There are hundreds of financial experts out there to help small business owners-380,000 of them in the U.S., according to Tiburon Strategic Advisors-so why is it that finding someone to help you manage your money can be such a difficult proposition? Most club owners, even those who keep their clubs intentionally small, ultimately reach a point where they need help setting financial goals and figuring out what steps will help them accomplish those goals.
A good financial planner can help club owners manage everything from your employee retirement plans to your monthly cash flow to your own long-term investment goals. Your challenge is finding the right person for the job-and asking these 8 questions can help you do just that.
What are your qualifications?
There are all kinds of financial planners out there. The four you’ll probably run into are: advisors who are are brokers, registered investment advisors, planners and insurance company advisors. A registered investment advisor is the only one who’s legally required to act in your best interests; the others must provide “suitable” advice but aren’t required to optimize your assets. (That doesn’t mean they won’t act in your best interests, it’s just something to keep in mind.)
Who’s your typical client?
You want to ask this early in your conversation, before you clue a planner into what you’re looking for. The reason? It’s tempting for a financial advisor to tailor his spiel to best match your needs, but before he knows what those needs are, he can talk honestly about what his practice does, and that can give you a lot of insight into whether he’s the right money manager for your club. Ideally, you’ll find a planner who’d got expertise in areas that matter to you.
How do you get paid?
An advisor might charge a flat fee, which can be a fixed number or an hourly rate, or he might charge commissions on your purchases, a percentage of your annual income or a fund charge-or some combination of the above. Pay close attention to the fee structures because your needs will determine the best deal-if you’re investing a lot and need a lot of planning advice, a flat fee may be a bargain, but if you’re putting together a few smaller investments, you may save money with a commission-based structure.
How many people like me do you work with?
Once you’ve described your situation to a planner, ask him about his clients with a similar profile. He won’t name names, but he can give examples. In the best of all possible worlds, someone with a clientele composed of similar investors who’s kept many of them around for several years is a good investment bet.
What can you do for me?
This question is less egotistical than it sounds-some states govern financial advisors pretty closely, so you need to make sure the person you’re hiring can give you what you want. For instance, some advisors can make sales but are prohibited from offering financial advice-if you’re looking for someone who can help you manage your monthly cash flow problems, an advisor who can’t give advice isn’t a good choice.
How many people would be working on my account?
People often make the mistake of thinking that the person they hire to be their financial advisor is the person who’ll be handling their account, but that isn’t always the case. At some firms, there are teams assigned to different accounts, and you may not have much contact with the person who you’re initially meeting with. Be sure you understand how the service structure works.
Would you describe your investment style as aggressive or more conservative?
Most planners will hem and haw a bit about answering this question, but it’s an important one because you really want financial planner whose investment philosophy matches yours. The goal, after all, is to have your money safely taken care of so that you’re not stressed and worried about it, right?
What happens if I outgrow you?
You want an advisor who can see far enough ahead to know that his clients might not always need him-and that’s especially true if you’re small potatoes right now but have plans for fitness club domination up your sleeve. A good advisor will acknowledge that there’s a limit to his ability to help you-or perhaps be able to clearly explain why he can continue to help you in the future.
