As an Entrepreneur, Ask Yourself This Question About Your Adviser

The following is adapted from The Entrepreneur’s Guide to Financial Well-Being, by AMDG Financial's founding partner, Wayne Titus.

Entrepreneurs often don’t know what they don’t know, and when it comes to their finances, there is a lot to know, because most entrepreneurs have far different financial situations than those with regular, salaried jobs.

Yet most advisers provide onlyinvestment consulting. Entrepreneurs need more. A financial professional suitable for an entrepreneur should ask such questions as:

  • What was your objective in setting up the company?
  • Was it just to have an exit strategy sale? Was it to provide a service to your clients on an ongoing basis, and then to ensure that continued as your legacy?
  • Do you want to help your employees save for retirement, and how? Who, if anyone, are you grooming to take over your business?

Many first-time entrepreneurs take on the mantle of leadership without being aware of everything that comes with it. When they do become aware of the financial complexity of running a company, the first thing they want to do is solve problems fast.

The Entrepreneur's Guide to Financial Well-Being

Sometimes they go for a quick fix, like choosing a payroll company that provides cookie-cutter retirement plans to entrepreneurs looking to help employees and themselves with savings goals. Later, those plans can turn out to be expensive and poorly run.

With one bad experience, entrepreneurs can become reluctant to provide employee benefits. Instead of a grabbing a quick fix, entrepreneurs should answer:

  • Why am I doing this? What’s important about it?
  • Do I know the impacts of the costs on the participants and the plan sponsor?
  • Is it the right design for me and my employees?
  • Will I be tied to costs I might not be willing to incur? What’s the flexibility?
  • What are the limits for owners’ contributions? Is a different plan a better fit?
  • Can more assets be sheltered from taxes with a combination plan?

In addition to asking you questions like these, your adviser should address your personal goals by gathering critical information used to develop wealth enhancement, wealth transfer, wealth protection, and charitable gifting strategies.

Moving to a collaborative mindset

An adviser who can go beyond investment consulting has to have a very different mindset than the average adviser. The shift is like what Atul Gawande describes in The Checklist Manifesto. It’s a move from a master-builder mindset to a collaborative one.

In premodern times, massive structures like the great cathedrals of Europe were built at the instruction of a master builder, a person who held all the necessary knowledge in his head. The master builder directed huge teams, but the projects were not collaborative.

Today, when a skyscraper is built, there’s no master builder. Instead, an integrated team of architects, engineers, and others works together, in constant communication. They establish guideposts and checkpoints along the way to ensure they don’t miss anything and the building doesn’t contain serious design flaws.

Medicine, Gawande writes, has moved from a master-builder model to one of immense complexity. The financial services industry is on the cusp of a similar shift, which means entrepreneurs should prepare to abandon the idea they can find one perfect adviser, with all the knowledge in their head, and instead adopt a collaborative mindset.

It’s not always easy to recognize this need, because the financial services industry perpetuates the myth that you can find a master builder to handle all of your challenges.

It’s necessary, though. We’re living in a time of incredible change, where old structures are disintegrating. Sometimes we fall back on a master-builder mentality just because that’s how we’ve been operating for thousands of years.

But that mentality is no longer viable for our time. It is a bridge collapsing under the weight of the past. You can base your decisions on chance or base them on intention.

As an entrepreneur, ask yourself:

Am I working with a master builder when it comes to my finances?

Or am I working with a collaborative, well-designed, and intentional team structure designed to support the weight of the complexity of today’s environment?

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