Having the right team in place that collaborates and is led by what I like to call a "Financial Quarterback" will be essential to integrating all your personal and business finances and wealth management needs. And that’s what I will talk about today. What is the Financial Quarterback, who should they be, and what qualities should business owners look for when filling this role in their wealth management team.
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"Having the right team in place, that collaborates and is led by what I like to call a Financial Quarterback, will be essential to integrating all your personal and business finances and wealth management needs. And that’s what I will talk about today. What is the Financial Quarterback, who should they be, and what qualities should business owners look for when trying to fill this role in their wealth management team?"
What does the Financial Quarterback do?
"For every entrepreneur, I’m sure as you grow your business you end up picking a CPA, an attorney, an insurance agent, etc. The problem that I’ve seen is none of these professionals actually talk to each other and are aware of what’s going on in a business owner's life unless the owner themselves consistently communicates with that professional and lets them know. Which for the business owner can take a lot of time, cause headaches, and usually things end up falling through the cracks because you’re too busy.
And so the Financial Quarterback is someone who can help you determine if you have the right team. They are your financial advocate for getting things done and can communicate with your other professional advisors on your behalf because many owners don’t have the expertise or the time to figure out tax, estate, or exit planning strategies."
Who should be your Financial Quarterback?
"Who should this person be? Well, it should be someone in wealth management, and not just anybody in wealth management or someone who holds themselves out as a financial advisor. It should be someone who has a specialization in working with business owners because the situation of a business owner is very different than the regular w-2 employee who works for a company, they are provided healthcare benefits, and 401k they can easily enroll in and start automatically saving for retirement."
"Someone who specializes in working with business owners will have access to other professionals who also have a specialty and expertise in working with business owners. Why is this important? Because maybe you don’t have a full wealth management team built out. And if you do sometimes, it’s a friend or your brother-in-law who is helping you with your taxes or estate planning and they may not be the best person with the right expertise to get you to the next level of planning."
"So for me, I am a certified financial planner and certified exit planning advisor helping business owners prepare personally and financially to exit their business as well as prepare the business itself to be attractive and saleable to a financial or strategic buyer. To do this entirely on my own would be very difficult. So I have built a network and have access to other professionals who have decades of experience, who I bring in to help with whatever we are working on. A recent example of this would be bringing in a Certified Valuation Analyst to come up with an accurate current business valuation or bringing on a team made up of attorneys and value growth advisors to help execute initiatives to increase the value of a business. So just making sure you are working with someone who has experience, and a specialization will be very important."
Working with a Fiduciary
"Next and most important is you should also be working with someone in wealth management who takes a fiduciary responsibility in working with you, which means having a legal representation where they always put you ahead of their own interests. And this can get very tricky, just because someone has a fiduciary duty doesn’t mean they don’t have a conflict of interest. In most cases, those conflicts of interest are disclosed in a document that nobody reads."
What to look for in a Fiduciary
"So if you are looking for an advisor to be the financial quarterback of your wealth, here’s what I recommend looking for in addition to experience in working with business owners…someone who does not sell products but someone who can represent you when you need to purchase those products. A common example is when a business owner gets pitched on buying a bunch of life insurance and using it as their own personal bank. Essentially building up cash and having access to tax-free money on the back end. Now this can work for some business owners and it won’t work for others. The problem is you are buying the product from someone who randomly reached out to you and pitched you this idea so they can earn a large commission on the back end because that’s how they get paid. And then you never hear from them again."
"The better way to go about it is when you have a wealth advisor acting in your best interest as the quarterback who has no benefit or conflict of interest in whether you buy the product or not, they will represent you and be by your side when reviewing these products and strategies to make sure it’s something that is in your best interest. Because let’s be honest how many business owners are using their own time to study tax, to understand insurance or estate planning, or exit planning strategies, probably very little. Your time is way more valuable working on your business so having a specialized advisor to be in your corner and be your financial advocate is really important."
A Fiduciary with no investment minimum
"Last point I want to make on working with wealth advisors and who should be the quarterback in helping you on your business journey is making sure they don’t have an investment requirement where you need to give them $1m dollars or 5m dollars to manage to work with them. We believe if you have a large bucket of cash, maybe you should pay off your house, buy real estate, get rid of this debt over here on your balance sheet, and invest it on your own, it doesn’t matter if you want to invest with us or not, the point is there is no conflict of interest or urge for us to manage it for a fee just so we can get paid. So in review does this person sell products, do they have an investment management requirement, if so that’s a conflict."
"When you have the right financial partner who has the expertise, who has access to a network of professionals, and no conflicts of interest, you can be sure you are setting yourself up financially to have the right target allocation for your investments, have a financial plan, and be prepared to exit your business for maximum value."