When business owners begin working with financial advisors, especially in a personal capacity, their company values can sometimes get lost in translation. Here are some best practices for how to communicate company goals to get the most from your financial advisors and improve the outcomes for your business.
How Your Company’s Priorities and Your Financial Advisor’s Advice Intersect
Executives and business owners often rely on financial advisors and wealth managers to build their assets and position themselves to make big financial moves, such as buying out a partner, selling a business, or preparing for retirement. However, all too often, those goals are either implicit or glossed over in the initial meeting and then set aside in favor of more technical issues such as the specific investments and products available. This can lead to a feeling that your financial advisor’s advice is a cookie-cutter response to market trends, rather than guidance that will truly help your business meet its goals.
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Clear communication of your company’s goals and your personal priorities is essential to making the most of your financial advisor’s fiduciary advice. Open communication helps to build a robust, trust-based relationship. Ensuring that this includes your company’s goals and values allows your financial advisor to tailor his or her advice to match, and to respond to changes that may arise along the way.
Techniques for Communicating with Your Financial Advisor
Financial advisors have an obligation to communicate effectively with their clients, including you, and to tailor their advice to your needs and priorities. But there are several techniques you can adopt to improve that communication:
1. Clearly Define Who the Financial Advisor Works For
One of your financial advisor’s fiduciary duties is to put the client’s needs first. To do that, you need to be clear about whether the advisor represents you, individually, or your company. Especially in family businesses or single-owner companies, the line between business and personal advisor can blur. If your financial priorities and your company’s goals ever conflict, that could create problems. Being clear on which individual or entity the financial advisor represents can avoid those problems down the line.
3. Identify Key Players and Stake Holders
In learning about your business, its situation, and its priorities, financial advisors may meet with your partners or intended beneficiaries (such as the next generation) as part of their work. It is a good idea to clearly communicate key players and stake holders’ roles in advance of those meetings. Especially if you anticipate the advisor providing financial advice to upcoming partners or stakeholders, identifying who will share an interest in the growth of the company is essential to protecting those interests over time.
2. Provide Written Company Goals and Vision Statements
If your company has done any strategic planning, you have likely created a written vision statement. You may also have a list of company goals, values, and priorities. Providing these documents to your financial advisor can avoid the kind of misunderstandings that develop over time as memory shifts. They also give your financial advisor something to look back on while preparing your personalized advice.
4. Describe Your Financial Risk Tolerance
Depending on your stage of life, industry, and entrepreneurial spirit, you may be more or less willing to take big risks with your money. A startup company may be willing to go into debt to finance its initial investment, while an established business would prefer to leverage its existing assets instead. Have a frank conversation with your financial advisor about your company goals and risk tolerances, so that he or she doesn’t recommend a bet you can’t afford to lose.
5. Know What Success Looks Like, Personally and for Your Business
One common mistake made in communicating with financial advisors is failing to define success. You may be focused on growth or increasing your holdings, but there can always be more growth. Without any kind of benchmark or milestones, you won’t know if you have hit that goal. This applies both to your personal ambitions (i.e. how much money do you need to comfortably retire?) and business goals (i.e. how much capital does the company need for that next big investment?).
6. Check In With Your Financial Advisor Regularly
Another common mistake is to take a passive role in communicating with your financial advisor. Adopting a regular communication schedule will keep your financial advisor informed about changes in the company. But if you simply wait until he or she reaches out for an annual review, you will miss out on receiving tailor-made advice in the midst of difficult financial decisions. Instead, be proactive in seeking out your financial advisor’s advice, especially before making big investments or purchases.
7. Make Sure You Understand Any Financial Jargon or Terms
As a fiduciary, your financial advisor should be clearly communicating his or her advice to you. But often, that advice could come wrapped in jargon or financial terms you don’t understand. Don’t allow embarrassment to limit the usefulness of the information you receive. If you see a term you don’t know, or are unclear about what went into a piece of advice, ask. This is especially important if your financial advisor works for a proprietary company and is recommending that company’s products or services. Knowing any professional considerations or financial incentives affecting the decision will help you weigh the costs and benefits of following it.
Knowing how to communicate company goals to get the most from your financial advisors requires a clear vision for your business’s future, and a willingness to question what you are told. By developing and communicating your company’s priorities, vision statement, and financial priorities, you can ensure the advice you receive won’t lead the company astray.
David Stanislaw is an organizational development specialist with over 25 years’ experience in creating and communicating company goals and values. Through business consulting and facilitation, David helps businesses identify their priorities and communicate their company values to their teams and financial advisors. Contact us to meet with David and begin prioritizing your company values today.
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