-personal/residential) business address for client correspondence and business matters. Other planners might work out a deal to work out of the space of a fellow advisor’s firm if they have a spare office anyway (especially if it’s possible to easily make a separate entrance), as this can often be done very inexpensively (especially if the advisor’s only other option is that the office space just remains vacant anyway and they’ve already paid for the lease!).

As advisory firms ramp up from there, the next option usually becomes a more substantive deal for a sustained office presence. This might just be ramping up the number of hours at the executive suite, but usually there’s a process of finding a space to lease. Depending on your area, space can be pretty expensive for a newer practice, so a lot of advisors will find another advisor in a similar situation and split the cost of an office lease (and perhaps the cost of an administrative assistant to be at the front desk to greet clients and handle some supporting work duties); a lot of advisor “partnerships” are formed this way, where the advisors essentially run two silo independent practices but partner together to split the overhead of office space and some administrative staff support.

Eventually, as the practice goes, most advisors take on a lease for a more substantive space – especially as the hiring ramps up – but that’s often many years down the road, so not necessarily something I’d worry about now. On the other hand, I’ve seen plenty of advisors who never felt the need to leave their initial home office environment either; after all, if their initial clients were willing to meet there and they could grow the practice that way, why change now? In other situations, I’ve seen advisors try to get into a more formal office space as quickly as they could, especially if they felt it was necessarily for their target clientele; realistically, if you’re working with multi-millionaires and business owners who are accustomed to working with their professionals in formal office spaces, you may feel the pressure to do the same.

On the other hand, I remember talking to one advisor in the mid-west who works with farmers and noted that if he ever showed up in a suit or had an office with fancy wood paneling, he’d instantly LOSE credibility with his clients, who included a lot of millionaire-next-door types with a Midwest mentality that wealth should not be flaunted. He said an astonishing amount of his business got done over a pool table at the local bar wearing jeans and drinking beers. Another advisor I knew works primarily with surgeons, and the reality was that the only way he ever could meet with his clients was to find a quiet space to meet at the hospital, to the point where eventually he gave up on having an office at all because he never actually met his clients there. Which I guess is a nice way of saying that in the end, decisions about office space really, truly come down to knowing how to fit in with the clients you’re trying to reach.

But again, from the practical perspective, the most common starting points I see are to either work from a home office, or rent an executive suite to get access to an office/conference room for a limited number of days per month (the rest of the time you can work from home, as it’s just emails, phone calls, or going OUT to networking meetings to find more prospective clients anyway). Then as the business grows from there, splitting an office with another advisor to share overhead (especially if they want more control than an executive office suite and/or it’s getting expensive because they’re using it so much), and only finally deciding to take down a full office space of their own when it’s time to start hiring support staff (when the firm needs an office not for the advisor but the support staff, though in a world of advisors getting virtual assistants, that may be less of a driver in the future as well?).

And in terms of credibility… ultimately, I think the bottom line is that that depends entirely on the clientele you’re aiming to work with in the first place. It may be crucial, unnecessary, irrelevant, or outright unfavorable, depending on what’s important to them.

So what was your arrangement for office space when you started your practice? And how has it evolved since then? Please reply to this post down below.

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