5 Key Criteria for Selecting a Financial Advisor

As one of the most important and influential sectors of your business, finances need to be handled with the utmost care. With the right financial advisory service, you’ll maintain control of your business’s financial future in many areas — from general money management to employee benefits and retirement plans. As you grow, you’ll continue to benefit from an insightful, educational partnership with trained professionals. 

How can CEOs ensure they’re making the right choices to push this exciting collaborative opportunity forward? This article will explore the major considerations that business owners and organizations should keep in mind when selecting a financial advisor or planner.

The Distinction Between Financial Advisors and Planners

Before delving into the specific criteria you can use when looking for a reliable financial management partner, it’s crucial to understand the different options at your disposal. While “financial advisor” and “financial planner” may sound like synonyms, there are further implications for these titles within industry context. 

Any financial manager can use “advisor” or “planner,” and most offer similar services, like funds management and tax planning. However, financial planners are more often than not backed by training and standards that earn them the designation of Certified Financial Planner (CFP). These professionals must adhere to a stricter code of ethical conduct, have a stronger educational background to earn their titles, and be granted acknowledgment by the Certified Financial Planner Board of Standards, Inc. 

CFPs offer the best advisory and planning qualifications, so choosing a financial manager with CFPs on staff will give you a huge advantage as you pursue your financial goals.

Making an Informed Decision

In collaboration with your team, determine your business’s main financial advisory and planning goals — which can be anything from budgeting to tax preparation. Once you have these needs mapped out, it’s time to create a partnership with an institution that fits your team’s vision. Knowledge is key when it comes to vetting financial planners — so prepare to communicate about a variety of subjects in order to make the best decision possible.

Finding Your Best Match

Every financial planner is different, so it’s important to determine whether each potential candidate can meet your business’s needs and goals. Start by asking these essential questions:  

  • Are you a CFP? First and foremost, get a clear, definitive answer on whether or not the individual is board certified. The CFP title is a clear indication of high standards for all services provided.
  • Are you a fiduciary? Ideally, all financial advisors should have your company’s best interests at heart — but fiduciaries set themselves apart from other service providers, like broker-dealers, with an official commitment to abide by the highest standards of trust and to work in the best interest of the client 100% of the time. In practice, this means a partner that can be relied on for a variety of important tasks — such as minimizing your risk for large investment losses and managing employee retirement accounts.
  • What are your other qualifications? While CFPs have done the work to secure their positions as financial experts, not all acronyms or certifications are reliable tells for whether or not a service provider has the education and knowledge to support your business. As you evaluate candidates, consult the Financial Industry Regulatory Authority’s database to understand any claimed qualifications and determine whether each is backed by an accredited organization. 
  • What does your client base look like? It’s best to choose a financial planner who works with businesses similar to yours in scope and structure. For example, a service provider with a majority client base of small businesses understands how an entrepreneur’s financial planning needs and monetary concerns differ from those of a multimillion-dollar organization. And even in the era of remote work, look for experts in your region who can easily understand the demographic context of your business.
  • What are your communication policies? Finally, determine the financial planner’s typical availability. How often will your team be scheduled for check-ins, and how quickly can you expect a response to email questions? The financial planner’s communication practices will influence whether or not they are a good fit for how your organization conducts business.

Advancing Your Tech Toolbox

What tools will the financial advisor provide you with to keep up with today’s technological world? Providers that utilize client portals for easy communication, data aggregation systems for detailed reports, and other perks give you a leg up on your industry competitors by ensuring you understand your finances on a deep level.

Clarifying Payment Processes

Financial advisors can be paid in several ways — but a good way to understand whether they are committed to working in your best interest is by checking to see if the organization is “fee-only.” This designation means that, in order to avoid conflicts of interest, no one on staff accepts commissions for selling specific financial products. 

Beyond the fees paid to the financial planner, there may be other required payments to access particular services (for example, some providers charge a separate fee for investment management). Set up an introductory call or in-person meeting to fully understand how a specific provider’s fees work before going all-in.

Planning for Financial Success

Ready to propel your small business toward exponential growth? Chesapeake Growth Network is the premier financial management choice for local organizations in Annapolis and Bowie, Maryland. With a well-rounded team of CFPs, CPAs, and attorneys, Chesapeake builds your professional network and provides access to comprehensive financial advisory services — as well as educational resources to build out a comprehensive  understanding of your portfolio opportunities and annual financial outlook.  

Contact Chesapeake Growth Network for more information on how you can benefit from this educational and strategic partnership. And don’t miss our next article, which will explore the different funding methods you can choose from for successful succession planning.

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