Choosing Your Financial Advisor

October 20, 2021

Choosing Your Financial Advisor – Part five of a Five-Part Series

Just as with your accounting and legal resources, planning the sale of your pharmacy provides an opportunity to re-evaluate your financial advice and confirm that you have the right advisor. If you don’t, then find another one. After all, the money you make from the sale of your pharmacy is likely to be the biggest liquidity event of your professional life.

Suddenly, you might need to manage a seven- or eight-figure investment portfolio instead of, say, a five-figure one. Just as importantly, your goals and priorities change, because you will not have that steady stream of revenue from your pharmacy business anymore. Now, you will have to generate cash flow from your financial assets, which will be exposed to an often volatile financial market. Returns might fluctuate and be aperiodic instead of regular. Building your equity will no longer be your top financial priority; preserving your capital will be.

In short, the financial solutions you have used in the past might not be right for you and your family anymore. But, unfortunately, neither might your financial advisor. How can you tell?

Here are a few suggestions:

Check qualifications

Your advisor should at least have an undergraduate degree, but designations such as Certified Investment Manager (CIM®) or Certified Financial Analyst (CFA) show that they have expertise in portfolio management. A Certified Financial Planner (CFP) will be adept at working with a portfolio manager to identify appropriate asset allocation.

Are they a middleman?

Some “advisors” are in fact financial intermediaries, who make a living by selling financial products. Often, these folks work at bank-owned brokerages or insurance companies, and they are incentivized to peddle their company’s product. Sometimes that will work out just fine for you – but sometimes it won’t.

Understanding your industry

Some financial advisors specialize in certain kinds of clients and sectors. They might have a particular interest and/or expertise in a particular niche – for instance, small-business owners. A handful have experience working with pharmacy owners, and if they do, that can be a huge plus.

Have a conversation

Be sure to ask a potential advisor about their investment and service style. When it comes to investing, are they biased towards growth or value, active or passive strategies? How much and how often are they going to touch base with you, and in what form? Make sure both styles suit your needs and expectations.

Due diligence

Before you hand over your finances, run a background check, including whether the advisor has ever been investigated or disciplined by a regulator or industry body. Ask for references from other clients, too.

Beware of clairvoyants

Don’t trust “market-beaters” or “fortune-tellers”: Some advisors might pretend they know how much the market will rise or boast that they can reliably outperform benchmarks. Do not believe them – nobody can legitimately make such claims. If they do, run away.

Do you need a discretionary manager?

Consider a discretionary manager, especially if you wish to delegate day-to-day security selection. By doing so, you will free up time to enjoy your retirement – with travel, golf, or other leisure activities – rather than sitting around watching the stock market.

Find someone you can trust

Most importantly, you need someone who is honest and you can relate to. A good financial advisor is patient with you. They are capable teachers, and much of what they do for you and your family might go beyond investing advice. They should have no qualms in pledging to be your fiduciary – someone who will act in your best interests, all the time.

Read the other articles from the series:

Part 1 – Assembling Your Transaction Team

Part 2 – Choosing Your Transaction Advisor

Part 3 – Choosing Your Transaction Lawyer

Part 4 – Choosing Your Transition Accountant

Max Beairsto, B.Sc. Pharm., MBA, CVA is an intermediary and valuation analyst with EVCOR (Enterprise Valuators Corporation), a Canadian business advisory firm that focuses on valuations and the sale of healthcare-related companies.

Coming to Market:

Western Canada

Max Beairsto, BSc., MBA, CVA
max@evcor.com
www.EVCOR.com
1-844-283-6367 ext 101

Dan Reich, PharmD.
dan@evcor.com
www.EVCOR.com
1-844-283-6367 ext 106

Eastern Canada

Ray Becher
ray@evcor.com
www.EVCOR.com
1-844-283-6367 ext 113

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