Did you know that 50% of small businesses fail after being in business for five years? If you are a new business and are debating whether or not you need a business financial advisor, you are in the right place. We have put together this short guide to share the top tips to take into consideration when you are looking at all of your options for advisors.
Keep reading to learn the ins and outs of finding the perfect financial advisor to help your business.
1. Know What You Need
Knowing exactly what you need will make it easier to find a financial advisor that can help your specific business. For example, do you need someone to create a profit and loss analysis or someone to give you tax clarity while you are starting a company?
It will also be a lot easier to narrow down your choice of advisors if you are clear on what your business needs.
2. Experience
The last thing you want is to hire someone that does not have the experience you are looking for or does not have enough experience with your business needs. You might want to take into consideration hiring a financial advisor that was once a business executive within your specific field. When they have had hands-on experience within your industry you know that you can count on their advice.
Keep in mind that your finances are a huge part of your business and this should never be taken lightly. Never rush into hiring the first advisor you speak to. Always compare financial advising experience between any advisors you are considering hiring.
Another tip is to find an advisor that has worked through different cycles of the economy. This will help your business whether the economy is down or up. You can also ask for references and can contact the references to discuss how the prospective financial advisor dealt with them.
3. Fees Transparency
Something else that you want to take into account is how transparent they are with their fees. Do not be afraid to ask how they are going to bill you and how much, to make sure that you do not end up paying more than you expect. If the potential financial advisor is trustworthy they will not be afraid to share their fee expectations upfront.
Some advisors will charge you a flat fee based on either asset value or time. Others will collect commissions depending on the products that they purchase for your portfolio (if you have an investment advisor). Keep in mind that their fees will depend on their experience, expertise, and the quality of their service.
Just because someone charges a really high fee does not mean that they are the best advisor for you, take the time to meet with them and make sure they do not have hidden fees.
4. Credentials
It is important to consider their credentials to make sure they are legit. Check their certificates and their legal documents to make sure that they are genuine and not fake. A financial advisor will also have licenses that you can check to make sure they are legit.
Double-check what the requirements are in your state to become a financial advisor and make sure that the advisor you are looking at has everything required in the state you live in.
5. Communication
Sometimes the financial world seems complicated and confusing because of the jargon. For this reason, you want to find a financial advisor that is able to communicate everything in a language that you understand. They should be able to explain everything in a simple manner and in an unbiased way.
The right advisor will also be patient and will not seem annoyed when you ask them a question. During your consultation test their objection handling strategy. If they can handle your objections without an issue then this is a great sign that they are good communicators.
6. Trust
Without trust, there is no reason to have a financial advisor because this is a nonnegotiable when finding someone to help you with finances. You can’t afford to work with someone who lacks integrity or is unethical because this can land you in hot water in the future or can even drive your business to shut down.
If the advisor ever gives you bad advice this will be on your shoulders. Whenever you have a suspicion that something is not right it is best to cut ties and not move forward with that advisor. You want to trust this person during a crisis so, if you do not feel comfortable sharing your financial details with them then move on to someone else.
7. Reporting Process
Something else that you want to ask is what is their usual method of producing financial reports. The key is to have financial statements that will be beneficial for you and your business. For example, if you require monthly reports then you do not want to hire someone that only does annual reports.
Make sure that you have their reporting process in writing before making the first payment.
Ready to Choose a Business Financial Advisor?
We hope that now that you are aware of the top things to take into consideration when you are looking to hire a business financial advisor you can start going through your options right away and make sure to compare references and reviews.
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