“My accountant has been trying to get me to do that.” I hear this more than you think, at least from clients and friends who have a good accountant. But perhaps more importantly, I also hear from people when they don’t agree with a recommendation from their accountant. In either situation, I always find it interesting that they are telling me about it in the first place. Not that I should not know (I should), but that there is a sense of insecurity about whether the advice is actually worth doing. How do you decide whether advice from a professional is good for you and worthy of your time? Those with a strong financial team, I would argue, have a much easier time adopting something new than those without. Being financially organized doesn’t mean knowing everything yourself. It means knowing who you trust, what they’re responsible for, and how their advice fits into the bigger picture.
Key Takeaways
- Managing personal and business finances is complex. Anyone in this situation would benefit from having a strong team of financial professionals supporting them.
- There are four primary professionals worth considering for a stronger financial team: a Financial Advisor to help see the big picture, an Accountant to focus on taxes and compliance, an Insurance Agent to help you protect your business and personal assets, and an Attorney to navigate contracts and estate planning.
Outsource Your Organization
Personal and business finances can quickly become too complicated for one person to handle alone. I mean that technically. Between business formations, tax reporting, trust documents, investment portfolios, and other areas, almost everyone needs to rely on a professional for help. Even avid DIYers who manage their own investments, bookkeeping, and online documents still talk to advisors, CPAs, attorneys, or insurance agents from time to time.
No financial plan is truly self-sufficient, so understanding how a financial team helps execute it should be equally as important as the plan itself. It’s worth considering who is in charge of changing your plan. I’d argue that having someone help you decide which path to take does not have to be the same person who gave you the advice in the first place.
Let me give you an example of two different business owners, with two different accountants, who received the same advice: raise their prices.
The first owns and operates a consulting business. She is in her peak earning years, runs to appointments all day, and generates a good income. Her primary goal has been to save for retirement and increase her income. When her accountant told her raising her prices would help, she felt like she was given permission to do what she had wanted to do all along.
The second owns a mature service business that has provided him with a good living for decades. He is much more focused on flexibility, generosity, and legacy. When his accountant told him to raise his prices, the accountant had blatantly missed the point of the business in the first place, from the owner’s perspective. He is focused on giving back and serving his community, so why does he need more money if it’s already working?
The short answer is yes. Generally, advice from a qualified professional is nearly always worth considering, but it should still be evaluated in the context of your situation. A real sense of “trust but verify” needs to run through each idea.
Frame Your Financial Team
For most people, their thoughts on their financial team are similar to their financial plan. They may not think of themselves as having a financial team, but over the years have gradually built a network of professionals they rely on. They may be friends who happened to sell life insurance, or accountants they met at church, or an attorney they got as a referral years ago.
Improving your financial team may not necessarily mean adding more or better people. Instead, understand how each member serves you and your financial plan. Especially as the world moves online, whether that is DIY taxes, estate documents, or AI financial advice, I’d argue the need for a team becomes even more critical. There are at least four primary professionals worth considering for a stronger financial team. Having each role covered gives you access to different areas of expertise without leaving you wondering who does what.
The first professional to identify on your team is a Financial Advisor. As cliché as it is, they are the quarterback, head coach, general, guide, point person, or whatever analogy you wish to use. Someone who isn’t necessarily in the weeds in one specific financial area, but who understands the connection between all your financial endeavors. Most people think of stocks and investment managers when someone mentions a Financial Advisor, but that misses the mark on how useful they can be on your financial team. They may invest your money or help with specific retirement accounts, but that should be only part of their broader value. Having a holistic advisor that understands your goals and objectives, one that you can talk to and bounce ideas off, can give you tremendous confidence that you are doing the right things.
The next professional is your accountant. Your accountant may understand your tax situation extremely well without having the same visibility into your retirement, estate plan, investments, generosity, or other goals. The challenge is that even technically sound tax advice may not account for goals outside the tax returns. Not in the sense that their advice is wrong (although it could be), but more in the sense that most accountants do not have the time to understand your overall financial plan. An accountant should be the executioner of all things tax-related, compliance, and otherwise. They may not want to be much more than that.
Next, an insurance agent is crucial to making sure you have the right protection for both personal and professional/business policies. You may have multiple insurance agents at different times, say for property and casualty insurance, life insurance, health insurance, and so on. The critical point is the purpose of buying insurance in the first place. It’s no wonder people fear asking a life insurance agent how much insurance they need, worried they’ll be sold to. If instead you work with a friend, mentor, or advisor to determine a reasonable amount of insurance, you’ll be much more confident in calling on an insurance agent to fill the need. There is nothing inherently wrong with insurance or insurance agents; they fill a genuine need that most of us have. Ideally, the amount and type of any policy start with your needs, not with a specific product being sold.
The last professional I would say is core to any financial planning team is an attorney. This could be a business attorney to help develop documents or contracts, but it could also be an estate planning attorney to help set up wills, trusts, and so on. The legal domain is one area where people think they can research well enough to bypass these professionals. But remember, these attorneys exist for a reason. They know the language needed to better protect you for your specific situation. Similar to insurance agents, the more you know coming into these conversations, the better your output is going to be.
Connection Matters
The best personal finance professionals have a desire to help people and can spot patterns when they review dozens of people’s situations. Just because these patterns exist does not necessarily mean they apply to your situation. The beauty of having a solid financial team is outsourcing not only the idea to improve your finances, but also the execution and perceived impact it has on the rest of your financial plan. Understand which professionals can do the deep dive for you to give you the right tax, legal, or wealth advice. Then make sure you compare any and every piece of advice you receive against the larger backdrop of what your financial plan is working toward.
