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How to Secure Unbiased Financial Advice — A Guide for Busy Entrepreneurs The article highlights that business success requires hard work and execution, but true financial success needs unbiased advice. Traditional wealth-management models often have conflicts of interest.

By Shirl Penney Edited by Chelsea Brown

Key Takeaways

  • Entrepreneurs need financial strategies rooted in unbiased advice to achieve long-term success.
  • While traditional brokerage models may present conflicts of interest and prioritize short-term, sales-oriented outcomes, RIA models prioritize client needs, offering a broad range of investment products tailored to each client's goals and risk appetite.
  • Choosing an advisor operating under the fiduciary standard and opting for an independent RIA-based advisor can ensure unbiased, client-focused advice, transparency and flexibility.

Opinions expressed by Entrepreneur contributors are their own.

Success in business comes from hard work, determination and effective execution. To derive the most value from their success, however, entrepreneurs need financial strategies rooted in unbiased advice. Unfortunately, conflicts of interest inherent in traditional wealth-management models can distort even the best-laid plans, undermining efforts to achieve personal and business goals in the process.

Unconflicted financial advice — where advisors prioritize their clients' interests over those of their employers — leads to effective decision-making and consistent follow-through. This is especially important for business owners who need to react swiftly to market changes. Understanding how to secure impartial guidance is crucial for sustaining growth and achieving long-term financial stability.

Related: The Truth About Your Financial Advisor

The impact of independent financial advice

A meeting I had about 20 years ago crystallized my view of these matters. I was sitting with a famous technology entrepreneur shortly after my then-employer, a big investment bank, had helped him launch an eye-popping IPO. My goal was to review his family finances and secure him as a wealth-management client — a high-stakes endeavor given his prominence and the potential for a lucrative multi-generational relationship between my firm and his family.

The meeting was going well from my perspective when the entrepreneur turned to me and asked, "Why should I pay retail pricing when the money I bring to the table makes me an institutional-level client?" Before I could get my head around that one, he added, "And why would I get my financial advice from the place that makes the products it uses to execute the financial plans it designs?"

The tech tycoon's questions forced me to consider what I now know for certain: Some entrepreneurs see traditional financial-advice models as a set of rules that favors the house. Over time, this insight inspired me to rethink how financial advice should be delivered to business owners. What follows is the distillation of this approach, crafted over the years, to define new and more equitable wealth-management rules, along with tips on how business builders can secure financial advice that actually answers their needs.

Contrasting brokerage and RIA models

The traditional brokerage model can present conflicts of interest. For example, advisors' investment recommendations may be influenced by undisclosed incentives that encourage them to favor the firm's proprietary products over third-party offerings. Additionally, brokerage-based advisors may be pressured to "up-sell" clients on in-house banking or affiliated insurance products. In this setting, you're always being sold to.

In contrast, entrepreneurial advisors with their own independent registered investment advisors (RIAs) — fiduciary entities overseen by the Securities and Exchange Commission — are bound to put their clients' needs first, free from pressure to promote specific products or solutions. Unlike their brokerage-based counterparts, who are trained to focus on short-term, sales-oriented outcomes, RIA owners have no incentive to favor one investment manager over another. Their long-term success depends on their trustworthiness, proven over time and in increments. This encourages independent RIAs to provide access to a broad range of investment products, allowing them to make recommendations tailored to each client's needs, goals and risk appetite.

Reducing conflicts of interest and promoting unbiased, client-focused advice within a framework of transparency and flexibility is especially suited to entrepreneurs, who need unfiltered information to make informed decisions.

Related: What Is a Fiduciary? Why Are They Important?

Key considerations for choosing an advisor

The upshot? Entrepreneurs in search of effective financial advice should, at a minimum:

  • Choose an advisor who operates under the fiduciary standard, meaning they are legally obliged to act in your best interests — and ask them to put it in writing!
  • Ask for open investment options. If an advisor cannot offer a wide range of investment products other than those tied to their firm, it should be a hard pass for the business owner.

Opting for an independent, RIA-based advisor has the additional benefit of ensuring client assets are held by an unaffiliated "custodian" — a financial institution responsible for holding and safeguarding a client's securities and other assets under management at the RIA. Among well-known custodians in the independent RIA space are Charles Schwab and Fidelity Investments.

Another, maybe surprising, advantage of working with an RIA-based advisor shows up on the technological front. Recent advances in fintech and RIA-platform services have improved the field for independent advisors with respect to big firms, with independents enjoying access to these better tools than the Wall Street brokerages. These advances in technology allow for scalable and adaptable financial strategies to address the complex needs of entrepreneurs.

Among additional advantages of RIA platforms are:

  • Scalability: As your business grows, your financial strategies can adapt seamlessly.
  • Efficiency: Enhanced technology integration ensures faster service and more accurate investment tracking.
  • Flexibility: Advisors can tailor their services to your unique needs, free from the constraints of proprietary product offerings.

The independent RIA model fosters a competitive, innovative environment that benefits entrepreneurs. By ensuring advisors act in their client's best interests, this model provides more choices, better technology and enhanced services.

Taking action for financial success

Securing the right financial advice is crucial for entrepreneurs who often juggle personal and business financial goals. To achieve this, start by evaluating your current advisory relationship. Assess whether your advisor operates under a fiduciary standard and if your assets are held by an independent custodian. Next, research independent RIAs to find advisors who offer transparent, flexible and customized financial strategies. Finally, ensure your advisor uses state-of-the-art technology for efficient portfolio management and decision support.

By following these steps, you can build a financial advisory relationship that aligns with your interests, providing the expertise needed to manage complex financial challenges. This proactive approach ensures your financial strategies can adapt to your evolving needs, ultimately supporting your long-term success. Aligning your financial advice with your personal and business goals is essential for achieving financial stability and growth in an ever-changing market environment.

Related: How to Choose the Right Financial Advisor — A Guide for Entrepreneurs

Shirl Penney

Entrepreneur Leadership Network® Contributor

President and CEO of Dynasty Financial Partners

Shirl Penney, founder of Dynasty Financial Partners, champions independent wealth management firms with nearly $100 Billion AUM. Dynasty offers technology, investment solutions, and capital providers and connects prospective clients to Dynasty Network Advisors. Learn more at www.dynastyconnect.com

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