What is the best financial advisor to use for a small business?

Running a small business often means wearing multiple hats and making difficult decisions with limited time. It’s easy for financial planning to fall by the wayside. However, working with the right financial advisor can benefit not only your personal financial picture but also the long-term health of your business.

Determine Your Financial Guidance Needs

The first step is to determine where you need guidance. For most business owners, this goes far beyond investing. You may need help managing cash flow, reducing taxes, selecting the appropriate retirement plan, planning for succession, or preparing your business for a future sale. Since personal and business finances are usually intertwined, it’s critical to work with someone who understands that complexity and can help you make decisions with both perspectives in mind.

Importance of Choosing a Fiduciary

One of the most important considerations is whether the advisor is a fiduciary. Although the term is frequently used, it carries significant weight. A fiduciary is legally required to act in your best interest. If your advisor earns commissions from selling products, their advice may not be entirely objective. As a business owner, you cannot afford advice that is biased by financial incentives.

Professional Credentials Matter

We also recommend looking for professional credentials such as a Certified Financial Planner™ (CFP®) or a CPA who also does financial planning, not just tax preparation. A CFP® receives training in comprehensive personal finance, including investments, insurance, retirement planning, and estate strategies. A Certified Public Accountant (CPA) who also offers advisory services can bring a strong tax and entity structure perspective. Ideally, your advisor has both skill sets or works closely with someone who does.

Value of Business-Specific Experience

Experience is equally important. A qualified advisor should understand what it means to run a small business. Perhaps they are a business owner themselves who understands the variable income, long hours, and major decisions such as hiring employees or setting up retirement benefits. They should be familiar with options like SEP IRAs or Solo 401(k)s and be able to help you navigate changing circumstances as your business evolves.

Advisor Fee Structures

The advisor’s fee structure is another factor worth considering. Many business owners believe they need to reach a certain asset level before hiring an advisor. That is not always true. Some advisors charge flat or hourly fees, which can be a great option, especially when you are still building savings or reinvesting profits into your company. The important thing is to understand exactly what you are paying and what you are receiving in return. If the conversation begins to feel like a sales pitch instead of a strategy session, it may be time to look elsewhere.

Choosing an Advisor Who Understands Your Business

Ultimately, the best financial advisor for your business is someone who takes the time to understand your specific needs. A good advisor brings clarity to both your personal and business finances, communicates effectively, acts in your best interest, and offers guidance that is personalized and practical. Most importantly, they should feel like a partner in your financial success and not just a professional who checks in from time to time.