There are various reasons why you may find yourself needing to hire a financial advisor for your business.  Whatever the circumstances, selecting the right person and firm to work with can seem like a daunting task, leaving you feeling overwhelmed and unsure of where to start, but it doesn’t need to be.

To be clear, the financial advisor you’d hire for your business is not the same financial advisor you might have for your personal investments or wealth management. While they both have the same title, they are two different people with uniquely different skill sets.  A financial advisor for your business will help you develop a solid financial strategy, including day-to-day cash management practices (i.e., cash flow), forward looking financial projections (path to profitability), assist you with capital sourcing, and lender communication.

Additionally, a good financial advisor should be able to look at your business holistically, providing you with guidance in the areas of strategic planning, new business development, operations, and governance.  Offering ideas on ways your business can improve, generate cost savings, increase margins, position its product/service offering, and help prepare your business for its next stage of growth.

There are many good FA’s (short for financial advisors) out there, so the key is finding the right one for you, one that understands your situation, one that speaks your language, one that can help you navigate the circumstances you and your business are facing.

Here are 4 Qualities to Consider when Hiring a Financial Advisor:

  1. Core Value Alignment
    Often the most overlooked step in selecting a financial advisor is core value alignment. Alignment at the core value level is paramount to creating not only a meaningful relationship but achieving positive outcomes for the long-term success of your business. Being aligned on fundamental beliefs allows for more time to be spent efficiently working on the task at hand. To learn about the FA’s core values, ask probing questions on how they would handle different situations, and why. How would they work with the various stakeholders of your business, such as vendors, customers, employees, and lenders/investors. Do their answers align with what you believe and with how you would approach the situation? Time and time again, our experience has shown us if you are aligned at the core value level, you can work through most every situation, regardless of how difficult it might be.
  2. Clear Communication
    While this might seem like table stakes, you would be surprised how often the failure of clear and concise communication adds unnecessary complexity to a situation.  A good financial advisor will be able to take a complex situation and break it down into easy to understand and easy to digest steps and pieces of information and explain how it relates to your business.  If you don’t understand something don’t be afraid to ask the financial advisor to explain it another way until you do understand and are comfortable with what is being discussed.  Be clear about what your expectations are for the frequency of communication; you should never feel like you don’t know what is going on or where things stand.  When in doubt, over communication should be the default expectation.
  3. Related Experience
    Financial advisory is a broad offering so it’s imperative that you select an advisor who has experience and expertise in the specific area of business finance that you most need help with. A financial advisor who specializes in the biomedical industry might be a very capable individual but may lack the domain knowledge to effectively help your commercial construction company. Ask the FA you are considering to provide examples of past situations that may mirror the circumstances your business is dealing with. Make sure they understand where you are coming from, what you view as a successful outcome, and what you want to achieve for your business in both the near-term and long-term. Ask what tools and processes they will utilize to help your business, and if they will train you how to use these same tools and processes so that you can utilize them after their engagement is done.
  4. Are they Present & Available
    Does your financial advisor listen more than they talk? Are they actively engaged when you are talking? Are they asking probing questions? Are they listening to your answers, and then asking follow-up questions? Or does your advisor do most of the talking and speak in terms you don’t understand? These are all questions you need to ask yourself. No one understands your business like you do, so it is imperative that you find a financial advisor that checks his/her ego at the door and seeks to understand you and your business first. Ultimately, you are unlikely to achieve your desired outcome if your advisor does not understand your point of view or your business or thinks they know your business better than you.

Ensure the financial advisors you are talking with have the capacity to take on your project. Communicate your desired timeline and the scope of work you want them to complete. Ask your advisor to present his/her plan (timeline) with key milestones on how they would work to accomplish what you have outlined to them and make sure it aligns with your expectations.

Choosing the right financial advisor shouldn’t be an intimidating or overwhelming event. Keep these 4 qualities in mind as you interview prospective FA’s and I am confident you will find a financial advisor that will be a value add to your business.

Many businesses go through periods of stress or distress so don’t feel like you are alone in this process. If you would like to talk and learn how we help companies navigate times of stress or distress, give us a call, or drop us an email, we would welcome the opportunity to learn more about your business and the challenges you are facing.

If you found this topic interesting, our strategic partner DWH published this content that you may find relevant as well: 5 Qualities to Look for When Choosing a Financial Advisor.

About Jeff

Jeff has over 25 years of strategic planning, business development, and business transformation leadership experience. Having worked with mid-market, closely-held and family-owned businesses his entire career Jeff has a unique understanding of how these enterprises operate and the challenges they face.

He is passionate about working with business leaders to build strong cultures while developing and executing strategies that deliver exceptional results that benefit all the company’s stakeholders. Jeff’s hands-on approach to working with companies begins with a commonsense approach to strategy development.

With extensive experience in organizational turnaround and growth Jeff follows a defined process (disciplined, focused, intentional) to guide clients from strategy to execution. His experience covers a multitude of industries, with an in-depth understanding of automotive manufacturing.

Jeff holds a Master’s in Business Administration from the Capital University School of Management and earned a Bachelor of Arts in Business Administration and Management from Ohio Dominican University.