Who’s On Your Team: Financial Advisor

Previously in this series, we discussed the importance of having an experienced accountant and insurance advisor on your business’s team of professional advisors. An experienced accountant will help keep your business in great financial shape and a seasoned insurance advisor will ensure your business has the right coverage to weather just about any storm  This month, we are going to talk about financial advisors and why you need to recruit a financial advisor for your dream team sooner rather than later.

Unfortunately, many small business owners completely miss the mark when it comes to planning for their financial future and retirement; and, to be honest, I don’t blame them. When you are the one signing your own pay check every week it makes sense that long range planning is overshadowed by the needs of the short term. However, although managing day-to-day issues is important, at some point all small business owners need to set time aside to plan for the later chapters of their careers and their retirement. This is where a financial advisor adds major value.

A great financial advisor will sit down with you and discuss your retirement goals and create an investment strategy to help you achieve those goals. And, if you haven’t thought through the end of your career at all (like many small business owners), a financial advisor can work with you to develop an investment plan to ensure you are as financially secure as possible at that stage of your life. When selecting a financial advisor for your team, make sure to consider the following:

  1. Experience: Unfortunately, a lot of individuals that enter the financial planning industry with the dream of managing a large portfolio of assets are just not able to make it. Many end up bailing within the first two years. In order to avoid being bounced around from one new financial planner to the next, it is important to select – at the outset – a financial advisor that has been working with a respected firm in the financial planning industry for an extended period of time. Take it from me: do not spend time trying to “help out the new guy” that is just getting started in the industry. Although a noble gesture, if you go down that road you may find yourself looking for a new advisor every two years. Instead, interview at least three advisors that have multiple years of experience and come strongly recommended by friends, family, or online reviews. This selection process will ensure you find an advisor that has the experience to effectively manage your money and will stick with you as you grow and ultimately exit your business.
  2. Interview: Interview each advisor prior to making a final decision. Let them spend a few minutes on the elevator speech, but make sure you have an opportunity to ask a few questions of your own. The following is a list of questions you should consider asking the advisor during the interview:
    • Tell me about your fee structure. How are you getting paid and do you offer alternative fee arrangements, like hourly billing (as opposed to commission-based fees)?
    • How do you go about establishing an investment strategy for your clients? What is the process that you will take me through to determine the best investment approach/strategy for me and my money given my investment goals?
    • Given my stage of life, the fact that I own my own business, and my investment goals, what are some initial recommendations that you have for me on how I should be preparing for retirement?
    • If I have a question or concern for you, how quickly can I expect a response?
    • What happens if you leave your investment firm? Who will notify me that you have left and what will happen to my account?

All too often small business owners get to retirement and realize their retirement portfolio contains only one asset: their business. Don’t let this be you. You need a financial advisor on your team to ensure you are financially secure when it is time to exit your business and/or retire. Spend the time right now finding the right financial advisor for your team. Do not wait. Start planning now.