How to Pick the Right Financial Adviser

Choosing the right financial adviser for your business can be one of the most significant and time consuming choices a small business will face. Get it wrong and you face unnecessary costs that cut into margins; get it right and you’ll be left wondering how you thought finance could be so hard! It’s clearly important for small business to get it right, but just how do you do that? After all, if you’re investing so much into your business, don’t you owe it to yourself and stakeholders to get the best advice available? 


This is where financial advisers come into their own. They are specialists in their field and deal with small business finance everyday. They are up to speed with regulation, tax benefits and financial solutions to leverage a business’s financial situation. Just like a doctor, they look at the current state of your health, addressing any areas for concern with some sort of solution to ail the weakness. They may also refer to specialists who can help with specific ailments. 


In a similar sense, advisers are constantly checking the health of businesses to help them operate in peak condition. But how do you know a good adviser from a bad one? There are many indicators that can lead businesses down path of destruction, however, we’re here to help you avoid that.



Relationships Focused


You need to feel comfortable with your adviser and trust them enough to have an open discussion about your business (warts and all). As some people say, when you’re choosing your financial adviser, be sure to make it someone that could be your best friend – because that’s the relationship you will want to build with your adviser. Keep your friends close, and your financial advisers closer.


When an adviser is relationship focused, honesty, transparency and a level of trust will usually follow. These should come more naturally and make you feel safe handing over your businesses financial details. Additionally, the adviser should also be prepared to share their own professional history and financial approach to ensure it is aligned with your business’s risk appetite.


Recommendations are Important


Recommendations can give you a good head start on your search for a financial adviser. If you know any business owners or friends that have had experience with financial advisers, ask for their recommendation to get a head start on your search. A recommended broker gives you some insight into the sort of adviser you want to work with and gives your business a quick starting point.


Personally, I will always try to be recommended to a financial adviser first as it gives me insight into the professional dealings with the business and the type of person they deal with.


Experience is Key


With financial advise, you pay for what you get. If you’re looking for cheap advise, it will likely be broad and indirect, not really addressing the problems at hand and resulting in a poor financial structure. When looking for a financial adviser, SMEs should look at the previous experience and history of working with other businesses to determine their success and their ability to service


In my opinion, a good adviser is worth their weight in gold and can turn around a business’s long term financial situation. My philosophy is to get the best advice you can afford, you will be pleasantly surprised how accessible good advice is from some global firms like Deloitte and KPMG.


Another factor to consider is if the adviser has had experience in your particular industry. Do they understand the typical demands of the industry and the people working in it? Will they understand how to structure your businesses finance to prepare for the demand patterns of your consumers? An adviser that understands the demands of the market is more likely to structure financial plans and goals around these variables to produce a realistic and achievable plan. For example, Rabobank has sectors within their bank that specialises in agribusiness. They plan for variables such as seasonal demand and natural disaster that results in poor yield like droughts and flooding. Working with an adviser with experience in a sector allows for realistic goals to be attained and sufficient financial buffers to remove the strain when push comes to shove.


Are they Qualified?


In some circumstances, an adviser may need to be qualified to offer you business advice in accordance with the Financial Market Authority (FMA). The FMA provides a certain level of compliance, a code of conduct and regulatory guidelines for financial advisers to operate under. This safety net is an assurance that the adviser has a certain level of quality and legitimacy when dealing with your account.


What does your Gut Say?


Your gut feeling is pretty important when making a decision. If something doesn’t feel right, then perhaps it isn’t. If you are not comfortable with a particular adviser, you should reconsider your choice to be with someone who you and your business is relaxed around. After all, you will be sharing all your business information with this person.


A lot of us like to think we can self diagnose (ie Dr. Google) and self medicate, but you run the risk of getting things drastically wrong or being blindsided by naivety and unrealistic expectations to detrimental effect. 


If you need help with financing your business for future growth, get in contact with Spotcap for short term financial solutions.


Until next time,

Alex Wong, Sales and Partnership Manager New Zealand