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How to Find the Right Financial Advisor When Selling a Business or Real Estate
By Admin | October 5, 2007
Finding the right financial advisor / exit planning specialist is one of the most important 
first steps in creating a solid exit plan when selling appreciated real estate or a business. However, many sellers take this task too lightly and believe that any ol’ advisor will do… because that is their job… to advise me on whats best for my situation.
If you are caught in this mindset… GET OUT OF IT.
Let me ask you this, if you have a prized race horse and it gets sick… who do you take it to?
You’re probably saying, “I’d take it to a vet.”
Well… true… you would. But, you wouldn’t take it to just any vet… you’d take it to the best horse specialist around so you know your prized horse is in good hands. Afterall… the normal vet may be an excellent vet and have a great understanding of overall veterinary medicine… but they may not have vast experience in working on horses.
A sellers decision on their financial advisor and exit planner truly should be the same… but many sellers simply do not realize that most financial advisors simply do not have a specialty in creating exit plans… nor do they work in that specialty every day. It’s not just knowing the different exit strategies… proper exit planning goes far beyond that. It is knowing the minute details of exit planning that really separate the true experts from the “weekend exit planners”.
What you as a seller need to find, is a financial advisor who specializes in creating exit plans for sellers of highly appreciated businesses and real estate.
So, how do you know a qualified exit planning specialist when you see one?
Below are some things to look for when you speak to a financial advisor about exiting your real estate or business effectively:
- Does the financial advisor ask you the right questions? For instance:
- What are your specific financial, retirement, charitable, succession, tax, etc. goals with your sale?
- Who do you want to sell to? (specifics)
- Do you have a qualified team of professional advisors working with you?
- Did they ask to contact your CPA and Attorney?
- etc.
- Does your financial advisor work as an exit planner everyday? … Or, do they create comprehensive exit plans “every once in a while”?
- Does your financial advisor present several strategies that are based on your goals? … Or, do they present a few strategies before ever really taking an in-depth look at your goals?
The points above are the minimums that a financial advisor should address. If they do not address each point well… you should seek out another opinion.
I realize that the above points are not completely comprehensive and detailed… but the main things you need to take away from them is that not all financial advisors are created equally when it comes to creating a solid exit plan for you. Sure, your advisor may be the best advisor with investments in the world and has earned you 15% returns year after year (I wish…)… but that truly has very little to do with being a qualified exit planner.
Another very important detail of gathering the right team…
Many sellers try to go it alone… or simply with only a CPA or Financial Advisor when selling their highly appreciated asset.
THIS IS DANGEROUS.
Often times the asset that people are selling is a major portion of their retirement. Is it really worth the risk of possibly drastically affecting your retirement and financial well being simply to save a few bucks on attorney or CPA fees? Simple answer… no.
As part of your overall exit plan, you as a seller should be sure that you have a team involved in planning your exit. As I mentioned earlier, advisors have their specialties… and you should utilize different advisors for different specialties.
Before selling your highly appreciated asset you should gather a qualified team that consists of:
- Financial/Insurance Professional
- CPA
- Business/Estate Planning Attorneys
- Business Consultant (if needed)
If you are selling to someone outside of your family or business…
- Transaction Attorney
- Intermediary (Business Broker, Real Estate Broker, Investment Banker, etc)
Working solely with just one of these professionals really places a large amount of risk on you… that can be relieved simply by spending a few dollars and consulting with experts.
“But… all of these advisors cost me money… won’t that be too expensive?”
The truth is that involving advisors who specialize in specific areas actually is not as expensive as you think…. and can often actually decrease the overall costs.
When you have advisors working in their specialty… they are much more efficient than an advisor who is not a specialist in that particular area. For instance, an advisor specializing in exit planning may be able to set up an entire exit plan in half of the time that your normal CPA can… resulting in cost savings.
Also, working with these specialists can save you huge sums of money down the road because you can rest assured that your strategy is solid. If you implement the wrong strategy… it could truly cost you thousands (or hundreds of thousands) in unnecessary taxes and future income potential.
So… is there is no easy answer to the age old question of, “How do you choose the right financial advisor / exit planner when I’m selling my real estate or business?”
… but you can take the proper precautions when speaking with a financial advisor to ensure that they are a specialist in business or real estate exit planning by following the information in this article.
If you are unsure whether or not your financial advisor is up to snuff, give us a call at The Settlement Institute at 800-666-5854 and we’ll help you to evaluate your advisor to ensure that you are on the right track.
More than once we have spoken to a seller who was told by their financial advisor or CPA that they were experienced in exit planning… to find out later that the extent of their knowledge was that they knew what a 1031 exchange was…
Topics: Estate Planning, Exit Planning, Exit Strategies, Financial Advisors, Planning Your Exit, Selling Real Estate, Selling a Business |