7 Questions to Help Build the Right Advisory Team for Your Private Company– October 09, 2014 by Chris Madison

It’s been quite a while since the word team has brought so much excitement to Northeast Ohio — the return of LeBron, our improving Cleveland Browns and the fact that it is prime-time fantasy football season! Each week we juggle our rosters in an effort to put the best team on the field.

All of which has me thinking about a question we regularly ask our private business owner clients: “Do you have the right team of advisors in place?” The response is usually something like, “I think so” or “I’m comfortable with my team; they know me and they’ve been my advisors for a long time.”

But how do you really know if your team is really as effective as it could be? How do you build the right team or know you have the right advisors already on your side? Let’s start by looking at a few of the attributes of a good team.

  • Everyone understands the ultimate goal.
  • Everyone understands the plan to achieve that goal andis committed to it.
  • Roles and responsibilities have been clearly communicated and accepted.
  • The requisite skills needed to fulfill each role are understood and available.
  • There is a system of accountability in place and communicated to those involved.
  • Everyone respects and supports one another.
  • There is constant flow of information through good communication.

Now apply this to you and your business. Start by taking a hard look at your current advisory team by asking yourself these basic questions:

  1. Do my accountant, banker, lawyer, insurance agent and investment advisors know and understand my goals?
  2. Do they proactively ask me the questions that will ultimately help my business or lead to other opportunities, or do I have to do the asking?
  3. Are they familiar with my business strategy and believe it will take me and the business in the right direction?
  4. Do they know what I need from them, and have they agreed to provide it?
  5. Do they have the skills and resources necessary to provide what I need today and what I will need in the future as my business grows?
  6. Does our contractual relationship provide a level of accountability on both of our parts?
  7. Do my outside advisors work together on other clients; do they talk to each other and have a good rapport outside of my business needs?

The fully integrated interaction described above is important because moving in unison, your advisors can be infinitely more effective. For example, your investment advisor needs to know your anticipated tax brackets to properly evaluate if tax-exempt investments may make sense for you, just as your accountant should know if an insurance trust is being set up by your attorney so the proper gift or trust tax returns can be filed.

If the answer to any of the questions is no, it doesn’t necessarily mean you have the wrong team, but it does mean that you have an opportunity or opportunities to improve the interaction between your business and its advisors — increasing their effectiveness in helping you achieve your goals.

As you prepare for year end, take a few moments to think about your answers to these seven questions. Be honest with yourself, and if you don’t like what you uncover, make a point to have an open conversation with your external team to work on tangible areas of improvement for the coming year (and hold them accountable for any agreed-upon changes). If they aren’t open to change, you might want to start looking at the waiver wire for the top free agents. It’s never too late to pick up a valuable player that can help turn your business advisors into a championship team.

Cohen & Company is not rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances.