If you’re a successful business owner, congratulations; you’ve already beaten significant odds. According to a report by the U.S. Small Business Administration, just over 45% of small businesses survive the first five years. By the tenth year, only 1 in 3 firms remain.
If you’ve made it past those milestones, you are probably enjoying your success. But that success usually comes with a cost: more time focusing on growing the business means less time to focus on your personal finances. Your business balance sheet may be looking good, but how about your own finances? If your business success went away tomorrow, would you still be able to live the way you to want to?
As long as your business and your life proceed as planned, you may never have to wonder, of course. But as we all know, there are many things in life that are far outside of our control. And some of these things can impact your financial well-being:
- Recession or business downturn
- Loss of a key contract
- Lawsuit against your business or you
- Divorce
- Death or disability of you or your spouse
Benefit from a Different Financial Perspective
Statistics show this is quite common. A report by BMO Wealth Management surveying 400 small business owners shows just how unprepared many people are. Here are some unnerving findings from that survey:
- 75% of those surveyed had less than $100,000 saved for retirement.
- Those between the ages of 45 and 64 were in slightly better shape, but still only 32% had more than $100,000 saved for retirement.
- Fewer than 11% had over $500,000 saved for retirement.
Risky Business
What Can Hiring a Financial Advisor Do For You?
- They can provide an objective look at your personal finances apart from your business.
- They can help you find ways to reduce your income tax burden, both today and in the future.
- They can help you manage your investments with discipline to help you achieve conservative and reliable growth (and avoid expensive mistakes).
- They can help you create a financial plan to fund your retirement and achieve your personal goals.
- They can help you with estate planning to help shield your personal assets from your business, in case of any unexpected litigation.
Choosing the Right Financial Advisor
- Look for firms that have stood the test of time and have been in business for decades, not just several years. Economic cycles can last a long time, and you need a firm with experience helping clients succeed in both good and bad markets.
- Only consider financial advisors that operate as your legal fiduciary. This means they are required by law to put your interests before theirs. This is an important distinction because some financial professionals may use the same title (financial advisor, financial planner, or wealth manager), but not actually act as your fiduciary.
- Look for financial advisors that are completely independent. An independent advisor with no ties to product companies is free to recommend products that are best suited to your needs.
- You want solid financial planning and retirement planning, so it’s recommended to find an advisor who is a CERTIFIED FINANCIAL PLANNER™ professional (or CFP®). To earn the CFP® credential, the advisor must meet certain experience requirements, complete a specific educational requirement, and pass a rigorous exam. By looking for this mark, you can help ensure that the advisor has the knowledge and experience to serve you.
- Use www.brokercheck.org to evaluate advisors you’re considering. When you type in their names, the site shows you the advisor’s history, licenses, certifications, and official complaints. It’s safest to avoid any advisors with compliance issues, and instead only consider individuals with a clean record. Your money is too important.