Mistake #2: Choosing Lifestyle Advisors or Trusted Advisors over Wealth Advisors

Does the person or team that you have hired have the right experiences to accomplish your goals?

When evaluating advisors, ask yourself the following questions:

• Have the advisors themselves accomplished what you are trying to accomplish?
• How many times?
• What is their success rate?
• What criteria and grading system did you use to select your advisors?
• Does my advisor have the right set of experiences to advise me?
• Is my advisor aligned with my goals? 

While many founder’s opt for advisors that are risk averse, transactional, and lifestyle oriented; the true value of quality strategic decision making is that it a) Creates Wealth and b) Mitigates Risk. 

• Advisors that create wealth ensure the following:
• Ensures funding or capital at better terms to grow the business
• Revenue acquisition via sales, partnerships, business development, and/or corporate development is better than competitors
• Ensures scalability created through and aligned with all decisions

• Advisors that mitigate risk ensure the following:
• Corporate structure supports near and long-term business objectives
• Documentation of company IP, processes, Brand, and “Franchise Effects”
• Scenario planning, comparing actual performance to budgeted and forecast models at the corporate, function and employee levels

Our experience at Ephor Group tells us that advisor input is most valuable when they understand your goals and objectives for the business, understand your strengths and needs, and when all interested parties are aligned.
A “non-aligned example” would be asking “Lifestyle Advisors” to support creating growth and wealth outcomes for the business.

• If you are a startup business you need advisors that understand the bootstrap mentality. 
• If you are a fast growth enterprise and you rely on “Lifestyle” business advisors you will remain a small business or struggle to handle the demands of growth. 

While there are a plethora of advisors, find one that fits with your near-term economic reality and long-term vision and goals.

Wealth Advisor Criteria:

Industry Experience	Wisdom comes from experience and experience comes from both mistakes and successes. If they have a lot of industry knowledge but it’s NOT broad (i.e. focused on only one functional aspect), then forget it.
Accountability	Consultants are often better talkers than they are doers.  Accountability starts and ends with whether they do what they say; both in terms of little items and results.
Fit	Do they have proven methodologies (tried and true practices)? Do their experiences fit your organization’s maturity, complexity, and needs?
Approach	There are three (3) types of advisors: a) Experts (Specialists in a particular niche or function), b) Facilitators(collaborative types that foster change and team work) and c) Hired Hands (those that you assign a task).
Track-Record	How many success stories do they have for your particular industry and situation?
Credentials	Degrees, Certifications, Awards, Titles, Publications.

Fact: Choosing the right advisor is paramount:

• Did you know that the majority of consulting projects fail?
• Did you know that the top performing private equity funds are returning less than 25% ROI?
  
  

Best Practice:  Have a plan for managing your advisors and holding them accountable.  Do this by managing the same way you would any issue.  First, understand the problem you are trying to solve.  Second, agree on MATO (milestones, assumptions, tasks and outcomes). And most importantly, ensure regular communication rhythms.

 

Role Model: Edward Jones & Co. is one of the all-time great American business success stories with more than six million individual investor clients and operating approximately 10,000 branch offices.  One attribute which has made them special is their long-term, low-turnover investment philosophy which truly puts its clients first.

The vision of the company while Garry was leading the group was “Bringing Wall Street to Main Street.”  The key elements of the firm's strategy included:

• Entrepreneurial culture revolving around small offices staffed by only one broker (plus an administrative person),
• An emphasis on long-term, low-turnover investing, and
• A strong focus on the average American investors (the average account size is about $50,000)

Clearly Edward Jones & Co. created wealth.  They started with a crystal clear picture of what they wanted to be, understood their strategy and business model, and focused on serving their ideal customer.