The world of financial planning is often crowded with advice. This noise can sometimes make it difficult to understand an already complicated area of business. However, general awareness and understanding of today's financial planning trends can be extremely beneficial for young professionals and small business owners alike. Although small business owners can benefit from having an awareness of financial planning trends, it is a wise decision to turn to a financial planner for professional advice at some point. The proper planning could help ensure your business will be part of the 20 percent of new businesses which survive past the five-year mark.
One of the most talked about issues in the world of financial planning is robo-advisors. Robo-advisors are essentially computer programs which construct low-cost investment portfolios based on a user's responses to a few questions. These robo-advisors are driving down the cost of stabilizing finances, which makes them an attractive option for small business owners and entrepreneurs. Recently, there has been a rapid growth in the use of robo-advisors, as financial giants like Charles Schwab begin to use them. This growth in popularity has been driven in part by the desires of millennials, who have come to expect less expensive, digital alternatives to financial planning. The proliferation of robo-advisors is making financial services available to a wider segment of the population, and some experts are predicting that, within five years, the sophistication of robo-advisors may have caught up to or even surpassed what human, financial advisors currently provide.
As major financial firms begin to pay more attention to young professionals, there have been many attempts at capturing their attention with inexpensive (often free) online tools or services. For example, MassMutual, the major life insurance company, provides a service called Society of Grownups which is aimed at providing young professionals with financial planning advice. Another great example is an investing tool that is being developed for the Oculus Rift, a virtual reality device, by the mutual fund group Fidelity. The aim of this tool is to make the process of investing more fun or, at least, more visually stimulating, to teach young professionals better-investing habits. Taking advantage of these tools can help you and your business gain a better understanding of your finances.
Outsource to Consultants
Another trend that financial advisors are currently recommending is outsourcing most of the functions outside of your core business to consultants instead of hiring a full-time employee. Outsourcing in this way is beneficial because it can help you stay up-to-date with the trends specific to your industry. Since these consultants work with several other businesses, your own business can benefit from their experience.
Limit the Size of Your Start-Up at Launch
Rather than spending much money up front for things like office space or office equipment, you can use services for virtual offices or coworking spaces to save money and invest what you've saved for the future of your business. These services provide you with a high level of functionality at a fraction of the cost of a lease. Reducing the initial cost of your business or startup is safer, less expensive, and wiser because you'll avoid the unnecessary financial risk that comes with a long-term office lease.
Cover the Basics
An awareness of trends can be beneficial, but the main thing financial advisors always stress is covering the basics of financial planning early. The focus of most young entrepreneurs' concerns aren't long-term concerns like retirement planning or risk management. For the young and healthy independent professionals, these things are often in the back of their minds. Despite what you might think, long-term financial planning is critical and can save you headaches down the line. It is best to develop a plan that you can stick with, rather than suffer potential complications when they arise.