More Than a Money Manager - The Advisor as Accountability

Creating a financial plan is one step. Staying aligned with it as your business and personal circumstances change is another.

Business owners frequently operate in an environment where decisions need to be made quickly and competing priorities demand attention. Over time, even a thoughtfully constructed plan can drift away from its original objectives.

An accountability partner can help an owner periodically reconnect day-to-day decisions with longer-term priorities. A financial advisor may be positioned to serve in that role by providing perspective that extends beyond investment management.

Providing an Objective Sounding Board

Passion can be an important ingredient in building a company.

But the same emotional investment that motivates an entrepreneur can also influence decision-making.

When conditions are strong, optimism may lead an owner to become overly aggressive. When circumstances deteriorate, fear or pressure can result in overcorrection.

An objective sounding board can help an owner compare a decision against the plan that was established before emotions became elevated.

The objective is not to remove emotion from business ownership. It is to create a mechanism for recognizing when emotion may be influencing an important financial decision.

Seeing the Entire Financial Picture

Business owners often work with several specialized professionals.

A CPA may provide tax expertise. An attorney may help with contracts or legal matters. During a transaction, an M&A attorney or investment banker may provide specialized advice focused on completing and optimizing the deal.

Each can provide important expertise, but their advice may naturally focus on a particular issue or transaction.

An advisor providing integrated financial guidance can help place those individual decisions within the context of the owner’s broader objectives—where they are trying to go financially and what values they are trying to preserve along the way.

Helping Owners Work on the Business

Business owners often hear about the distinction between working in the business and working on the business.

Working on the business may involve addressing long-term priorities, strengthening enterprise value or making decisions that could improve the owner’s eventual transition options.

But after those priorities are identified, everyday responsibilities can quickly take over.

Operational issues require attention. Difficult decisions are postponed. Owners can return to familiar activities rather than addressing uncomfortable long-term priorities.

An accountability partner can help keep those issues visible and provide a regular opportunity to assess whether agreed-upon actions are actually being completed.

Choosing the Right Accountability Partner

The appropriate accountability partner will vary by owner.

One consideration is whether that person can provide objective, consistent and holistic perspective rather than advice centered only on an individual transaction.

Once that person is identified, sharing your long-term priorities—including your definition of financial independence, business objectives and approach to building wealth outside the company—can give them the context needed to help you remain aligned with your plan.

For business owners, financial advice can therefore involve more than managing a portfolio. It can also involve creating a structure for making decisions, coordinating different areas of advice and maintaining accountability as both the company and the owner’s life evolve.

This article is based on an EP Wealth Insights podcast episode about the role an accountability partner can play in helping business owners stay aligned with their financial plans, from EP Wealth Advisors.

EP Wealth Insights Podcast Disclosure

The speakers featured in this podcast are employees and/or Investment Adviser Representatives of EP Wealth Advisors. The information discussed is provided for educational and informational purposes only and should not be considered personalized investment, financial, tax, or legal advice.

The views expressed are those of the speakers as of the recording date and are subject to change. Investing involves risk, including the possible loss of principal, and past performance does not guarantee future results.

Before making financial decisions, consult your financial, tax, or legal professional. EP Wealth Advisors is a registered investment adviser. For additional information, including our Form ADV, please visit www.epwealth.com.