You own a business. How does it fit into your personal financial plan?

Receipt bundles for tax accountant small business owner - by Flickr User Steven Depolo

Receipt bundles for tax accountant small business owner – by Flickr User Steven Depolo

You’ve already navigated the challenges of building a successful business—but now, with retirement just a few years away, it’s time to tackle another set of challenges, such as:

  • You don’t have a clear picture of what you need to retire.
  • You don’t know what you’ll have at retirement, because although you know a portion of your net worth is tied up in your business, you aren’t quite sure of its value or you simply don’t know how to incorporate it into your planning.
  • You want to work less, but you don’t have a plan for succession.
  • You have focused so much on your business over the years that you don’t have a comprehensive personal financial plan.

It’s important for anyone to find the right financial advisor, but the needs of business owners are more complicated—they require someone who can look at the complete picture and put it all together.

After all, your accountant probably can’t address your investment goals or estate-planning issues. A business broker is more valuable when it’s time to sell your company. And if you’re working with a financial advisor now, they might not be giving you the service you deserve—even if the value of your company is substantial—because your “investable assets” don’t reflect your true net worth.

Business owners need an advisor with a vision beyond those investable assets, one who can collaborate with other trusted advisors to provide the perspective you need to retire the way you want.

But how do you pick the right advisor? It all comes down to asking the right questions. Below are a few to start. And for more detail, check out “Your Guide to Choosing A Financial Advisor.”

How is the advisor paid?

A fee-only advisor doesn’t accept commissions for the investment products they recommend, so you can have confidence that those recommendations are right for you. In our opinion, the best advisors act as fiduciaries—that is, they have a duty to act in your best interests at all times. And they’ll put it in writing.

How deep is the advisor’s experience?

Make sure your advisor can address your specific needs—in your case, you’ll want someone who has experience working with business owners. You also should ask about their certifications, along with inquiring about expertise in other areas of interest, such as risk management, tax planning, net-worth analysis and more.

Does the advisor regularly collaborate with other professionals and key individuals?

To get a complete picture of your financial situation as a business owner—and help you reach your goals—an advisor should seek input from your accountant, attorneys, business broker and other key professionals. They even can involve family members if succession issues are relevant.Ask for testimonials and examples that reflect your situation.

What will you receive in the end?

You might not realize it, but your advisor should: With your business interests, along with retirement accounts, outside investments and possibly rental properties or other assets, you may well be the proverbial “millionaire next door.” That means you need a personal financial plan that reflects all of those assets, not just your investment accounts. Any advisor who tries to sell you investment products without helping you understand how they fit into an overall plan is a salesperson, not a true advisor.

You’ve worked hard to build your business so it can provide a number of things: A comfortable living for you and your family. The freedom to have the retirement you want. Perhaps even financial security for generations to come. The right financial advisor can help you create a solid plan for those goals, a plan that puts all of the pieces together to ensure your future—and your legacy—are both secure.

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