The tiny world of the financial super elite definitely has a different view on what it takes to create wealth these days, and a correct one too as attested to by the mere fact that they’re part of a tiny fraction of people. Subsequently, anybody harbouring ambitions of joining the 1% or at the very least just achieving even a small fraction of that type of success would have to look towards the financial sector.
I mean it’s no longer the inventor or software developer who comes up with an original idea who shoots to the top of the rich list anymore, but rather those who are involved in the financial sector surrounding things like original ideas and inventions. Whether it’s through speculation, derivative markets, direct and indirect trading or merely providing financial services (and charging a small fee), new money is made in the financial sector.
How does one go about starting a business in the financial sector though? There are a lot of avenues to pursue, many of which if done right can yield some colossal profits. What does it take to get approved to start your own micro-lending business, for example, or perhaps even your own bank if that’s how big you’re thinking?
Can the average Jane on the street have her own fully functional bank up-and-running and raking in lots of profits via bank charges in no time? The short answer is “no,” but with the right kind of drive, desire, patience, persistence and persuasiveness, it’s definitely in the offing.
It’s All About Compliance
Basically it’s all about getting compliant with the Financial Conduct Authority or equivalent body in your own country, like the Financial Services Board, etc. And I use “basically” very loosely here, because there’s nothing basic about making sure your operation complies with all the regulations of the Financial Conduct Authority (FCA).
But yes, the Financial Conduct Authority is ultimately tasked with ensuring consumers are protected and that protection encapsulates the risk they run of losing their money, which in turn is directly linked to the financial service provider’s ability to protect consumers’ investments, even if it’s in the form of something like paying monthly or weekly insurance premiums.
Unlike in other sectors, before you start your business which is to be active in the financial services sector, you can’t really work on a financial services product beyond theorising it. So basically it’s a matter of shifting things around in your head and putting theories down on paper which represent the business model you’re going to adopt.
This is where the barriers to entry prove a little bit too high for the average Jane, quite simply because you essentially have to approach the FCA with your business plan, while that business plan effectively needs to be audited by a reputable auditing/accounting firm. It isn’t an ordinary business plan, but rather an expertly-scrutinised model of how your business plan would fare in the real world markets. The required auditing and modelling comes at a very hefty fee, but once approved, then a good portion of the job is done.
There are a lot of other regulations to comply with after that, such as having to have some locked-in capital reserves (to protect the consumers) and a corporate structure that pleases the FCA.