6 Times Entrepreneurs Need a Financial Advisor

6 Times Entrepreneurs Need a Financial Advisor

Ask any successful business owner the key to success, and he or she will likely tell you that you can’t do it alone. As entrepreneurs, we know we can’t possibly do everything ourselves. So, we delegate, outsource, or invest in resources that will help us reach our goals more effectively. 

But this mindset doesn’t always carry over to our personal finances. In fact, only 40 percent of small business owners have consulted with a financial advisor, according to American Express Open Forum. Even fewer engage long-term. 

There are many reasons entrepreneurs tend to be skeptical of paying for financial advice. Still, there are times when working with a trusted advisor can be more valuable than going it alone. In this article, we’re sharing six times entrepreneurs need a financial advisor—and how an advisor can help.   

#1: You’re Not Confident You Can Retire on Your Preferred Terms 

A recent Paychex Small Business Survey found that nearly two in five small business owners aren’t confident they’ll be financially prepared for retirement. Of those surveyed, the majority said that simply being able to save more would increase their confidence levels. 

You may be planning to eventually sell your business and fund your retirement with the proceeds. Unfortunately, there’s no guarantee that will be a viable strategy in the future. A financial advisor can help you develop a savings strategy that supports your retirement goals without detracting from your business. 

#2: You’re Facing a Big Financial Decision 

Many people wait until a major life event to seek financial advice. For example, divorce, death of a spouse, or a significant inheritance often trigger the need for an advisor. 

As an entrepreneur, you’ll likely encounter such major events in your business from time to time. Perhaps you receive a surprise offer from an interested buyer or are considering bringing on a partner. 

You may be able to weigh the pros and cons of these opportunities from a business perspective on your own. However, a financial advisor can help you evaluate how these decisions will impact your personal finances—as well as your ability to meet your future goals. 

#3: You Need to Diversify Your Assets 

Suppose you receive a lump-sum payout upon selling your business. What do you do next? 

Typically, the way you invest your money as an entrepreneur will be very different from how you invest your money leading up to and in retirement. After exiting your business, you may need guidance as to how to diversify your assets or convert a cash payout to a retirement income strategy. A financial advisor can help you turn the proceeds into a viable strategy that preserves your wealth and lifestyle in retirement. 

#4: You Think You’re Overpaying Taxes 

Not all financial advisors are CPAs or experts in tax accounting. In most cases, you’ll also want a CPA as part of your financial team. However, financial advisors who act in a fiduciary capacity tend to take a more holistic approach to managing our clients’ personal finances. As such, we’re often able to see opportunities that other specialists don’t. 

Specifically, a financial advisor can help you identify opportunities in your personal financial plan to reduce or offset your overall tax bill. An advisor can also help you develop tax-efficient investment and distribution strategies that benefit you over time. 

#5: Your Financial Needs Have Generally Become More Complex 

Typically, the more money you have, the more financial challenges you’re likely to encounter. For instance, affluent individuals and families are more likely to be the targets of lawsuits—especially frivolous ones. You’re also likely to have more complexities baked into your estate plan as you accumulate more wealth. Whether you’re aware of these challenges or not, a financial advisor can help you put strategies in place to protect you and your family from unnecessary financial setbacks. 

#6: You Simply Don’t Want to Be Bothered 

Let’s face it: if personal finance was your passion, you probably would have pursued it as a career path. Instead, you chose to pursue your own passions and have succeeded as an entrepreneur because of it. 

If managing your finances doesn’t light you up, there’s no shame in delegating it to someone else. Time and energy are also precious resources. When yours can be better spent on other pursuits, the question of whether entrepreneurs need a financial advisor becomes much easier to answer. 

Oak Capital Advisors is a fiduciary financial advisory firm that specializes in tax and retirement planning for Charleston-based entrepreneurs. If you’re curious about taking the first step with a financial advisor and want to learn more, please request a free retirement assessment to get started.

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