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Are You Getting Good Financial Advice?

Don’t Just Look At Numbers; What’s Your Gut Telling You?

It’s not hard to find advice on how to manage your money these days. You can find plenty of it on the Internet, in books, magazines and newspapers, from well-meaning friends and relatives, and of course, from professional advisors.

But while finding financial guidance is easy, judging the worth of it can be a much tougher task. Even hiring a professional adviser is no guarantee you’ll get great advice. If you’re paying someone for a personalized plan, though, you especially want to make sure you’re getting your money’s worth.

The true test is whether you reach your goals. But if your goal is decades away – retirement, for example – you don’t want to wait until age 65 to see if you made the right moves.

An annual review of your overall financial situation is the best way to assess the quality of the service you’re getting.

So what things should you look at? Ask yourself these questions when gauging money advice:

What are the numbers? The most obvious way to judge investment advice is by performance. But make sure your expectations are realistic.

If you have a diversified portfolio, you’re going to outperform the worst asset class but under perform the best. With that in mind, don’t look at just your pure rate of return. You don’t have to be in the year’s highest flying mutual funds and stocks to succeed.

Instead, you and your advisor should quantify your goals when creating your financial plan.

That plan should include periodic, realistic mileposts to check your progress against. If your net worth isn’t growing as fast as you’d forecast, examine why. Maybe it was just a down year in the market. Or maybe you’ve been too cautions with your investments and need to make a change.

What does your gut say? Can you stomach the investment risk they’re taking?

The real key is to remain invested.

Remember, some discomfort is normal. You’re not going to gain anything without taking risks. But if you’re so nervous about the risk you’re taking that you cannot stay invested, you need to talk to your advisor. If you’re always buying at the top and selling at the bottom, you won’t build wealth.

You also should pay attention if your gut feeling is telling you that your advisor isn’t being honest with you.

If it doesn’t feel right, it probably isn’t. If your advisor doesn’t listen to you, doesn’t return your phone calls, does some kind of trading in your account that you didn’t know about, you need to raise your hand and say something.

Have you been following the advice?

If you haven’t put your plan into practice, what’s stopping you? If it is because the suggestions are too complex, and you don’t understand them or they make you uncomfortable, talk to your advisor.

Why pay for counsel you’re not going to use? If your planner won’t listen, you may need to hire someone else.

Is the advice clear to you?

I really believe that the way an advisor speaks to a client is very important. Sometimes people who aren’t confident about something use lingo to make themselves appear to be an expert.

Also, it’s crucial for you to understand the money moves you are making – and why you’re making them.

Is your financial advisor a good listener?

Responsiveness is key. Many people have questions. Are you getting good answers to those questions?

If your accountant says: “‘Don’t worry about those details. Just trust me,” consider looking for a new one. You should feel comfortable enough with your advisor to ask questions and are entitled to understand what he or she is doing.

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frequently asked questions

  • What Is A Virtual CFO & How Can It Transform My Business?
    • a. A Virtual CFO can be a much-needed sounding board, coach, and guide. Outsourced Virtual CFO is generally not just one person, but an experienced team of professionals providing a full-stack Accounting and Finance Department at a fraction of the cost that it would otherwise cost a business to hire even just one full-time CFO internally. The right virtual CFO service team, such as the one at Perpetual CPA, can deliver timely, detailed, comprehensive financial reporting, interpret the financial data, prioritize recommendations, give expert guidance on how to execute those recommendations, and ultimately give a better path to business success.
  • How can a Virtual Accounting Department help small businesses scale and grow?
    • a. A growing number of small businesses are opting to outsource services such as IT, human resources, or accounting. The benefit of a Virtual Accounting Department is that the company can reduce or increase services to accommodate current business needs. Because the service provider has multiple clients they can absorb fluctuations in workflow more easily than the average small/medium business can on its own.

      b. A Virtual Accounting Department can integrate with a company’s own accounting department to create a blended solution or provide a full-stack accounting department, including Accounting Staff, Manager, Controller, and Virtual CFO. By using a Virtual Accounting Department Small business owners don’t have to worry about hiring, training, figuring out compensation, and payroll compliance for the internal accounting team. Also as the business grows and new and more complex accounting and tax issues come up, the outsourced Virtual Accounting Department can provide all the needed expertise to facilitate continued business success.
  • What are the benefits of hiring a CPA firm?
    • a. Certified Public Accountants (CPAs) do a lot more than just crunch numbers and prepare taxes. They provide valuable expertise and strategies to help businesses and individuals achieve their business and financial goals. A CPA firm can help small businesses with management financial reporting, tax compliance, strategic business advice, and much more. Firms like Perpetual CPA, that specialize in helping small and medium-sized businesses achieve growth, can also provide Virtual CFO services, that help the business owners have the foresight into the short-term future cashflows and be able to more successfully navigate their business performance.
  • What are the best strategies for small business growth?
    • a. A business growth strategy is, simply, a plan of how a business gets from where it is today to where it wants to be in the future.

      b. Some of the questions to consider when coming up with a growth strategy are:
      i. Where will the business get new customers from?
      ii. How will the business expand into new markets?
      iii. What new products could the business offer?

      c. In reality, what happens with many small businesses, is that they generally achieve a specific level of business activity or sales and then the business growth trend flattens. In those cases, working with a firm like Perpetual CPA, which provides Virtual CFO services, can help small businesses avoid stagnation. Virtual CFO services, aside from providing timely accounting and tax reporting, can also provide valuable insight into the current performance of the business, as well as, foresight into the future cash flows for the business. Perpetual CPA Virtual CFO team helps small businesses interpret their financial information and come up with business strategies to help improve business performance and achieve growth.
  • What are the best strategies for small business risk management?
    • a. A risk management plan helps a business develop a detailed strategy to deal with certain risks that are particularly important for the businesses’ success.

      b. For many small and medium-sized businesses, the easiest way to develop and implement a business risk management plan is to work with a reputable CPA firm, such as Perpetual CPA. Large corporations invest a lot of resources and time into managing risk, which is a material factor that allows those large corporations to continue to generate billions of dollars in revenue every year. Small businesses, however, almost never manage any business risks, which is the major reason that over half of all the small businesses do not survive for more than 5 years. Generally, small business owners are not experienced corporate business professionals and lack the needed business knowledge, yet they often have to wear many hats while trying to get their businesses off the ground. In those situations, a CPA firm such as Perpetual CPA, can help small businesses better manage tax compliance risks, cash flow, internal controls, business administration, financial reporting, and much more.
  • What is Strategic Advisory and Virtual CFO? / How do Strategic Advisory and Virtual CFO services work?
    • a. When small businesses start spinning wheels, it is a good time to consider hiring a reputable CPA firm, such as Perpetual CPA, which can provide both Strategic Advice and Virtual CFO services.

      b. As a strategic advisor, the CPA firm will work with business management to improve the effectiveness and profitability of the business. They will look holistically at the business and find ways to operate the business more efficiently, increase customers through additional or improved marketing or improve customer touchpoints and service.

      c. As a Virtual CFO, the CPA firm is like a part-time version of a traditional CFO or Chief Financial Officer plus a full Accounting support team. They perform the tasks that in a larger organization would be performed by the CFO, Controller, and Accounting Staff such as preparing and overseeing the budget process, identifying and analyzing current and future trends, and developing strategies for the business growth.
  • How can timely financial visibility and management reporting help with better business decisions and growth?
    • a. A simple way to a successful business is to prioritize the timely financial visibility and management reporting as it means:
      i. Timely financial information and analysis are essential for making informed decisions, evaluating your company’s results, improving financial performance, and ensuring you are on the path to meet your strategic goals.
      ii. Management reporting is a source of business intelligence that helps business leaders make more accurate, data-driven decisions. But, these reports are most useful if they are available timely and the management receives proper interpretation of the business financial information.

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