*Financial Advisors

Financial Advisors:
What You Need To Know TO Hire The Best

By Sally Bell

Financial advisors aren’t just for high-flying, established companies. Whether you’ve been in business for years or are just starting out, whether you’re flush or barely scrape through each month, an advisor can guide you toward your goals.

“Good financial advisors should be able to simplify the small-business owner’s life,” says NASE Member Christina Kemprecos, a certified trust and financial advisor who is founder of Secure Future Financial Services in South Dennis, Mass. “They can put you on the right financial track as cheaply and simply as possible.”

That applies equally to your business and personal life. In fact, Kemprecos says a financial advisor can help “tie your business and personal needs together, making sure the two tracks are coordinated.

“We can help before they even get the business going by making sure they put their money in the right places,” notes Kemprecos. “Don’t think financial planners won’t be interested because you’re small. The little guy needs us as much as the guy who has money.”

NASE Member Darell Barnes, a financial consultant who owns Osiris Financial Management Corp. in Denver, explains the financial advisor’s thought process this way: “If I help out someone just starting, who is that person going to come to when he does make money?

The Advisor’s Job
Broadly, financial advisors help with cash, risk and investment management, as well as tax, retirement and estate planning.

For your business, that might include reviewing employee benefits, analyzing business agreements, reducing business taxes and making sure you have adequate property or liability insurance coverage.

For yourself and your family, a financial advisor can help you save and invest to achieve financial goals -- like college for the kids, a bigger house and the retirement cottage on the beach. Advisors also work to slice estate taxes.

They can point your business in the right direction to help meet personal goals. Maybe you want to keep the business in the family, for example, or use the business to create a retirement income. An astute advisor can even recommend ideas to make your business more profitable.

“We find ways to save income taxes, make sure they [business owners] aren’t spending money on products and services they don’t need, and review everything periodically to make sure their plan keeps current with their changing needs,” says Holly Brown, a certified financial planner with Lincoln Financial Advisors of Dallas.

And after the plan is complete, Kemprecos says a good advisor will encourage small-business owners to stay the course by making timely phone calls, dropping by and doing the paperwork to keep it going smoothly.

Who To Choose
Financial advisors come in an alphabet soup array, including certified public accountants (CPA) and certified financial planners (CFP), with its allied designations such as chartered financial consultant (ChFC) and certified trust and financial advisor (CTFA). Tax lawyers, stockbrokers and investment managers round out the mix. With so many choices, how do you cut through the thicket to find the advisor that’s right for you?

Each profession has its place, and not surprisingly, each sees a business owner’s needs through its own filter. Barnes advises thinking carefully about what you and your business need. Stockbrokers, for instance, tout the merits of Wall Street. CPAs can set up the business accounting system efficiently. A tax lawyer might be the right specialist if your business encounters a specific tax problem.

For these reasons, many small-business owners choose a certified financial planner. Where other financial advisors are specialists, CFPs are generalists. They determine a client’s needs, refer them to specialists as necessary and coordinate the ultimate package to ensure it works together.

“Financial planners have the broadest viewpoint,” says Brown. “I always suggest starting broad and getting more narrow in scope as you need to. CFPs will also work with your existing advisors. You don’t need to do away with anyone.”

Over the long term, you’ll probably seek the services of several different kinds of financial advisors to guide your decisions. As Kemprecos observes, “Even a sole proprietor needs a team. You’ll rarely find everything you need wrapped up in one person.”

Making A Match
Whichever kind of financial advisor you believe fits your needs, use your business acumen to find the best one, just like you’d find the right vendor to supply your business.

Getting referrals is a good way to start, suggests Barnes. Ask your business associates, banker, friends, family -- any knowledgeable person you trust to make a recommendation.

Keep in mind, though, that your needs may not be remotely similar to your next door neighbor, best friend or even your business partner. Ask what that advisor did for the person to match compatibility with your needs. A financial advisor who primarily helps families, for instance, may have little experience with small-business owners.

Don’t stop with just one referral, either. “Shop around and get the opinion of several planners,” Barnes says. Advisors likely will suggest different financial routes, based on their professional backgrounds and experiences. By talking with several, you’ll pick up ideas that will help you hone in on the kind of guidance you most need.

Ask pointed questions when searching for an advisor. After all, it’s your money, your business success and your financial future at stake. Quiz them about client selections and portfolio performance over the last three years -- and get supporting documentation.

“Always ask why. Don’t just accept what they say,” Barnes stresses. “Ask why they selected an investment option, what was its risk at the time, why it performed the way it did, how they feel about it now and in the coming year.”

Questions like those will help determine the skill of potential advisors, which Barnes notes is vital because “the biggest risk in any investment is the person sitting across from you. Their skill makes money for you or loses it.”

The advisor candidate should also ask questions to learn about your financial goals and time frame for accomplishing them. “It’s very important they write down what you say and pay attention to what you want before suggesting what they can do for you,” Brown says.

Don't forget to discuss an advisor's investment philosophy. Everyone has a level of risk with which they're comfortable, and the advisor should respect yours. "This person is your coach. Your want the coach's philosophy to match yours. What's aggressive to one person isn't to another," Barnes points out.

Pay attention also to how you interact with each advisor. Can you converse easily? Do you feel comfortable sharing the most intimate financial details of your business and personal life?

Check out advisors' credentials and certifications, which ensure reasonable knowledge in the field. Most of the credential-issuing organizations also require substantial continuing education to retain certification. An accountant, for example, should have earned the CPA designation. A stockbroker should have the Series 6, 7 and 13 securities licenses from the National Association of Securities Dealers. A tax lawyer must have passed the bar exam.

Absence of complaints is important as well. Call the local Better Business Bureau. If you choose a stockbroker, you can find whether there have been complaints from the federal Securities and Exchange Commission by calling (202)942-7040.

Proceed Cautiously

Watch for warning signs, Brown advises. Run if the advisor criticizes every financial step you've taken. "The advisor should build on what's been done previously rather than want you to redo everything," she says.

The same applies if an advisor tries to pull you away from financial advisors you already trust. "I'd be suspicious of that," remarks Brown. "Just because someone else put a policy in place, it's not necessarily bad."

She also notes that no advisor can truly know how a specific investment will perform in the future, so avoid planners who promise a particular investment return. That also goes for an advisor who doesn't disclose fees or expenses involved in transactions.

If the advisor starts selling solutions too quickly, find someone else, says Kemprecos. "The advisor should ask a bunch of questions about your financial goals and time frames. They need to get a handle on that before making recommendations."

Be cautious if the advisor doesn't have a track record. It's a rapidly growing industry, and many advisors have been in it less than five years, Kemprecos notes. That's not an automatic negative, however, because the person may have accumulated deep experience in an allied field before moving into financial advising.

The complicated ins and outs of finances and investments can make a small-business owner hesitate to act. However, Barnes says it's not as hard as it looks.

"Don't assume you won't understand, because you can understand and you will," he says. "The more the advisor is your coach and interpreter, [the more] they will help you understand."

Sally Bell is a freelance writer in Dallas, Texas, and a frequent contributor to Self-Employed America.

Sage Advice
When choosing a financial advisor, the experts recommend you select someone who:

Ties together your business and personal financial plans

Builds on financial plans you already have in place

Is willing to work with your other business advisors

Understands your business and personal goals before making recommendations

Possesses an investment philosophy that matches your own