Want to Make Money and Get Rich? You'll Need to Get This One Decision Right. Hard work earns you money, finding the right financial professional is essential to growing your wealth.
By Russ Alan Prince Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Entrepreneurship is the most likely way to become personally wealthy. You have the highest probability of becoming a millionaire or a multi-millionaire through your ownership in your business -- which is the foundation that can potentially generate enormous wealth now and in the future.
But, you guessed it, there's a catch. Your ability to leverage your company to build significant personal wealth -- as well as ensure both are legally protected as best as possible -- is largely rooted in one fundamental decision you make: The financial professional you choose to work with.
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Let me be clear, I am not a financial advisor or wealth manager. Therefore, I'm not trying to sell you on my services or the services of any specific financial professional. But what I know from working with extremely wealthy families for decades is this: The families who build and maintain the most wealth typically are those who select the best possible financial professionals to help them make smart decisions about that wealth.
To see the importance of working with the right professional, consider the fact that many entrepreneurs tend to get wrapped up in the mechanics of managing wealth. They may over-focus on what the stock market is doing, or they may scour the Internet for tax-saving strategies. But unless they have deep knowledge of the intricacies of tax strategies and financial markets, this approach is about as helpful as doing a Google search on a health problem and trying to diagnose themselves.
Sure, some entrepreneurs are very informed and adept when it comes to personal finance, of course. However, most are not. That's not a bad thing, or even at all surprising. After all, their businesses and families take up the bulk of their time and efforts, as they should! Better to focus on what you do extremely well to make money -- as well as on the loved ones you're making that money to help support -- than to try to navigate a world where you don't have the requisite expertise.
The problem with finding a pro
So now you know your job is to go out and find a top-flight financial professional on whose expertise you can safely rely, right? Unfortunately, it's not that simple. Another thing I've learned over the decades is that most financial professionals are unable to deliver the results successful entrepreneurs need and want.
It's not that these financial professionals do not want to do a good job for their business owner clients. It's that they have limitations. They don't know the optimal ways to deliver value to entrepreneurs—and compounding the problem is that they simply don't know what they don't know.
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On top of that, some financial professionals -- not a lot, but enough -- are crooks who want to rip you off. Bernie Madoff is infamous for operating the largest Ponzi scheme in history, of course. The amount of money missing from the accounts of his clients (including the fabricated gains) was nearly $65 billion, with actual losses estimated at $18 billion. Be aware: There are more Bernie Madoffs out there who haven't been caught.
Finding high-quality financial professionals
So how can you find a high-quality financial professional with the requisite expertise and trustworthiness? Pay attention to:
1. Referrals from professionals. The most common way that very successful entrepreneurs find these experts is from referrals from professionals they're currently working with -- such as lawyers and accountants. Referrals from trusted existing pros can help mitigate selection risk because those professionals won't recommend someone who would put their own reputations at risk. You likely wouldn't be happy with a lawyer who referred you to a wealth manager if that wealth manager did a substandard job. The lawyer knows this and realizes his or her relationship with you can crumble if the wealth manager messes up.
2. Industry reputation. Is a prospective financial professional you are considering well-respected among his or her peers and other professionals? Typically, high-quality financial professionals with solid industry reputations are thought leaders -- widely known for their expertise.
Thought leaders very willingly share their insights, methods and financial strategies with other professionals who are also working with entrepreneurs. The logic is that by helping these other professionals, everyone benefit -- especially the business owners. Financial professionals who are thought leaders often have written books or extensive research reports. They may regularly present to groups of entrepreneurs at conferences, symposiums and mastermind groups.
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High-end financial professionals are focused on delivering outstanding value to you and your business -- and who are actually able to do so -- constitute a relatively small percentage of the financial advisor universe today.
By working with a high-quality financial professional you are likely to get the results you're looking for to the extent possible. That's why you need to make sure you are indeed carefully choosing who you work with.
