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Financial Planning > Behavioral Finance

Advisors Need Advisors, Too

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RIA owners are known for being fiercely independent, sometimes with a sense of duty that makes them believe they can handle anything that comes their way.

But this industry is too complex and nuanced for any one person — or even group of persons — to manage an entire business on their own, and the fallout could be the practice not realizing its full enterprise value.

That’s something any RIA owner should guard against because the math is simple: The more a practice is worth, the more the owner can sell it for upon retiring.

Enterprise Value

Unlocking enterprise value demands making prudent financial decisions. Many RIAs could use stronger versions of the firm’s financial statements, cash flow analysis, budgets and forecasts. But that usually requires more time, better software and an objective expert’s guidance.

That’s why RIA owners cannot be afraid to ask for outside help on how best to optimize the value of their businesses. If you have accepted that it’s time to seek assistance, a good way of going about it is to first share your inner workings with a trusted consultant, then define and refine your goals, and finally acquire the proper software to help make it happen.

Why Consultants?

Much like the goals of your advisory clients, your initial goals may be too vague, unrealistic or even financially dangerous. And when it comes to financial technology, advisors often gravitate toward the big name even though it may not be the best choice. Beginning with a trusted consultant is a smart way to establish clear goals and adopt the right software.

Many RIA owners badly need an external sounding board to bounce ideas off of before committing to a strategy that often requires a significant investment in both time and money. Consultants come in many forms and from an array of possible sources, including business coaches, M&A strategists, dedicated CFOs, peer networks and national organizations.

In general, the best consultants have extensive experience optimizing enterprise value with RIAs of your size, scope and structure. They also ask probing questions that force you and your team to recognize where the firm has room for financial improvement.


Every RIA owner wants to increase revenues and profits, so overcoming your firm’s financial stumbling blocks will call for more precise goals. A good consultant can recommend numerical targets — for instance for growing revenues and profits, each with one-year and multi-year time frames, as well as a lower dollar figure for monthly expenses that your firm can hit and maintain within the next few months.

More ambitious goals include setting similar kinds of financial targets for specific parts of your business. This could apply to practices with multiple business lines like financial planning, asset management, 401(k) plan oversight and estate planning, which, granted, have unique variables and fewer controllable factors.

Broader strategic goals could be opening an additional office location, hiring staff to expand service offerings or purchasing other practices to grow through M&A. RIA owners, of course, should make sure the firm is strong enough to pursue these goals without incurring too much debt or sapping cash reserves.

Software Needs

Once goals are set, consultants should be able to match you with the right software solutions that will turn those goals into a reality. A good rule of thumb for RIAs seeking outsourced accounting and CFO functions is to have low-cost automated tools that simplify processes and minimize potential errors — keeping in mind that “low-cost” doesn’t always mean lowest cost.

You might need software that tracks accounts receivable and accounts payable, as well as reconciling the general ledger. If your fee structure allows, also think about tools that can monitor billable hours to clients, schedule and send invoices, and pay vendors automatically. A couple easily overlooked financial reporting features include analyzing the variance on budgeted spending versus actual spending, and getting a snapshot of how taking out loans would impact monthly expenses and cash flow.

Collectively, these features can bring financial discipline to your practice and help optimize its enterprise value for a potential sale well before you are ready to retire. Asking for help can be one of the hardest things for an RIA owner to do, but tapping an outside consultant to refine your goals and steer you toward suitable financial software is worth the effort.

Stephanie Holly is the chief financial officer of the Chalice Financial Network (, a provider of technology and business solutions to independent wealth advisors.