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If you do your own business or if you are a tax payer, have you ever wondered whether you should turn things over to a professional advisor? This article attempts to shed some light on this topic and provide you with some things to think about so you can make the best decision.

Professional advisors are the experts a business owner or manager will call to help them solve a difficult or new problem. Instead of trying to find the right answers yourself, it is easier, and often wiser, to call a business advisor to get the benefit of all their years of experience solving problems for a wide range of organizations.

When the Time Comes

Professional advisors say there is no magic asset number that pushes a businessman/taxpayer to seek advice. Rather, it is more likely an event that takes place with the individual or businessman which send him to an advisor's door. The event could be something that requires the individual to manage an asset himself. It may be that the person is in receipt of or access to a large sum of money that the individual didn't have before. It may be either that the business is expanding and the owner doesn’t know how to manage it in legal and financial terms. It may be that earnings of the tax payer have increased and he does not have any idea how to manage his savings and gain from it.

"When you reach a point in which you're constantly afraid that you're going to make a mistake with your investments, and then you need professional advice"

Often, someone who has never spent or managed more than a few thousand rupees is looking at managing a six-figure or group of accounts.

If this happens to someone just about to retire, the decisions that need to made are more critical, as the retiree will want to make this money last. As such, people often seek professional advice just before they retire, because they feel that they need professional advice to make such long-term decisions.

Why it is a great idea to know an advisor?

Imagine how long you would need to spend in training courses and working in the industry to build the knowledge your business advisor has gained from their years of practical experience.

The advisor needs to stay industry and professionally current by watching all the news and events of their chosen fields, while you spend that time running your business instead.

Like a mechanic, you only need to pay them to fix a problem, and not an annual wage waiting for something to fix.

Judging Yourself

The need for critical self-evaluation is vital when determining whether to hire a Professional Adviser. Advisors say the decision depends on the investor.

The following questions should help you sort out whether you need an advisor:

- Do you have a fair knowledge of business/investments?

- Do you enjoy reading about investments and doing research?

- Do you have expertise in the business you are doing? Do you have the time to monitor, evaluate them and make periodic changes as per the requirement of the changing business scenario?

- Do you have fair knowledge or taxes, laws and regulations of the jurisdiction in which you are doing the business?

If you answered "yes" to the above questions, you may not need an advisor or financial planner.

Not So Fast

Many people who believe they don't need a professional financial adviser could benefit from one anyway.

"Most people need a professional business/tax adviser. The ones who don't need one are usually smart enough to use one".

There's another difficult task: finding the right advisor.

Finding the Right Financial Professional

How should you go about finding the right advisor? Begin by asking for referrals from colleagues, friends or family members who seem to be managing their finances successfully. Another avenue is professional recommendations.

The client must also decide how the advisor will be paid. Some advisors charge straight fixed charges every time anassignment is given. Some may charge a fixed annual retainer ship fee which includes each and every work as per the agreement during a financial year.Generally fee is decided purely on the business size/volume of the client and the nature of assignment for which he/she is hired.

If you have selected the right advisor that has the right combination of industry experience and professional qualifications the advisor will be able to quickly;

i. Review your current business situation

ii. Advise on any immediate actions that need to be taken to prevent or reduce more damage

iii. Determine a range of suitable options to solve your problem

iv. Inform you of the outcomes, positive and negative, of each option

v. Let you make your own decision

vi. Then provide support to implement the selected option

The Wrong Advisor

If your advisor only records some transactions from time to time but never sits down and discusses long-term goals with you, you may want to look for a new advisor. Similarly, if your advisor never does any value addition to you, you may be better served elsewhere. If you adviser do not provide you with a timely information then definitely you should think for a change.

A good adviser will always keep your business information confidential and will never discuss your business issues/plans with anyone else.

A good adviser always helps you to meet the statutory deadlines and follows rules & regulations required as per the National laws.

In addition, a good advisor who is just beginning to work with a client should never recommend a solution until he has learned a lot about his or her circumstances and goals.

Finally, the individual should ensure that any financial professional has the proper credentials. Avoid any advisor who is little more than a broker but calls himself a financial planner or advisor.

Here are some things to help you select the suitable advisor;

i. Ask for specific experiences in similar businesses and organisations like yours.

ii. Find out how they stay current with industry changes.

iii. Do they hold the relevant formal qualifications to match your current problems?

iv. Can they explain your situation and options in plain English?

v. Ask for the three latest references they have serviced and contact them all to check the advisors professional behaviour and methods.

Take Control of Your Money

A smart businessman or a taxpayer should take care that he should not leave everything on his/her professional adviser. He must evaluate himself whether the adviser is guiding him in the right direction or not. He must do a regular check on the work done and delivered by the advisor. At the end the money is yours and you are responsible for the safeguard of your business and money.

One important last word on advisors

You need to trust the advisor as you will be discussing your business performance and confidential data in the hopes that you can fix the problem, not create a new problem.

If you are relying on the advisor to help fix your organisation and follow their recommendations it could be expensive if they are wrong or provide poor advice that causes damage to your business.

Ensure that they hold all the relevant insurances and membership to professional associations required in the country or state you operate in.

The Bottom Line

The decision about whether to seek advice can be critical. If you do choose to seek advice, carefully choose the right professional for the job, and you should be on your way to a better financial plan.


By: CA Dhiraj Satnalika

[CA, CS, B.Com(H)]


Published by

(Assistant Manager)
Category Others   Report

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