When you’re running a business, financial decisions might not always be your strong suit. The complexities of taxes, investments, and cash flow management require expertise and a tailored approach that aligns with your unique business goals. This is where a financial adviser becomes an invaluable resource.
Before committing to a specific advisor, know which questions you should ask to ensure that the adviser you choose can genuinely support your needs and help you thrive in a competitive landscape. Let’s begin!
How do you tailor your advice to my business?
Every business has unique challenges and opportunities that require a customized approach. Ask potential advisers how they assess your financial situation and goals to create a personalized strategy. A good financial adviser should not only demonstrate their ability to analyze your current financial position but also be proactive in suggesting solutions that align with your business aspirations.
If you work with a financial planner, they should consider factors like your industry, revenue cycles, and growth targets to ensure their advice effectively supports your long-term success. Now, that’s a good indication of a financial adviser who truly understands your business and has the expertise to guide you toward your goals.
How do you communicate with your clients?
Next, inquire about their preferred methods of communication and how often you can expect updates. Establishing a consistent communication schedule, through meetings, phone calls, or emails, ensures that you remain informed about your financial strategy and any relevant developments.
A strong adviser should be open to discussing complex financial concepts in a manner that is easy to understand, providing clarity and confidence in their recommendations. Transparent and accessible communication fosters trust and empowers you to make informed decisions for your business’s financial health.
How do you handle conflicts of interest?
Keep in mind that financial advisers often earn commissions or fees for their services, creating a potential conflict of interest. So, you would want to ask how they handle such conflicts and if they have any limitations on products or services they recommend.
Know that someone reliable will always prioritize your best interests over theirs, even if it means recommending a product or service with lower compensation for themselves. A trustworthy financial adviser should disclose any potential conflicts upfront and explain how they mitigate them to uphold their fiduciary duty to you.
Do you have experience working with small businesses?
As a small business, you need an adviser who understands the unique challenges and opportunities of operating in a competitive market. Ask about their experience working with small businesses, including references or case studies from similar industries.
Picture this: You’re a small business owner in the retail industry, and your potential financial adviser has mostly worked with large corporations in the tech sector. While they may have solid financial knowledge, their experience might not necessarily translate to your specific needs as a small business owner. In this case, it’s best to look for an adviser with a track record of helping businesses like yours succeed.
What is your investment philosophy?
If you’re seeking advice on investments, ask about the adviser’s approach to investment strategy and how they approach risk management. Do they recommend a conservative or aggressive strategy, and why? How do they evaluate potential investments, and what metrics do they use to measure success?
Your financial goals should align with the adviser’s investment philosophy since their recommendations will directly impact your business’s financial health. A conservative strategy may be appropriate for a business focused on stability and slow, steady growth, while an aggressive approach might be suitable for a company seeking rapid expansion. Make sure the adviser’s investment philosophy complements your goals and risk tolerance.
How do you charge for your services?
Perhaps most importantly, be transparent about the costs associated with your adviser’s services. Ask for a breakdown of fees and any additional charges you may incur. Generally, advisers charge a percentage of assets under management or an hourly fee but make sure to confirm the specific details before committing to their services.
Advisers who use a fee-only compensation structure often prioritize their client’s best interests, as they are not incentivized by commissions or selling products. However, this doesn’t mean advisers who earn a commission-based income won’t have your best interests in mind. The key is to understand how they are compensated and ensure it aligns with your expectations.
Choosing the right financial adviser is critical for the success of your business. By asking the right questions, you set the foundation for a fruitful partnership. A knowledgeable adviser who understands your specific challenges can provide tailored guidance, helping you navigate the complexities of finance and ultimately driving your business towards its financial goals.
Take your time in selecting the right adviser to ensure a prosperous future for your enterprise. After all, it’s your business you are thinking about, and it deserves the best!