Steps in Choosing a Financial Advisor for Your Business

A financial advisor can increase your business’s profitability and prepare for future growth

Never take the task of choosing a financial advisor lightly. Keep in mind that this professional will offer you advice that can make or break your business

Only around 40% of small business owners have had a consultation with a financial advisor. Almost 30% don’t know how much money they’ll need when they retire, and less than 25% have a succession plan in place.

Most small business owners want to pass down their business to a successor. However, it’s almost impossible to manage every single financial aspect of your business while you’re busy operating it.

A financial advisor can help increase your business’s profitability and prepare it for future growth. Nevertheless, the process of choosing a financial advisor isn’t as easy as it sounds.

So, to help you out, here are some steps you need to follow when choosing a financial advisor for your business.

1 – Choose the Type of Financial Advisor

Essentially, there are three types of financial advisors based on how they’re paid: commission-based, fee-based, and fee-only.

  • Commission-Based: Commission-based financial advisors such as insurance agents and brokers sell financial products including annuities, insurance, and mutual funds, and receive a commission on the sale of the products. Note that the temptation of commission can impact the advice these financial advisors give you.
  • Fee-Based: A fee-based financial advisor offers financial advice for a fee and also holds a license to sell investments or insurance for a commission.
  • Fee-Only: Fee-only advisors charge flat fees or a specified percentage of the assets they manage. Such advisors don’t earn a commission from the products they sell and typically offer more holistic financial advice.

2 – Identify the Financial Advisor Services You Need

Financial advisors usually specialise in specific areas. Thus, when choosing a financial advisor, you need to ensure that they provide the services you need. Some services you can get include:

  • Tax saving strategies
  • Budgeting
  • Retirement planning
  • Improving business profitability.

3 – Look for Financial Advisors with Reputable Credentials

Checking credentials allows you to know if the financial advisor is adequately qualified to handle your business’s financial affairs. When choosing a financial advisor, opt for someone who has cleared their CFP (Certified Financial Planner) exam.

You can also check if a financial advisor is a member of The National Association of Personal Financial Advisors (NAPFA), which requires ongoing education that goes beyond the basic credentials.

4 – Schedule A Meeting with A Financial Advisor

Most financial advisors allow you to meet with them before you officially recruit them. Use this opportunity to ask any questions that you may have? For instance, you can ask them how long they’ve been practicing which will help you gauge their level of experience.

Asking specific questions can allow you to determine how the financial advisor communicates, along with their area of expertise, and if they’re right for you. The key is to ensure you comprehend their responses, and in case you don’t, feel free to ask follow-up questions.


Never take the task of choosing a financial advisor lightly. Keep in mind that this professional will offer you advice that can make or break your business so follow all the steps outlined above and research carefully.

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