2 days ago
The truth about financial advisors—and how business leaders can pick the right one
Not all financial advisors are created equal. For busy entrepreneurs and business leaders, your money is your livelihood. You've worked hard to make it, you've worked hard to keep it, and the hands you trust to manage and grow it matter significantly.
When seeking out a financial advisor to help you optimize your wealth, there are many factors that come into play. It's not a one-size-fits-all mentality; what works for someone else and their business strategy might not work for you, and that's OK. It's about learning who you trust and who you want to embark on this journey with.
A business leader's journey involves making tough choices, and this choice is no different. In fact, this choice might be one of the most important ones. And if you don't like the advisor you choose, you have full rein to fire them and start fresh—that's just how business works.
Here are three truths about financial advisors, as well as how to pick the right one as a business leader.
TRUTH NO. 1: YOU MUST VET YOUR ADVISOR
Choosing a financial advisor is a lot like choosing a business partner. You want someone you can trust, someone you can talk openly and honestly with, and someone who is a partner. Business executives may get a very different experience working with a large financial advisory firm versus an independent advisor, and it's important to know that distinction in advance.
For instance, an executive meeting with a large firm may encounter conversations that lean more product-driven, where recommendations may be influenced by internal sales goals. In contrast, independent advisors typically have more freedom and flexibility to tailor their guidance solely around their clients' unique needs and goals. Use your judgment in your selection process to pick the best option for yourself and your business.
Regardless of who you choose, meet with several advisors before making a decision. If you don't vibe with your advisor, get a new one. I tell my clients, 'If you don't like me, fire me.' No harm, no foul. It's the game, and I get it. It's about finding a match, and it's a two-way street.
When vetting your financial advisor, have an open conversation about money. Each advisor you meet with will charge you different amounts in fees to manage your portfolio, and it's up to you to decide which fee structure is right for you. If one advisor is charging a 1% fee, but another is charging only 0.7%, which one do you go with? The cheaper one? The more expensive one? Which advisor feels like a better fit in totality for you and your business goals?
Finally, it's important to do a gut check and be honest with yourself about how the partnership is going. Ask yourself: Are they honest? Are they trustworthy? Are their fees what they say they are? Are they helping me reach my financial goals and prepare for the future goals of my business?
These are questions you need to ask yourself, and you should feel confident in your answers.
Here's the hard truth: No one knows everything.
The great thing about economics is that you never find the answer. No stock chart, business playbook, or talking head on TV can prepare business leaders for the unknown. Sure, they can opine about what happened historically and make a projection about the economic outlook, but no one has a magic crystal ball.
The same is true for financial advisors.
While an advisor may have a strategy playbook, the harsh truth is that they are making an educated guess based on their experience, similar to how an entrepreneur takes an educated risk in starting a business. A financial advisor is a knowledgeable partner in your corner who will work with you to try to figure out the best possible answer and the best possible solution to grow and maximize your wealth. They will listen to your business goals and put you on a path to help achieve them—whether it's for capital planning, succession planning, or an upcoming merger or acquisition.
A financial advisor will take their industry experience and historical knowledge and use that to drive results in your financial portfolio. Sometimes they will get it right, and sometimes they will get it wrong. That's life. They are only human, and things will likely balance out over time. The goal is to come out on top and with a win that sets you and your business up for future success.
TRUTH NO. 3: WORK WITH AN EXPERT, BUT STILL QUESTION EVERYTHING
I encourage all business leaders to read two books—Malcom Gladwell's Blink and Hans Rosling's Factfulness— because these books teach readers to question life. They teach you critical thinking and not to blindly accept answers someone is telling you.
As humans, we have an inherent instinct to want to believe what people tell us is the truth. That's not always the case, however. What we are told might be their narrative, but that doesn't mean it's the truth. That's why it's important to have a discerning eye, not a trusting eye.
I may be a financial advisor, but I tell my clients to question me as well—to hold my feet to the fire and hold me accountable. I believe blindly accepting answers and not asking questions is the most damaging thing to our society, and it needs to change. If all anyone does is follow, who will emerge as the leader?
THE VERDICT
Choosing a financial advisor is an important decision. Entrepreneurs, business leaders, and executives in all industries need to vet advisors before committing to one person or firm. You need to be on the same page about your business goals and where you want your partnership to go.
When you have two people questioning things and thinking critically together, they are an unstoppable force to be reckoned with—and the outcomes can be both rewarding and lucrative.
