Fee agents: financial planning is a hard game to win without a pro on your team

Entrepreneur, Jan, 2003 by Scott Bernard Nelson

Even before they have employees, most entrepreneurs have financial advisors. An accountant to keep the taxes straight, maybe, or a lawyer to handle nagging paperwork. They have an insurance agent, if nothing else. At some point, though, entrepreneurs find they also need a financial pro to handle their personal finances.

A planner should be able to guide your investments, taxes, estate planning and retirement planning, among other things. Trying to figure out how to pay college tuition a few years down the road, improve your mutual fund selections, or make sure your parents are tended to in their old age? A planner can help with all those situations. A good financial planner is a one-stop shop for pocketbook help, which is especially useful for time-pressed business owners.

But how do you know when it's time to bring in a planner? Christine Moriarty, a certified financial planner and president of small-business consulting company Moriarty Consulting in Bristol, Vermont, says it's important to hire someone "as soon as things get complicated." If you start to hear conflicting advice from the accountant and lawyer, for instance, or if you've dropped the ball on investment or insurance decisions, it's probably time to start your search. These days, she says, many people are feeling sheepish about their stock-picking prowess after taking on too much risk when times were good.

SBA director Hector Barreto is himself a former financial planner who focused his practice on entrepreneurs in the Los Angeles area. "Small-business people don't know what they don't know when it comes to financial planning," Barreto says. "They're busy building the business, and they don't start asking questions until a need or problem comes up." Entrepreneurs are doing a disservice to their businesses when they ignore even the most basic financial planning. Start with a will, and then bring in a professional as soon as possible. The process isn't as time-consuming or as expensive as you might assume, Barreto says.

Depending on your needs, a planner may become a regular part of your life or recommend no more than a yearly check-up. Financial planners' fees vary: Some take a percentage of assets under management, some charge an hourly fee and still others make their money on sales commissions. Some make their money through a combination of two or more methods. In any case, it should be disclosed upfront so you feel comfortable with the arrangement before committing.

Contact Source

* Moriarty Consulting (888) 449-8081, www.moneypeace.com

Scott Bernard Nelson is a financial writer at The Boston Globe.