Home Base

For financial planners, home office can offer a lot of convenience, but it makes a definite statement.

The Career Advisor, Spring, 2004

A home office can offer a lot of convenience, but it makes a definite statement.

By David Evanson

May 6, 2004- The LPL survey turned up one contradiction: while there is near universal support for the use of a home office in the financial planning profession – go ahead ask anyone — only 12% of financial advisers reported that they worked from home. This is one of those industry debates that will probably never be settled, and financial planners will forever be asking themselves if they should have a home office.

Despite this flux, experts and planners seem to agree on one idea: a home office may not be a great idea when you are starting out: According to Amy Leavitt, a planner with 25 years experience, who works out of a home office in Quechee, Vermont, “My own experience and bias is that it was when I started out I needed a professional office.”

Of course this was the time she could least afford it, so Leavitt moved in with another planner and rented a single room. “At the time, I did not yet have a professional designation, and I thought working out of my home would brand me as someone who was not professional.”

If you are more established, and you are considering taking the plunge, here are three questions from John Bowen, founder and CEO of CEG Worldwide, a research, training and coaching firm focusing on the financial services industry, you can ask yourself to help make the right decision.

First, will a home office accommodate your target market? Specifically, if you happen to be living in a fixer-up starter home, but are going after an ultra-high-net-worth market, it’s not going to work says Bowen. But if you are marketing to similarly situated individuals, then your starter home with an office may work. “A home office is very much a statement about how you value balance in your life, and clients appreciate that.”

Sharon A.C. Chatten, a CFP who has morphed into virtual office coach (www.paperlessoffice.org) takes that idea one step further. “What kind of image are you portraying where you waste money on couches, original artwork and secretarial support?”

Second, will your practice support a home office? “In the final analysis,” Bowen says, “most of the functions in a financial planning practice, such as asset management, recordkeeping, even typing, can be outsourced. Therefore if your practice revolves principally around interacting with clients and going out and getting more clients, with the rest of the functions occurring remotely, a home office may work.” On the other hand, if your practice requires a large support staff and equipment, a home office may cramp your style.

Finally, are you a self starter? The fact is, being home alone can be, well, lonely. According to Bowen, you need to evaluate whether or not you rely on a network of people in your now remote office to keep you moving and in motion. If not, they may represent an unnecessary and expensive trapping you can do without.

The other dimension to being a self starter is whether or not you can remain focused throughout the day. Will you put in the time required, or start gardening because you can? Of course many planners who have home offices find just the opposite occurs. Nancy Langdon Jones, a financial planner in Upland, Calif., finds she works more hours with a home office. “It used to be I would end a day, then go to dinner and that would be it. Now, I find that many times, I return to the office in the evening and do more work.”

If you believe a home office is right for you, keep in mind, it’s not an anything goes proposition. First, most planners will tell you must have a separate closed-off area that is dedicated office space. A separate entrance is a plus, if you have one.

If you have kids, especially, boisterous, active and loud kids, a home office is a challenging proposition no matter how separate your facilities are.

Next, you’ve got to have an office that looks professional. Don’t be fooled into thinking that clients or prospects will never show up there. While many clients are comfortable in their own space, and you can go to them, there are still others that want the privacy of another location – your location. Second, says Leavitt, “Perhaps 25% of my prospects wanted to see my place before they would commit to doing business with me.” As a corollary to professional space, make sure the other areas of your practice are top notch. “You need good letterhead, a good Web site, and a good process,” says Leavitt.

Finally, there are middle-of-the road-options to consider as well. For instance, some planners work primarily out of their home but have an arrangement with their broker/dealer or managed account platform where meet with clients in their space.

And if you are going after the ultra wealthy, those with assets of more than $25 million, the whole home office conundrum may be moot, because says Bowen, “You go to them, they don’t come to you.”

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