In times when you need to make sound financial decisions as far as your business is concerned, then a proper financial advisor could be the difference. A decent financial advisor will not only assist you with your tax or bookkeeping, but will be involved in the long-term financial planning process regardless of whether you are a small start-up or a large corporation. However, there are numerous advisors on the market, so how can one pick the one that will suit their needs? In the present paper, we will disaggregate the main considerations to make when choosing a financial advisor for your business and will also give some practical advice to facilitate the process.

The Reason Why Your Business Should Have a Financial Advisor

To begin with, we should discuss the reasons why you may need a financial advisor at all. Being a business owner, you have a lot of roles, like marketing, operations, and customer service. However, when it comes to financial management of your business, an expert is important at your side. A financial advisor is able to:

• Assist you in cash flow optimization
• Future growth planning
• House tax planning tactics
• Direct investments and risk management
• Provide tips on how one can save money and become more profitable

The proper selection of an advisor saves you a lot of financial loss, optimizes your operations, and leads you to long-term success.

Step 1: Get to Know Your Needs

It is imperative to know the exact financial requirements of your business before you begin your search to find a financial advisor. Financial advisors are of different kinds and they offer various services, thus you can focus on what matters to you and thus reduce your choice. Ask yourself:

• What are your major financial objectives? Do you want to concentrate on tax planning, investment management, or growth strategy?
• In what phase is your business? Are you a nascent business aiming to grow, a growth-stage business, or an exit?
• Are you in need of a person who has experience in a specific business? There are financial advisors who focus on specific industries, like real estate, healthcare or tech.

You will be able to find an advisor who can address your needs well, by defining your needs in advance.

Step 2: Research Credentials and Experience

After getting an idea of what you need, the second step is to screen the possible financial advisors. Ensure that they possess the qualifications, experience, and record that supports what they are saying. The following are some of the things to be noticed:

Credentials

• Certified Financial Planner (CFP): CFP certification is used to show that an advisor has achieved a particular educational, ethical, and professional level.
• Chartered Financial Analyst (CFA): A CFA is an expert in the investment management field and may be able to give you some valuable ideas in terms of your business portfolio.
• Certified Public Accountant (CPA): In case you require professional assistance in taxation and accounting, you can find professional support with the help of a CPA.
• Registered Investment Advisor (RIA): The title indicates that the adviser is legally bound to act in your best interest.

Experience

Seek an advisor who has experience in dealing with a similar business like yours. Ideally, they must be people who have worked in your industry before and understand the financial issues peculiar to your business. Look at their success track record and request references or case studies of their previous clients.

Step 3: Analyze How They Approach Financial Planning

All financial advisors have a certain way they handle money, and this is one of the reasons why you must make sure they have a style that suits you. There are advisors who are more hands-on and there are those who might be hands-off. The following are some of the questions to pose to have a clearer understanding of what they do:

• How do they come up with a financial plan? Are they developing a tailor-made plan according to the objectives and issues of your business, or do they provide a blanket solution?
• How do they communicate? Will they update you on a regular basis, or you will only receive a call when you are in need?
• What are their service rates? There are advisors who charge on an hourly basis and others are on fee-based or commission-based. Ensure that you know how they are remunerated.

When you select an advisor whose style of financial planning is compatible with your expectations, the relationship will be more productive and trusting.

Step 4: Evaluate Compatibility and Reliability

In addition to credentials and experience, you need to be confident and comfortable with your advisor and his or her capabilities. They will also be handling sensitive financial information about you, and therefore trust is most important. The following are some of the tips to evaluate compatibility:

• Personal connection: Can you talk freely to them about money? Are they accommodating and ready to lend an ear to your issues?
• Trust: Do they do what is best in your interest? Always ensure that your advisor works on a fiduciary standard, which means he or she must always act in your best interest.
• Transparency: Do they disclose fees, services and conflict of interest?

The fact that an advisor does not make open communication and transparency a priority may be indicative of a red flag.

Step 5: Think of the Fees of the Advisor

Cost should not be the only deciding factor but it is useful to know how much you are going to pay in order to receive financial advisory services. Advisors have different fee structures and they may charge very differently based on the level of complexity of your needs.

• Hourly rates: These consultants will bill you on an hourly basis depending on the number of hours that he or she spends on your financial planning.
• Fixed rates: There are advisors who do not charge an hourly rate but a fixed amount of money which may be beneficial in case you have a limited project.
• Percentage of assets: There are advisors who will charge you a percentage of assets they will be managing. This is typical of wealth management but not necessarily the most appropriate for businesses that are concentrated on financial strategy, as opposed to investment management.

Be sure to get to know their fee structure very well before making your commitment to avoid any surprises in the future.

Step 6: Request References and Reviews

Request your prospective adviser to provide you with references of other business clients before settling on him or her. Listening to the experiences of other people can provide you with a great deal of information regarding the strengths and weaknesses of the advisor. Also, you can read reviews online or find industry forums to look at how an advisor is perceived.

Conclusion: Act and Make the Right Choice of Advisor

Making the right decision about who will advise your company on financial matters is a critical step that can largely determine the future performance of your company. With knowledge of what you need, background checks on credentials, analysis of strategies, and analysis of trustworthiness, you are able to get an advisor who fits your business objectives and financial vision.

The Finance Focus is a company that specializes in assisting companies to make sound financial decisions. When you are ready to be in charge of your financial future of your company, call us to consult. We have a team of professionals that will help you throughout the process.