Looking for an investment advisory business plan? You're in the right place.
An advisory firm gets paid on the assets it manages, so the questions a bank, a landlord or a co-investor will ask are specific. How many households does the firm need before fees cover payroll? How much do they have to bring? Which regulator does the firm answer to, and does that change as it grows? What happens to fees if markets fall? A blank template won't show you what sound answers look like.
In this article we'll walk through a complete sample plan for a fee-only advisory firm in Arlington, Texas, section by section, so you can see how the pieces fit before you write your own. We'll cover the executive summary, the registration position, the SWOT and, above all, the financials: the build-up of assets, the fee schedule, capacity, and five years of profit, cash flow and balance sheet.
After reading, you'll be able to:
- The executive summary: put the whole firm on one page, so a reader sees the ask, the fee model and the first-year loss within a minute
- The registration section: see how a state-registered adviser plans for the asset level at which the SEC takes over, instead of finding out when it arrives
- The fee schedule and asset ramp: learn how tiered fees turn into an effective rate, and how households and assets build month by month
- The capacity table: check whether your hiring plan can serve the households your revenue line relies on
- The five-year profit, cash flow and balance sheet: understand how each hire, fee and distribution decision shows up in the numbers
- The downside case: have an answer ready for the "what if fees run 20% short?" question, with the steps the owner takes in response
If you're setting up an advisory practice, read this before you write your own. The firm is fictional, so take what fits and change the rest.
In this plan
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Executive Summary
GrowthLink Advisory is a fee-only investment advisory firm that opens in Arlington, Texas on 1 January 2027. It manages portfolios and writes financial plans for two groups: owners of privately held businesses who are within ten years of selling or handing over, and retirees with $0.6 million to $5 million invested. Founder Valerie Sweeney, CFP, owns 100% of GrowthLink Advisory, LLC, a Texas limited liability company.
The firm needs $350,000: $250,000 of Valerie's savings and a $100,000 bank term loan. Of that, $268,000 is held as a cash reserve, $33,000 buys equipment and fit-out, and $49,000 pays for legal work, registration, technology set-up and the launch.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $346,370 | $776,000 | $1,185,000 |
| Assets under management at year end | $51.2 million | $90.1 million | $129.5 million |
| Net income after start-up costs | ($204,147) | $46,728 | $143,781 |
| Closing cash | $99,445 | $115,572 | $228,490 |
Fourteen households, introduced by CPAs, attorneys and Valerie's personal network, have said they intend to move once the firm is registered; no advice is given and nothing is signed before then. The firm funds 37 households by December 2027 and 134 by Year 5. Year 1 is a loss because Valerie is paid, an associate planner starts in month 4 and fees on assets arrive only as accounts transfer. The firm is profitable from Year 2, once it has about 46 households and $65 million of assets.
Fees on assets are 82% to 84% of revenue. They are a percentage of assets, so a fall in markets cuts them directly, and assets also shrink as retirees draw income, which the model nets off. The plan runs a case in which every revenue line is 20% short because there are fewer clients, with the owner's response set out, and the firm still holds cash in every year.
The practice is built on one idea: a business owner's advice does not stop at the portfolio. The same advisors who manage a household's assets also run a fixed-fee exit-planning engagement and advise the owner's company retirement plan, so one relationship covers the owner before and after a sale.
The Firm and Its Registration
Legal name: GrowthLink Advisory, LLC, a Texas limited liability company. Owner: Valerie Sweeney, CFP, 100%. Premises: about 1,300 square feet of leased office space in Arlington, between Dallas and Fort Worth. Opening: 1 January 2027. Advisory agreements are signed only once state registration is effective in December 2026.
Why clients pay the firm
A client pays GrowthLink for three things, each priced differently:
| Service | How it is priced | Year 1 share of revenue |
|---|---|---|
| Portfolio management and ongoing planning | Tiered percentage of assets | 83% |
| Business-owner transition and exit planning | Fixed fee per engagement, about $12,500 in Year 1 | 14% |
| Company retirement-plan advisory | 0.50% of plan assets | 3% |
Client assets sit with an independent custodian, never with the firm. The firm has authority to trade and to deduct its fee, and the client receives statements from the custodian directly.
Goals through Year 3
- 37 funded households and $51.2 million of assets by December 2027.
- A profit after tax in 2028, the second year.
- A second advisor in 2028, and the registration move described below in 2029.
- Owner distributions from 2030, once retained earnings turn positive.
Which regulator, and when it changes
Registration depends on assets. The SEC's guidance for small advisers, last reviewed on its page in September 2026, says advisers managing more than $110 million generally must register with the SEC, advisers below $100 million are generally prohibited from doing so, and mid-sized advisers with $25 million to $100 million generally register with their state. GrowthLink starts in the state category.
Texas takes the filing through the national IARD system: Form ADV Parts 1 and 2 for the firm, a Form U4 for each advisor representative, and a package of documents emailed to the State Securities Board, including a balance-sheet certification, the standard advisory contract and the fee schedule. Filing a U4 schedules the representative for the Series 65 exam. The Board's page asks for at least $110 in the filing account: $75 for the firm and $35 for each representative.
With the year-end assets in this model spread evenly through each year, assets pass $100 million around month 27 (March 2029) and $110 million around month 30 (June 2029). From the second date the firm must register with the SEC, and it would confirm with the Board and counsel what Texas still requires of an SEC-registered adviser. The operations and compliance manager starts in month 28, two months before the $110 million mark, and the outside consultant and Valerie prepare the first SEC filing in the months before. Plan assets are advised without discretion and the model does not count them as regulatory assets under management; if the firm took discretion over them, the date would move about three months earlier. The firm takes no performance fees and sells no insurance or product commissions.
How Households Buy Advice
Who is paying for advice
The Bureau of Labor Statistics counted 299,400 personal financial advisors in 2025, put median pay at $105,070 a year (2025 data) and projects 1% employment growth from 2025 to 2035, slower than average. The same page says advisors either charge a flat fee or earn commissions on the products they sell; it does not mention percentage-of-assets fees, which GrowthLink uses for portfolios alongside fixed fees for planning engagements. The firm sells no products. No local count of households or businesses is quoted here, because the Census and SBA state pages could not be loaded when this plan was checked.
The alternatives a household has
| Alternative | What it offers | Why a household picks it | What GrowthLink offers instead |
|---|---|---|---|
| Bank and brokerage advisors | Portfolios, lending, one provider | Existing relationship and convenience | An advisor who earns no commission on products |
| Automated and hybrid services | Low-cost, algorithm-led portfolios | Price and a good app | Planning for a sale or a business-linked retirement plan |
| Independent advisers | Planning and portfolio management | Personal service and local referrals | A defined niche and fixed-fee exit work |
| Insurance-led planners | Cover and annuities with planning | Protection products in one place | Fee-only advice with no products sold |
| CPAs with an advisory arm | Tax with planning and investment | Existing trust in the CPA | Referral work with CPAs instead of competing for the client |
Each row is a category, not a ranking, and the last column states only where GrowthLink positions itself. No firms are named and no prices quoted, because each firm publishes its own and changes them.
Strengths, gaps and risks
| Strengths | Weaknesses |
|---|---|
| CFP certification and fourteen households who intend to move at registration | One senior person: when Valerie is away, reviews and trading decisions wait |
| Fee schedule that is easy to explain and to compare | No track record under the firm's own name |
| A second line of work, exit planning, that fits the clients | Year 1 loses money and uses the reserve |
| Opportunities | Threats |
|---|---|
| Owners approaching a sale who want advice before the deal | Falling markets reduce fees directly |
| CPAs and attorneys who want a trusted referral for their clients | Low-cost services pressing fees on smaller accounts |
| Company retirement plans that bring owners' personal money with them | Losing a key hire in the registration year |
The Households We Serve
Business owners aged 52 to 66
Owners of closely held companies worth $2 million to $10 million, with personal wealth concentrated in the business. The owner has been too busy to build a portfolio and has little idea what the business would net after tax. The trigger is usually a partner buying in, an offer, a health scare or a child deciding not to take over.
Retirees and near-retirees
Households that have crossed into retirement with $0.6 million to $5 million, often from a pension rollover or a sale years ago. The question is income: how much can be drawn, from which account and in what order, and what happens if markets fall in the first few years.
What both groups need from the firm
A written plan with numbers, a named advisor, two reviews a year and a clear fee in dollars.
Household sizes in the model
| Household assets | Share of new households | Annual fee at the schedule |
|---|---|---|
| $0.6 million | 40% | $6,000 |
| $1.2 million | 35% | $11,600 |
| $2.3 million | 20% | $20,400 |
| $5 million | 5% | $38,000 |
The schedule is 1.00% on the first $1 million, 0.80% on assets from $1 million to $3 million, 0.60% from $3 million to $5 million and 0.45% above $5 million. The mix averages $1.37 million a household and pays about $12,400 a year at the schedule, an effective rate of 0.91%. The 5% of households at $5 million pay about 15% of the fees.
Winning and Keeping Households
From introduction to funded account
An introduction by a CPA or client, a 45-minute first meeting with no pitch, a written proposal with the fee in dollars, a signed agreement, then a custodian account opening and transfer. Valerie takes every first meeting in Year 1. Transfers take two to six weeks, and fees start when the assets arrive.
Twenty-three households after launch
Twenty-three households are won after launch, on top of the fourteen who intend to move at registration, from about 60 first meetings at a 38% close rate.
| Source | Households in Year 1 | Share |
|---|---|---|
| CPA, attorney and banker referrals | 9 | 39% |
| Retiree workshops | 6 | 26% |
| Client referrals | 4 | 17% |
| Content and local search | 2 | 9% |
| Networking and associations | 2 | 9% |
Planning fees open the door
A business owner often begins with a fixed-fee transition engagement. Four are sold in Year 1 at $12,500, eight in Year 2 and thirteen by Year 5, and a share of owners who start with the engagement move their investable assets across afterwards. Plan advisory brings two company plans in 2027 and ten by Year 5.
Staying and growing
The model has no household leaving in Year 1, then two, three, four and five a year. The loss comes mostly from moves, a bad market year and the death of the original client.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Households at year end | 37 | 64 | 90 | 114 | 134 |
| Assets at year end ($ million) | 51.2 | 90.1 | 129.5 | 167.8 | 201.7 |
| Assets per household ($ million) | 1.38 | 1.41 | 1.44 | 1.47 | 1.50 |
| Advisory fee per household | $11,700 | $12,600 | $12,800 | $13,000 | $13,300 |
Fees per household are advisory fees on assets divided by the average number of households in the year. Assets per household rise slowly because market growth is largely offset by fees and by retirees' withdrawals.
Referral Partners and Workshops
What a household costs to win
Year 1 marketing is $60,000: $20,000 of launch spend paid from start-up capital and $40,000 of running costs. That is 17% of revenue, falling to 4% in Year 3 and 3% in Year 5. Across the 23 households won after launch, the cost is about $2,600 each, against a first-year asset fee of about $11,700. In Year 2 the cost is about $1,600 a household.
| Item | Year 1 spend | What it is meant to do |
|---|---|---|
| Brand and website (launch) | $9,000 | A site that states the fee schedule and the two client groups |
| Referral materials and launch seminars (launch) | $11,000 | Introductions to the first 25 CPAs and attorneys |
| CPA and attorney referral programme | $12,000 | Lunches, joint client events and a one-page process note; about 9 households. No referral fees are paid, because any payment for referrals would first have to be checked against the SEC's marketing rule and Texas requirements |
| Retiree workshops | $12,000 | Library and community-centre talks on retirement income, with a mailing; about 6 households |
| Content, search and email | $8,000 | One guide a month on sale preparation and withdrawal order |
| Client appreciation | $4,000 | An annual client event that prompts introductions |
| Memberships | $4,000 | A chamber, an estate-planning council and a CFP chapter |
Dates to watch
- January 2027: ten households funded.
- April 2027: 19 households and the first exit-planning engagement.
- September 2027: 30 households.
- December 2027: 37 households and $51.2 million of assets.
Running the Practice
The Arlington office
About 1,300 square feet at roughly $27 a square foot a year, service charges included ($35,100 in Year 1), with a meeting room and four desks. The firm moves to about 2,000 square feet at roughly $30 in Year 3, when the second planner and the operations manager arrive.
The custodian and the technology
Assets are held at an independent custodian that supports advisers. A portfolio and billing platform handles trading, rebalancing and fee calculation and charges the firm in basis points, which is why direct costs are 3.5% of fees on assets. The remaining systems are a financial planning tool, a client relationship system, secure email and document storage with archiving, and cybersecurity tools. Software costs $32,000 in Year 1 and $115,000 in Year 5.
Compliance and insurance
An outside consultant on retainer supports the compliance manual, annual Form ADV update and the books-and-records files. The operations and compliance manager takes on the work from month 28. Errors and omissions, cyber, general liability and crime cover, plus key-person life and disability cover on Valerie, are budgeted at $18,000 in Year 1, and the figure is an estimate to be replaced by quotes. Professional fees of $38,000 cover a compliance retainer, a legal retainer and the accountant.
Capacity
Each household needs 18 hours a year (two reviews, plan updates and ad hoc requests), 25 hours to onboard, 70 hours for each transition engagement and 40 hours a year for each company plan. Founder time is 900 client hours a year, a further advisor 1,000 and a planner 1,400. Winning clients is separate: each first meeting, with preparation, proposal and follow-up, takes 4 hours, and those hours come out of the advisors' non-client time.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Hours demanded | 1,724 | 2,354 | 3,051 | 3,696 | 4,167 |
| Hours available | 1,950 | 2,720 | 3,417 | 5,120 | 5,700 |
| Utilisation | 88% | 87% | 89% | 72% | 73% |
| Business-development hours (outside the rows above) | 240 | 304 | 304 | 296 | 264 |
| Households per lead advisor, year end | 37 | 32 | 45 | 38 | 45 |
Utilisation is tight in Years 1 to 3, which is why the associate planner is hired in month 4 and why the downside case keeps both Year 1 hires. The load eases when the second planner and second senior advisor arrive in months 36 and 44. Valerie works about 2,200 hours in Year 1: 900 with clients, 240 on business development and the rest on running the firm and compliance.
Safeguards
- Client assets stay with the custodian and statements go to clients directly.
- A written code of ethics, cybersecurity plan and business-continuity plan.
- Two people see every fee calculation before billing from Year 3.
- A succession arrangement with a named advisor who can take over client accounts for a short time.
Founder and Team
Valerie Sweeney, CFP, founder and lead advisor
Valerie has twelve years in wealth management: six at a national brokerage and six at a regional bank's private client group, where she became a senior advisor and served about 70 households. She holds the CFP certification and has passed the Series 65 exam. Her $250,000 is her savings from those years. She has confirmed her non-solicitation terms with a lawyer and does not approach her former employer's clients. She is leaving to run a firm with fewer clients per advisor and no commissioned products.
What the founder has not done before
Valerie has not run compliance, built a firm's technology stack or hired for her own practice. The plan covers those with an outside compliance consultant, a technology set-up budget of $12,000 and an employment lawyer on call. She has no direct experience of the SEC examination process, which is why the operations and compliance manager starts two months before the SEC date.
Cover for Valerie's absence
Valerie is the only senior advisor for the first 19 months. The firm carries key-person life and disability cover on her, budgeted inside insurance, and a named advisor at another firm holds a written agreement to service accounts for up to 60 days. The second advisor, hired in month 20, removes the dependency.
Advisers on call
An accountant who works with advisory firms reviews the first-year accounts each quarter. The Texas State Securities Board's published guidance and a securities lawyer on a fixed-fee retainer settle registration questions.
Guarantee and covenants
Valerie owns 100% of the firm and gives the bank a personal guarantee. The loan carries a covenant to deliver quarterly accounts.
Assets, Fees and Cash: The Five-Year Model
GrowthLink lives on a handful of linked figures: households, the assets each one brings, and the fee those assets pay. The model turns them into a five-year forecast, month by month for 2027 and by year after that. The figures that drive every table come first.
Launch capital and the reserve
| Use of funds | Amount |
|---|---|
| Laptops, monitors, phones, secure network and meeting-room equipment | $15,000 |
| Office furniture and fit-out | $18,000 |
| State adviser registration, exam fees and licences | $3,000 |
| Legal: entity, advisory agreement, Form ADV and compliance manual | $14,000 |
| Technology set-up: portfolio, billing and planning systems, data migration | $12,000 |
| Launch: brand, website, referral-partner materials, first seminars | $20,000 |
| Cash reserve to carry the firm until fees cover payroll | $268,000 |
| Total uses | $350,000 |
| Source of funds | Amount |
|---|---|
| Valerie Sweeney's savings | $250,000 |
| Bank term loan | $100,000 |
| Total sources | $350,000 |
Valerie invests $250,000 of her own savings, 71% of the $350,000 total, and the bank lends $100,000 over seven years at 10.5%, interest only for the first twelve months. That rate is an illustration for this example, not a quoted lending rate, and the bank asks for her personal guarantee. The base case would also work with equity alone; the loan costs $10,500 of interest in Year 1 and is there to keep $100,000 of her savings outside the firm and to start a banking relationship before the firm needs one. Year 1 uses $217,555 of operating cash, of which $49,000 is start-up cost, and the lowest month-end balance, after allowing for 20 days of receivables, is about $84,000 in December, roughly six weeks of Year 2 costs. A smaller reserve would leave the stress case below with negative equity at the end of Year 1.
What the numbers rest on
- Advisory fees follow a schedule set by the firm: 1.00% on the first $1 million of a household's assets, 0.80% from $1 million to $3 million, 0.60% from $3 million to $5 million and 0.45% above $5 million. The new-household mix is 40% at $0.6 million, 35% at $1.2 million, 20% at $2.3 million and 5% at $5 million. That averages $1.37 million and pays 0.91% before any discount. The model uses 0.91% in Year 1, easing to 0.89% by Year 5 as bigger households put more assets into the lower tiers, and allows for no discounts. The 5% of households at $5 million pay about 15% of the fees, so one departure in that band costs as much as three households at $0.6 million.
- Fourteen households have told Valerie, through CPA and attorney introductions and her personal network, that they intend to move once the firm is registered. None comes from her former employer's book, and no advice is given and no agreement signed before registration is effective in December 2026. Funded households run 10 in January, 14 in February and 37 in December. Year-end totals are then 64, 90, 114 and 134. No household leaves in Year 1. From Year 2, two, three, four and five leave a year, 4% to 5% of the opening count, so gross new households after launch are 23, 29, 29, 28 and 25.
- A new household brings $1.37 million, rising 3% a year as the firm moves up-market. Assets then change by 5% market growth, less the fee itself (about 0.9%, debited from the account) and less withdrawals of 2.5% a year across the whole book, because retirees draw 3% to 5% while owners are still saving. Net growth on existing assets is therefore about 1.6% a year. The 5% and the 2.5% are planning figures, not forecasts. Year-end assets under management are $51.2 million, $90.1 million, $129.5 million, $167.8 million and $201.7 million, or $1.38 million to $1.50 million a household. Transfers from other custodians land during the first two months, so January fees are charged on half of the month-end balance.
- Fees are debited from client accounts each quarter in advance. The model books them month by month and carries 20 days of receivables on the balance sheet, which smooths cash timing that is lumpier in practice. Planning fees are invoiced on delivery.
- Business-owner transition and exit planning is a fixed-fee engagement of about 70 hours: ownership options, the owner's personal cash flow after a sale and the timeline. The model books four in Year 1 at $12,500 (April, July, September and December), then 8, 10, 12 and 13 a year as the average fee rises to about $14,600.
- Company retirement-plan advisory earns 0.50% of plan assets on a non-discretionary basis, which the model treats as keeping those assets out of regulatory assets under management. Two plans arrive in 2027, $2 million in June and $3 million in October. Plan assets then reach $9 million, $14 million, $20 million and $26 million at the end of Years 2 to 5, spread over 4, 6, 8 and 10 plans, each averaging about $2.5 million. If the firm took discretion over them they would count, and the SEC date would move about three months earlier.
- Direct costs are 3.5% of fees on assets (portfolio-platform, rebalancing and billing charges quoted in basis points), 2% of transition fees and 10% of plan fees (third-party administration support), about 3.5% of revenue overall. The custodian charges the firm nothing for its platform, with trading and fund costs borne by clients; that term has to be confirmed in the custodian agreement.
- Payroll adds 27% to wages for employer taxes, health cover, paid leave and a retirement match. The wages in the personnel table are launch rates. Annual pay raises of 3% appear as their own line from Year 2, and a bonus pool for advisors and planners grows from $12,000 to $55,000.
- The office is about 1,300 square feet in Arlington at roughly $27 a square foot a year, service charges included ($35,100 in Year 1), and about 2,000 square feet at roughly $30 from Year 3. Software runs $32,000 in Year 1 and $115,000 in Year 5, for portfolio management and billing, planning, a client relationship system, archiving of client communications and security tools. Professional fees of $38,000 in Year 1 are a $14,000 compliance consulting retainer, a $10,000 legal retainer, $8,000 for the accountant and $6,000 of filing and other advisory costs. Insurance of $18,000 (5.2% of revenue) covers errors and omissions, cyber, general liability, crime, and key-person life and disability cover on Valerie. All of these are estimates to be replaced by quotes.
- The LLC elects taxation as a corporation, so the 21% federal corporate rate applies and the owner distributions are dividends. An S corporation election would change both. The model carries the Year 1 operating loss of $155,147 against Year 2 and Year 3 profit in full. It ignores the $49,000 of start-up costs, which are generally amortised rather than deducted at once, and it applies no limit on loss use, whereas current federal rules cap how much of a year's taxable income a loss can offset. Tax in Years 2 and 3 is therefore understated and a tax adviser would re-run it.
- The Texas Comptroller describes the franchise tax as an entity-level privilege tax at 0.75% for most businesses, with no tax due below $2,650,000 of revenue for the 2026 and 2027 report years. Revenue stays under that figure in every year here, so state tax is set to zero. The Comptroller resets the threshold from time to time and it has to be re-checked for later years.
- Owner distributions of $60,000 in Year 4 and $150,000 in Year 5 are paid once retained earnings turn positive in Year 4. The bank loan runs to term instead of being repaid early.
Fees by source
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Advisory fees on assets under management | $286,789 | $636,000 | $988,000 | $1,323,000 | $1,644,000 |
| Business-owner transition and exit planning | $50,000 | $105,000 | $140,000 | $170,000 | $190,000 |
| Company retirement-plan advisory fees | $9,581 | $35,000 | $57,000 | $85,000 | $115,000 |
| Total revenue | $346,370 | $776,000 | $1,185,000 | $1,578,000 | $1,949,000 |
| Growth on prior year | – | 124% | 53% | 33% | 24% |
Fees on assets are 83% of Year 1 revenue and 84% of Year 5. Transition planning falls from 14% to 10% as the book grows, and plan advisory rises from 3% to 6%. Year 2 growth is 124%, which the Year 1 ramp explains: December 2027 fees on assets run at $37,214 a month, $446,568 a year, and Year 2 collects $636,000, 1.42 times that, because the 37 households already on board are joined by 27 net new ones in the course of the year. After that, growth eases to 53%, 33% and 24%.
How the fee base builds through 2027
| Month | Advisory fees on assets under management | Business-owner transition and exit planning | Company retirement-plan advisory fees | Total revenue | EBITDA |
|---|---|---|---|---|---|
| Jan 2027 | $5,195 | $0 | $0 | $5,195 | ($34,439) |
| Feb 2027 | $12,474 | $0 | $0 | $12,474 | ($27,412) |
| Mar 2027 | $16,127 | $0 | $0 | $16,127 | ($23,886) |
| Apr 2027 | $18,746 | $12,500 | $0 | $31,246 | ($9,290) |
| May 2027 | $21,368 | $0 | $0 | $21,368 | ($18,826) |
| Jun 2027 | $23,994 | $0 | $833 | $24,827 | ($15,487) |
| Jul 2027 | $26,103 | $12,500 | $833 | $39,436 | ($1,384) |
| Aug 2027 | $28,216 | $0 | $833 | $29,049 | ($11,411) |
| Sep 2027 | $30,331 | $12,500 | $833 | $43,664 | $2,698 |
| Oct 2027 | $32,450 | $0 | $2,083 | $34,533 | ($6,117) |
| Nov 2027 | $34,571 | $0 | $2,083 | $36,654 | ($4,070) |
| Dec 2027 | $37,214 | $12,500 | $2,083 | $51,797 | $10,549 |
January brings $5,195 because only ten households are funded and transfers arrive through the month. Asset fees then climb every month as accounts move across. Planning fees land in April, July, September and December, and the monthly profit before interest, depreciation and tax (EBITDA) turns positive only in July, September and December. Month-end cash bottoms out in Dec at about $84,000. The annual tables spread Year 2 evenly, at $64,667 a month, so January 2028 shows a step up from December's $51,797 that real quarterly billing would soften.
Who is on payroll, and from when
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and lead advisor (CFP) | $150,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Associate planner | $82,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Client service associate | $54,000 | Month 10 | 1 | 1 | 1 | 1 | 1 |
| Advisor (CFP), business-owner clients | $120,000 | Month 20 | – | 1 | 1 | 1 | 1 |
| Operations and compliance manager | $78,000 | Month 28 | – | – | 1 | 1 | 1 |
| Second associate planner | $86,000 | Month 36 | – | – | 1 | 1 | 1 |
| Second senior advisor (CFP) | $135,000 | Month 44 | – | – | – | 1 | 1 |
| Second client service associate | $58,000 | Month 50 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $285,750 | $426,720 | $599,017 | $795,338 | $962,872 |
Valerie works alone for three months. The associate planner joins in month 4, as the first transfers settle and the planning workload arrives, and a client service associate follows in month 10. A second advisor starts in month 20, an operations and compliance manager in month 28, a second associate planner in month 36, a second senior advisor in month 44 and a second client service associate in month 50. Valerie's $150,000 is in the costs from month 1, so every profit figure is after her pay.
What the practice earns and keeps
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $346,370 | $776,000 | $1,185,000 | $1,578,000 | $1,949,000 |
| Direct costs (portfolio platform, plan administration) | ($11,996) | ($26,875) | ($41,040) | ($54,650) | ($67,499) |
| Gross profit | $334,374 | $749,125 | $1,143,960 | $1,523,350 | $1,881,501 |
| Payroll incl. on-costs | ($285,750) | ($426,720) | ($599,017) | ($795,337) | ($962,872) |
| Rent | ($35,100) | ($36,200) | ($60,500) | ($62,300) | ($64,200) |
| Utilities | ($3,600) | ($3,700) | ($5,200) | ($5,400) | ($5,600) |
| Marketing | ($40,000) | ($46,000) | ($50,000) | ($54,000) | ($58,000) |
| Insurance | ($18,000) | ($21,000) | ($26,000) | ($30,000) | ($33,000) |
| Professional fees | ($38,000) | ($40,000) | ($46,000) | ($50,000) | ($54,000) |
| Software subscriptions | ($32,000) | ($52,000) | ($78,000) | ($98,000) | ($115,000) |
| Registrations, licences, CE and professional dues | ($4,000) | ($6,000) | ($8,500) | ($10,000) | ($11,000) |
| Client events, seminars and meetings | ($12,000) | ($18,000) | ($22,000) | ($26,000) | ($28,000) |
| Phones, supplies and postage | ($4,000) | ($5,500) | ($7,000) | ($8,000) | ($8,500) |
| Equipment replacement and new-hire kit | $0 | ($5,000) | ($5,000) | ($9,000) | ($6,000) |
| Advisor and planner bonus pool | $0 | ($12,000) | ($30,000) | ($42,000) | ($55,000) |
| Bad debt allowance (planning fees) | ($1,000) | ($2,000) | ($3,000) | ($3,500) | ($4,000) |
| Annual pay raises (3% a year) | $0 | ($12,802) | ($36,480) | ($73,749) | ($120,849) |
| EBITDA | ($139,076) | $62,203 | $167,264 | $256,063 | $355,480 |
| Depreciation | ($5,571) | ($5,571) | ($5,571) | ($5,571) | ($5,571) |
| Interest | ($10,500) | ($9,904) | ($8,512) | ($6,966) | ($5,250) |
| Income tax | $0 | $0 | ($9,400) | ($51,140) | ($72,378) |
| Net income before start-up costs | ($155,147) | $46,728 | $143,781 | $192,385 | $272,280 |
| Start-up costs expensed at opening (legal, registration, technology set-up, launch marketing) | ($49,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($204,147) | $46,728 | $143,781 | $192,385 | $272,280 |
Year 1 loses $155,147 before start-up costs and $204,147 after them. Year 2 earns $46,728 and pays no income tax, since the Year 1 loss is carried forward; Year 3 pays $9,400. The EBITDA margin is 8.0% in Year 2, then 14.1%, 16.2% and 18.2%, because assets grow faster than payroll. The largest gain, 6.1 points, comes in Year 3, when revenue rises 53% against payroll growth of 45% including pay raises, even with $24,300 of extra rent for the larger office. Payroll with pay raises takes 57% of revenue in Year 2 and 54% to 56% after that. Concentration matters: the 5% of households with $5 million of assets pay about 15% of the asset fees.
Cash through the years
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($217,555) | $28,758 | $126,941 | $176,422 | $257,523 |
| Equipment and fit-out | ($33,000) | $0 | $0 | $0 | $0 |
| Funding received | $350,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($12,631) | ($14,023) | ($15,569) | ($17,284) |
| Owner distributions | $0 | $0 | $0 | ($60,000) | ($150,000) |
| Net change in cash | $99,445 | $16,127 | $112,918 | $100,854 | $90,238 |
| Closing cash | $99,445 | $115,572 | $228,490 | $329,344 | $419,582 |
Closing cash is above zero at every year end, and the lowest year-end figure is $99,445 at the end of Year 1. Operations use $217,555 that year, including the $49,000 of start-up costs. The year-end figure charges receivables at 20 days of average-year revenue ($18,979). The monthly low point charges 20 days of December revenue ($34,531), which is why December month-end cash on that basis is about $84,000, not $99,445. Distributions begin in Year 4, and Year 5 closes with $419,582.
Position at each year end
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $99,445 | $115,572 | $228,490 | $329,344 | $419,582 |
| Accounts receivable | $18,979 | $42,521 | $64,932 | $86,466 | $106,795 |
| Equipment and fit-out (net) | $27,429 | $21,857 | $16,286 | $10,714 | $5,143 |
| Total assets | $145,853 | $179,950 | $309,707 | $426,524 | $531,520 |
| Bank loan | $100,000 | $87,369 | $73,346 | $57,777 | $40,493 |
| Paid-in capital | $250,000 | $250,000 | $250,000 | $250,000 | $250,000 |
| Retained earnings | ($204,147) | ($157,419) | ($13,638) | $118,747 | $241,027 |
| Total liabilities and equity | $145,853 | $179,950 | $309,707 | $426,524 | $531,520 |
Margins, break-even and debt cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -40.2% | 8.0% | 14.1% | 16.2% | 18.2% |
| Net margin (before start-up costs) | -44.8% | 6.0% | 12.1% | 12.2% | 14.0% |
| Payroll incl. pay raises as share of revenue | 82% | 57% | 54% | 55% | 56% |
| Revenue per full-time equivalent at year end | $115,457 | $194,000 | $197,500 | $225,429 | $243,625 |
| Average monthly revenue | $28,864 | $64,667 | $98,750 | $131,500 | $162,417 |
| Monthly revenue needed to cover operating costs | $40,870 | $59,297 | $84,311 | $109,396 | $131,731 |
| Debt service cover (EBITDA / interest + principal) | -13.2x | 2.8x | 7.4x | 11.4x | 15.8x |
Year 1 averages $28,864 of revenue a month against $40,870 needed to cover costs, so it loses money. Year 2 averages $64,667 against $59,297 needed. In households: on the Year 1 cost base the firm needs about 35 average households, or about $48 million of assets, and has 24. On the Year 2 cost base it needs about 46 households, or about $65 million, and averages 51 households with $71 million. Payroll alone, with pay raises, is covered at about 29 households in Year 2. All-in revenue is about $15,400 per average household in Year 2. Revenue per full-time equivalent rises from $194,000 in Year 2 to $243,625 in Year 5. Debt service cover is negative in Year 1, because the firm loses money while paying interest, then 2.8x in Year 2 and 7.4x in Year 3, rising to 15.8x.
A 20% shortfall from fewer clients
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $277,096 | $620,800 | $948,000 | $1,262,400 | $1,559,200 |
| Net income before start-up costs | ($175,922) | $10,751 | $50,484 | $118,144 | $203,249 |
| Net income after start-up costs | ($224,922) | $10,751 | $50,484 | $118,144 | $203,249 |
| Closing cash | $82,466 | $67,324 | $91,428 | $182,348 | $357,621 |
Every revenue line is cut by 20% in every year. The case describes 20% fewer clients than planned, not a market fall, because fewer households also means fewer hours of work; a fall in markets would cut fees while the workload stayed the same, and this plan does not test that. The response: every hire from month 13 starts six months later, the second senior advisor is dropped, marketing is cut by 20%, Valerie takes a 20% pay cut, the firm stays in its first office and no distributions are paid. The associate planner and the first service associate are kept, because one advisor cannot onboard a new household alone. With 20% fewer households, the capacity table works out at about 82% in Year 2 and 76% in Year 3, even with the second advisor six months late. The firm then ends every year with cash in the bank, at no less than $67,324 at a year end (Year 2), and the lowest 2027 month-end balance, after receivables, is about $70,000 in December. It is profitable from Year 2, but only just, at $10,751. Equity ends Year 1 at $25,078, so thin that the firm would talk to the bank before any covenant test. Without the response, the same shortfall would leave $36,366 of cash at the end of Year 1 and a deficit of $92,624 at the end of Year 2.
Sources
- SEC, Investment advisers (small business building blocks), page dated July 24, 2026 and last reviewed September 9, 2026: SEC and state registration thresholds.
- Texas State Securities Board, Getting started as a registered investment adviser: IARD filings, Form U4, Series 65 scheduling, filing-account fees.
- Bureau of Labor Statistics, Personal financial advisors, Occupational Outlook Handbook: 2025 jobs and median pay, 2025-2035 projection (1%) and the flat-fee or commission statement.
- Texas Comptroller of Public Accounts, Franchise tax: tax rate and the no-tax-due threshold for 2026 and 2027.
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