Operating a business is a job with an immense share of responsibilities. From the day to day tasks that are necessary to keep the business running, to executing your financial plan to secure growth and security in the future, it’s likely you already have a lot on your plate. The good news is that managing your business’ finances is not something that you have to do by yourself. A business financial advisor can help you get your ducks in a row-and keep them there-regardless of whether you are a small business just starting to experience success or you are a large organization that has become too big for individual management.
When you are choosing a financial advisor, your selection process should be thorough. Make sure that the person or firm you choose aligns with your beliefs and financial practices, while also contributing new strategies. In order to do this, you will need to ask the right questions to analyze and vet any advisor with whom you are thinking of working.
What Does a Business Financial Advisor Do?
A business financial advisor is a specific type of investment and money professional who focuses on the needs of businesses. This means that they have pinpointed their knowledge to the heartbeat of business money management – rather than spending significant time dedicated to personal finance issues (such as structuring your retirement). Some advisors cover more than one field, and some have expertise in very niche categories. The right advisor for your business will depend on what kind of business you run, and whether you need help with your entire financial picture or just one section of your operations.
In general, a financial advisor who specializes in working with businesses will be ready to assist with:
- How to be effective when managing your cash flow
- Navigating unexpected challenges (such as the COVID-19 pandemic)
- Methods to help your profits go further
- Options for investing, both into your business and into the market
- How to navigate insurance
- How to mitigate your tax burden, and make preparations to pay it
- Planning exits, succession and employee retention
However, certain planners will offer different specializations or areas of expertise.
Questions to Ask Potential Financial Advisors
Vetting a financial advisor is a critical part of the selection process. You should not just go with the biggest name in your area or the company with the highest reviews. While these metrics can be helpful and should be taken into consideration, your ideal financial advisor will have skills that directly correlate to your needs. To find out if a financial advisor is a good fit for your business, be sure to ask:
1. Are you a fiduciary?
Fiduciaries are responsible for offering unbiased advice about your situation. They must disclose any relationships or influential factors that they bring to bear on their recommendations, which means that you can rest assured you are receiving the advice that is best for you-not a recommendation that is in the advisor’s interests alone.
2. Who are your most common clients?
While you won’t be able to get a list of names for confidentiality reasons, you are looking for advisors who work often with businesses-especially businesses that are similar in size and scope to your own. Experience in the field is critical to success.
3. What is the payment structure?
Some financial advisors will charge you a fee each time you see them. Others will bill by the hour, and still others will charge you a flat percent of your assets each year or a broad bill that covers an entire year’s worth of service. None of these payment schedules are inherently better or worse, but you should know what to expect from each type. Fee-only advisors do not receive commissions for selling you products, which is an important keyword to keep an eye out for.
4. How do we work together?
This question should encompass not only a test of your compatibility but also an understanding of how to communicate. Choose an advisor whose philosophies are similar to yours-or, at least, how you want yours to be. Also take this time to understand how to speak with the advisor. Some may do email meetings, others may meet in person and others may be on call at any time.
Trust the Experts to Help You Navigate Your Financial Future
Choosing the right financial advisor for your business does not have to be a difficult decision, but it should be a thorough one. The experts at Inflection Advisors would be happy to share our experience and help you achieve your goals for your business. Reach out to schedule an appointment to get started or to learn more.
