Do You Need a Financial Advisor as a Small Business Owner?

May 14, 2023

If you’re a small business owner, you know how much work it can be to keep your business running smoothly: on top of that, you need to keep track of finances, plan for retirement, and manage investments. At the end of the day, finding the time or energy to tackle these things yourself can be tough.

That’s where an experienced wealth manager comes in. We can help you navigate the challenges of business ownership so that you can focus on running your company instead. This guide will help you understand what we do and how we can potentially benefit your business.

This article explores these topics:

  • Why entrepreneurs need a wealth manager
  • What a financial advisor actually does
  • How small businesses utilize financial planning
  • The benefits of working with an advisor
  • Tips for finding the best financial advisor for you

What Is a Financial Advisor—And Do I Need One?

A financial advisor is a professional who helps you make the most of your money. They can help you make better decisions about investing and help build a plan for your future.

In fact, a good financial advisor will do all the following:

  • Understand the different types of investments available (stocks, bonds, mutual funds) and which ones are best for you
  • Educate you about different investing strategies (capital preservation vs. growth)
  • Determine whether or not it’s a good time to sell stocks that have increased in value (so that you can buy low-cost funds instead, which are less risky than individual stocks)
  • Help you create an investment portfolio that fits within your overall financial goals

A financial plan for reaching your overall objective (whether saving for retirement or paying off debt faster) can yield massive peace of mind. When you know that your hard-earned dollars aren’t just sitting there doing nothing; when they are growing faster through smart investing strategies like dollar cost averaging (or making periodic purchases over time so as not to buy everything at once), you can rest easier.

The Benefits of Having a Financial Advisor

There are many benefits to working with a financial advisor.

  • They can help you make better financial decisions. Wealth managers have expertise in areas like retirement planning, tax management, and estate planning that may not be very well-known or understood by small business owners.
  • They can help you avoid monetary pitfalls. Working with a financial advisor allows them to review your personal goals, budget, and spending habits—so that they can identify any potential problems that could become too big of an issue to deal with on your own.
  • They tend to be more educated than most people when it comes to matters of finance. As a result, they'll be able to provide guidance on how best to meet those needs, whether the area of concern is saving money or investing in long-term assets like stocks or bonds (both of which can carry risks).

How Much Does It Cost To Use a Financial Advisor as a Small Business Owner?

As a small business owner, you will have to pay a fee for the services of a fiduciary financial advisor. The three most common ways are by percentage, a flat fee, or a monthly fee. The first, the percentage, is based on the total of your assets under management (AUM) with them.

The second, the flat fee, is typically charged on a project basis but can also be hourly. This does not change based on how much money is in your account at any given time. The third is a fixed fee charged every month. Learning exactly how they are compensated is only one of a few things you should research before signing on with a wealth manager.

If Patrick Can't Save Your Business $5,000 in Taxes, You Get Your Money Back

Questions To Ask a Financial Advisor Before Signing Up

If you're thinking about hiring a financial advisor, ask the following:

  • What is your fee structure? How much does it cost to work with them?
  • What is your investment philosophy, and what types of investments do you recommend? For example, do they have a long-term growth strategy, or are they focused on short-term gains?
  • How long have you been in business? Do they have any testimonials from clients who can vouch for their professionalism and integrity?
  • What educational background do you have (such as a bachelor’s degree in finance or accounting)? Have they taken continuing education courses that keep them up-to-date on new developments in the financial field—and keep their advice current and relevant?

Work With Your Financial Advisor To Achieve Your Business Goals

Ask questions. Meanwhile, when your financial advisor asks you to fill out a questionnaire, be as honest with him or her as you expect them to be with you. If your answers don't align with what they're seeing in their analysis of your finances and goals, they'll probably end up wasting both of your time.

Be clear about what you want to achieve. It's important for small business owners to know exactly what they want out of a financial advisor before engaging one. Whether you’re seeking peace of mind or an expert opinion on how best to utilize cash flow for expanding your business without taking on debt, make your needs clear.

How To Find the Qualified and Reputable Financial Advisor for You

If a financial advisor is right for you, how can you tell? By doing your homework. Make sure they have the proper qualifications—and they aren’t new to the financial services industry. Find out all you can about what kind of experience he or she has.

Next, study their firm’s reputation: are they recognized positively by their clients and peers?

Take a long look at how much it costs to work with them (in terms of both fees and commissions) in comparison with other firms offering similar services.

These are important things to consider. Not only do they tell you if this is someone who will be able to meet your needs—but they may also reveal if someone will be more interested in selling products than helping you achieve your goals.

What if You’re Not Happy With Your Current Financial Advisor?

Approach changing advisors as you might switching physicians: if you're not happy with your current wealth manager, ask for a referral to another professional. You won’t be obligated to work with whomever they recommend. If that person is reputable, it won’t hurt to see what you think of them.

If you are not satisfied with a soon-to-be-ex advisor’s response or the actions they take overall, get up and walk out. You don’t have to be rude, but you don’t have to waste your time.

The Sum Total

Before hiring a financial advisor, ask yourself: Do I need help managing my finances? Are there things I can't do on my own that would make life easier and more streamlined? If so, then hiring an independent professional who can help might be just what you need to reach your business (and personal) financial goals over the long run.

There are plenty of qualified professionals out there who are eager to help small business owners succeed financially. The key is finding one who can work with your unique situation. Ironclad Wealth Management is ready to meet your needs exactly. Contact us today for financial planning Entrepreneurs can count on.

MGO One Seven LLC ("MGO One Seven") is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training. All titles listed for individuals associated with Ironclad Wealth Management represent the individual's role with Ironclad Wealth Management, and not their role with MGO One Seven. Services are provided under the name Ironclad Wealth Management, a DBA of MGO One Seven. Investment products are not FDIC insured, offer no bank guarantee, and may lose value. Please visit our website for important disclosures.

Please note, the information provided in this presentation is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services.

Nothing provided in this presentation constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

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