Coping with costs and compliance

For newly minted sole practitioner Andrew J. Feldman, the toughest part about striking out on his own has been coping with the cost of doing business. “In this day and age, there are a lot of upfront costs in compliance,” he said. “All the costs are definitely an issue — licenses costs, renewal fees — and I maintain an insurance license.” The other side of the balance sheet is red, too, because generating income has been a problem. “Dealing with the public is a hard thing and getting to the income I would like is slower than I had anticipated,” said Mr. Feldman, president and founder of AJ Feldman Financial LLC of Chicago, which he launched last fall. The firm manages $13 million in assets. Before striking out on his own, Mr. Feldman had been a member of GemShares LLC, teaming up with former colleagues from exchange-traded-funds developer Treasury Equity LLC to build and market those products. While his ETF development career was unfolding, his financial planning career also took shape. Mr. Feldman worked at Lincoln Park Financial Group LLC, receiving his securities and insurance licenses, as well as his certified financial planner designation. After more than two years at Lincoln Park, he moved to Mesirow Financial Investment Advisory in 2008 and left in 2009. An impasse in ETF development at GemShares made Mr. Feldman think about which career path he cared about more. “We were working on a second project, which hadn't been a real success, when I realized financial planning is better for the long-term future,” he said. “When I got my CFP, I fell in love with dealing with the public,” Mr. Feldman said. The transition hasn't been easy, especially trying to hold on to his original clients. “I was sensitive to the clients I had pulled away and made sure we didn't step on any feet,” Mr. Feldman said. He also had problems with the person that he hired to help set up his firm, who he said wasn't familiar with the nuances of running a fee-only practice in Illinois. “Someone set up my business entity, and I wasn't as pleased as I could've been,” Mr. Feldman said. “The LLC was set up fine, but the filings with the state and my ADV [weren't]. They weren't used to the unique way I run my business,” Mr. Feldman said. The young firm wasn't profitable last year, but he said that the desire to grow and succeed keeps him going. “I'm going to grow this business, and this is what I've chosen to do,” Mr. Feldman said. E-mail Darla Mercado at dmercado@investmentnews.com.

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“The first year or two will be lean. You're going to be spending as much as you're making, if not more.” Andrew J. Feldman