6 Mistakes You Can Make When Choosing a Financial Advisor

6 Mistakes You Can Make When Choosing a Financial Advisor

A financial advisor can be a crucial figure in your business. To build a robust financial model, you need to hire an advisor who knows every ins and outs about the type of business you are running.

So, when it comes to hiring a financial advisor, you can’t afford to make a mistake. It should be the top priority. Your future business trajectory largely relies on the skills and experience of your business advisor.

As you can’t afford to make the wrong choice to recruit the financial advisor, we try to point out some of the mistakes people usually make when they hire an advisor.

Recruiting an Advisor Who is not a Fiduciary

A fiduciary is simply an individual who ethically holds himself/herself responsible for acting on behalf of another person’s interest. This obligation or commitment is the most crucial aspect of becoming a financial advisor. It eliminates the conflict of interest between you and your advisor.

So, if your advisor is not a fiduciary, it could be a real problem for your business. An advisor has to hold your business interest above all. You can expect it from him/her if he/she is a fiduciary.

Hiring a Financial Advisor with Wrong Speciality

This mistake happens when you hire an advisor only by his/her reputation and fancy resume. You need to keep in mind that the advisor’s high profile means nothing if it is not related to your business. He/she might be good at a specific field, but you need someone who knows every little detail about your business.

The good news is an individual with a high level of skill and knowledge likely to refuse your proposal if he/she thinks it is not his/her type. But, from your part, you need to know what kind of expertise would be necessary for someone to be your advisor.

 

Choosing the First Advisor You Meet

It would be best if you weren’t hasty when it comes to selecting the advisor. You may find it tempting to recruit the first advisor you meet. But, our experience says that it’s a wrong move. You need to interview everyone who applies for the job. There is no harm giving someone a chance to take the position. Interviewing more candidates can open up new possibilities and new perspectives.  So, before hiring, please take your time, compare the skill and experience of your candidates.

Choosing the First Advisor You Meet

Not Asking for Credentials

You should be professional when you are going to hire an advisor. You may think that a recommendation from a trustworthy friend should be sufficient, but it is not. Checking the credentials is more important than you think. It is to avoid legal problems in the future.

Hiring on Your Own

As hiring the advisor is a crucial matter; you shouldn’t act on your own. You need to consult with your business partner, manager, and friends who have these types of experience before you make your move. You can form an interview panel to make the decision right.

Hiring Someone Close

You can think hiring someone close to you could be an excellent thing for your business. You can trust him/her from the core of your heart. But our experience suggests that it is a terrible idea. You shouldn’t involve your personal feelings with your business.

A business decision should be neutral and free from emotional attachment. That’s why selecting someone close as an advisor may not be a clever move.

The Bottom Line

You don’t always have to be a genius to be a successful businessman. It doesn’t always depend on how good you are but how good are the people you are surrounding yourself. Then they can make the right decision for you. So, if you need to hire a financial advisor, give your best effort and full attention.

If you need consultancy regarding your financial plan, tax issues, investment, insurance, feel free to contact us anytime you want.