Just for Entrepreneurs: How to Choose the Right Financial Adviser

While most entrepreneurs know their industries well, many are not experts when it comes to money. To help entrepreneurs succeed financially at work and in life, they need both a great CPA and a trustworthy financial adviser. Ideally, with the right people, one firm could serve both roles. It’s possible, in my opinion, to work with two different firms, but coordination is essential to keep critical information from falling through the cracks.

What are the characteristics of the “ideal” adviser? To me, it’s all about trustworthiness, the existence of a solid process, and a holistic approach that considers all aspects of an entrepreneur’s life and business.

Defining “Trustworthiness”

How do you know whether your financial adviser is trustworthy? The perception of trustworthiness is subjective, but to me, it’s more than just likeability. It’s also more than friendship, or a reputation based on a referral from a friend, boss, relative or coworker. By “trustworthy,” I mean an adviser who isn’t considering his or her wallet when offering guidance: a person who always puts the client’s agenda first.

It’s true that some financial advisers are required to place their clients’ interests before their own because of the fiduciary standard established under the Investment Advisers Act of 1940. However, that standard only applies to certain types of advisers in specific situations, all of which the layperson is usually unaware. Finding an adviser who is required to meet the standard is one thing; finding an adviser who embraces the standard as a mindset, and who structures fiduciary processes to support the standard, is ideal. Look for an advisory firm accredited by the Centre for Fiduciary Excellence, or CEFEX. CEFEX-certified firms voluntarily undergo annual audits to verify their adherence to best-interest standards. This is supplemental to regulatory or government oversight.

Why Process Is Important

Your financial well-being is a big-picture scenario. All of the moving parts need to work together, and your adviser needs to be confident that his or her process compensates for blind spots and avoids errors. In his book, The Checklist Manifesto, author Atul Gawande discusses the difference between someone with “aptitude,” (the natural ability of a person to be able to accomplish a certain skillset) vs. “eptitude” (the application of knowledge correctly and consistently). High-performing advisers demonstrate eptitude by having strong processes in place to identify and understand your needs, and monitoring those processes to make needed adjustments. Any adviser should provide a great deal of clarity about what you can expect from the relationship. In addition, he or she should be skilled and confident in connecting your business growth with integrated and holistic wealth management that includes tax, financial and investment strategies.

It’s important to understand that a good process informs strategies, which determine the tactics you and your adviser will take toward your financial well-being. Entrepreneurs know that complexity (and sometimes, chaos!) can be the rule in getting a business off the ground. Having a trustworthy adviser who can guide you through these types of situations will help you sleep better at night.

The Need for a Comprehensive Approach

Entrepreneurs have far different financial situations than those with regular, salaried jobs, yet most advisers provide only investment consulting. Entrepreneurs need more. A financial professional suitable for an entrepreneur should ask such questions as: What was your objective in setting up the company? Was it just to have an exit strategy sale? Was it to provide a service to your clients on an ongoing basis, and then to ensure that continued as your legacy? Do you want to help your employees save for retirement, and how? Who, if anyone, are you grooming to take over your business? How can you minimize the impact of taxes that diminishes your wealth over time?

An adviser who can go beyond investment consulting has to have a very different mindset than the average adviser. The shift is from that of a master-builder, as Gawande describes in The Checklist Manifesto, to a more collaborative mindset. In premodern times, as the great cathedrals of Europe were constructed, the master builder held all of the necessary knowledge in his head and directed huge teams, but the projects were not collaborative. Today, complex large structures involve a team of architects, engineers and others who work together in constant communication. The financial services industry is on the cusp of a similar shift. Instead of working with one “perfect” adviser, entrepreneurs should look for firms with diverse master-builder teams who collaborate with, and on behalf of, the client to find creative solutions that work well for the inherent complexity of entrepreneurs and their businesses.

Choosing the right adviser is well worth the time and effort, even for the busiest entrepreneur. With the right person to watch your financial back, you’ll have the freedom to focus on what really matters to you: your family, your goals, and your company.

About the Author

Wayne B. Titus III, CPA/PFS, AIFA founded AMDG Financial and AMDG Business Advisory Services in 2002 based on his 15 years’ experience at two large accounting firms working with Fortune 50 clients. He dove into entrepreneurship to make a bigger impact on people’s lives. As a fee-only fiduciary adviser, his loyalty is to his clients: he places their interests ahead of his own or his firm’s. With assets of more than $150 million, AMDG Financial integrates tax, financial and investment strategies to help clients make financial and life transitions successful on purpose. The company’s credo is, “From financial wisdom, better stewardship.” His latest book is The Entrepreneur’s Guide to Financial Well-Being (Lioncrest Publishing, March 2019). To learn more, visit amdgservices.com.