Uploaded January 19, 2017,
“The roles of accountants, financial advisors and relationship managers at lending companies all sound like clear job titles. However, these roles all have many nuances and variations that people outside of these industries don’t consider. Below, five Forbes Finance Council members – top financial services executives – explain things that business owners don’t know about these financial industries but should.
1. Financial Advisors Can Have Varying Legal Standards
It’s a little-known secret that not all financial advisors are held to the same standards when it comes to acting in their clients’ interests. Many advisors are only held to the suitability standard, which means their advice only has to be deemed “suitable” for their clients. Fiduciary advisors, on the other hand, are legally obligated to act in their clients’ best interests at all times. – Elle Kaplan, LexION Capital
2. Nine Out Of 10 Businesses Fail After 10 Years
Surrounding your business with top-rated advisors can help push the odds in your favor of being a long-term success. Most businesses fail not because of their passion; it is underestimating the cash needed to pass the breakeven point that fuels long-term value and growth. Having top-rated accountants, attorneys and marketers at the very beginning can be the difference between success and failure. – Lee Reams, ClientWhys, Inc.
Working with early stage companies, we speak with a lot of people who believe any accountant can help get their business off the ground. While any accountant worth their salt can help with standard finance and accounting issues, it’s good to work with someone who has experience in your particular situation. Think of it like finding a doctor or lawyer who can help with your specific need. – David Ehrenberg, Early Growth Financial Services
4. Accounting For Tax And Strategy Is Opposite
Most entrepreneurs assume their CPA can take care of their business financials. They can’t. Tax accountants are conservative technicians whose sole purpose is to minimize/defer tax liability (or reduce on paper profit.) Accounting for strategic use is the complete opposite; you are aiming to maximize profits, improve systems and spot financial pitfalls ahead of time. You need both. – W. Michael Hsu, DeepSky
5. You Don’t Have To Put 20% Down To Buy A House
A common misconception in the mortgage and real estate industry is that a 20% down payment is required to buy a house. Not only are there down payment assistance programs, but there are options to purchase with less than 20% down. For example, the Federal Housing Administration only requires a 3.5% down payment for an FHA Loan, and there’s conventional financing options with as little as 5% down. – Domenica Danna, Supreme Lending”