Help find me a business model

April 19, 2009 6:47 AM

Is there a realistic business model in personal finance advice/coaching?

I'm a personal finance blogger and enjoy helping people to better manage their money.

I've started doing some one-on-one personal finance coaching, teaching people how to save for goals, pay themselves first, and get a better yield on their money. I don't sell anything or recommend investments, and I don't "manage wealth."

My passion is more in helping people get more from personal finance.

But I'm not sure there is a real money-making business model in one-on-one finance coaching. (I know that sounds weird, given it's all about money)

I charge a flat fee for a sit-down coaching session, and that's it. No monthly fees, etc. It's the best (most moral) way to charge, but it requires a huge base of customers to make real money.

Is there a real business model in this type of personal finance coaching?

posted by junger to Work & Money (7 answers total)

Sure, but not as much as if you take a more hands-on approach to managing their money. It sounds like you have to get past what you see as a moral-dilema, but many people actually trust their wealth manager in the face of conflict of interest. The client can get great deal from a wealth-manger relationship - access to investments previously unavailable to them, an "I just get the monthly statements" hands off-ness which many people want, and perhaps the most important - someone else to blame when the shit hits the fan.

If all you want to do is sit down with people and say "pay off your credit cards, set your 401k allocation to 60/40, make abudget" then that is a different story. Much harder to make a real go of it.

If you don't want to associate with a megabank, look at edward jones. you setup an individual office, using their backoffice and brand name and research etc, and you are off to the races.
posted by H. Roark at 6:55 AM on April 19, 2009

Could you find a way to create a more regular service for some of your existing client base. Something like a monthly budget review, to help them get spending under control, for example? You could put them on some kind of system for tracking the money they spend and then have them report back on their experiences, and tweak their program for them each month.

There are shows on television where the hosts pretty much do this, so you'd have a market of people who believe it's a valuable service.
posted by jacquilynne at 7:47 AM on April 19, 2009

I asked Metfi question awhile back about whether anyone knew of an online financial coaching service, preferably ongoing, that would be able to provide the best options for all kinds of financial decisions-everything from whether to rent or buy; to what health insurance plan worked best for my situation. (I already did the heavy lifting with paying off a house, creating an IRA decades ago, etc. etc.) I'm just sick of researching everything to death and would like to ask some financial coach, okay how much rent can I afford at this stage in my life with the money I have? Or what Medicare plan should my husband choose? What are the top three cars I should consider given this or that? Mefi has been helping on some of these things, but I still wouldn't mind a financial buddy who would track down information on the small stuff (and sometimes the bug stuff) because I'm tired of it.

I don't have a business plan for you, but I wonder whether there isn't a business that starts with a standard consultation--all financial information on the table, do this, do that--followed by some kind of a maintenance subscription or hourly service to suggest top two or three choices, with up and downsides of each. The hive mind pretty much recommender a financial planner. I've already had one of those, which is why we're in decent shape on big stuff. This would be for day to day decisions.

Also, I've seen wonders done with younger people who've gotten in over their heads then got out of it with the Dave Ramsey program--not my thing--but I was surprised. Maybe some of these people still need some regular, affordable everyday money advice on creating a budget, whether it's a good time to buy a house, where to go for a mortgage, what car to buy.
posted by Elsie at 8:19 AM on April 19, 2009

I'd start by trying to establish short or medium term coaching relationships with my clients. One sit-down is a good start, but how much can you really help someone in one session? Offer that one session at the flat-rate fee and discuss what else you could do for the client in, say, the next three months. Offer a series of one-on-one sessions and e-mail consultation. Think of yourself as a personal trainer or teacher — focus on developing the clients money-management skills instead of handing out token advice or short-term solutions. In the long run, I think that makes most sense financially, both for you and your client.
Give a man a fish; you have fed him for today for a one-time fee. Teach a man to fish; and you have him recommending your services for all his friends. (Also offer additional courses for fishermen of different skill levels.)
posted by Orchestra at 9:28 AM on April 19, 2009

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posted by cortex at 10:13 AM on April 19, 2009

As you no doubt have realized, there are a few built-in limitations with the coaching/personal trainer/therapist model. First, it doesn't scale - if you want to double sales, you need to do twice as much work. Second, you need to save your clients more money than the fees you charge. For wealthy people (wealth management) a fraction of a percent might make it worth it. If your dealing with regular folks and suggest little optimizations such as moving $10k to a savings account with %1 more interest, that is $100/year, so your cut would have to be smaller than that. Third, if you're teaching people to fish, there will come a point when they don't need you. If each engagement is only 1-3 sessions, then you'll be needing to figure out a way to either keep customers longer, or find out a steady source of new clients.

I'm thinking you'd probably want to do continue doing some coaching to get real-world problems and situations and then have a book/blog/video/newsletter/system etc. that you sell.
posted by kamelhoecker at 2:21 PM on April 19, 2009

If you want to do it through a website, have a look at SBI; it would seem to be designed for your kind of business. The short summary of their approach is, create content, attract traffic with keywords, "pre-sell", and then monetize.

Their major selling point is that they have a quite intelligent process for coming up with useful keywords: they provide metrics to show how commonly searched for (on Google, mostly) those keywords are, and how commonly a result is returned, and basically the trick of it is to write content that intelligently uses those keywords for which there are a great number of searches and few results. This, in theory, will bring traffic to your site. If you provide useful information to the visitors, you can then monetize it through advertising and affiliation (in your case, for example, providing referrals to finance providers, investment funds, accountants), as well as providing an online store for various goods and services of your own, such as bookings for your face-to-face consultations, PDF ebooks, charging to answer very specific questions, etc.

You don't need to decide in advance what to provide and then try to monetize it; the search analysis tools basically tell you what there is demand for, and you provide that.

I don't mean to come across as an evangelist for it, and I'm not associated with it other than as a very recent customer - but it may be of use to you.
posted by aeschenkarnos at 12:08 AM on April 20, 2009