A4,000‑SMB study by Intuitfound that companies working with professional accountants generate 11.5 % more annual revenue than do‑it‑yourself peers. Layer on a savvy financial advisor and you convert that larger revenue base into owner wealth, efficient taxes, and a smoother exit.
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Below are the seven traits every $1 M+ owner should insist on, real‑world vignettes that show why they matter, red‑flag answers to watch for, and a quick readiness checklist.
Trait 1 — Understands Your Entity Structure and Tax Interplay
A franchise owner in Atlanta switched from an advisor who “just managed a portfolio” to one who modeled the tax hit of converting her LLC to an S‑corp. The change shaved $38 K in payroll taxes the first year and freed cash for a second location. If your advisor can’t explain the tax ripples of your entity in three sentences, keep interviewing.
Trait 2 — Coordinates Seamlessly With Your Accountant
Quarterly strategy calls that include your CPA prevent April headaches. One SaaS founder has hisadvisor,CPA, andfractional CFOin the same Slack channel; they shifted $150 K of Q4 bonuses into a cash‑balance plan and cut the founder’s effective tax rate by four points.
Trait 3 — Models Cash Flow and Capital Needs
Beyondasset allocation, a business‑savvy advisor builds a 13‑week cash‑flow model, flags covenant risks on loans, and tells you how much of your portfolio can safely fund CapEx. A California e‑commerce brand avoided a 20 % APR merchant‑cash‑advance loan because its advisor showed a cheaper inventory‑credit line two months earlier.
Trait 4 — Plans for Owner Liquidity and Succession
Good advisorssurface exit paths five years ahead. A specialty‑food company received a surprise PE offer; because the advisor had already simulated valuation gaps and trust strategies, the founder shaved two months off diligence and saved $400 K in estate taxes.
Trait 5 — Advises on Retirement Plans for You & Team
Solo 401(k)s, Safe Harbor plans, and cash‑balance pensions can slash taxable income and attract talent. One HVAC firm put $190 K pre‑tax into a cash‑balance plan—far more than the standard $69 K 401(k) cap—letting the owner grow wealth inside the company tax‑shelter.
Trait 6 — Speaks Plainly When Markets Get Ugly
Ask for the one‑page client memo they sent in March 2020 or during 2022’s bear market. Clear language under stress signals an advisor who will keep you from panic selling at the bottom.
Trait 7 — Is Transparent on Fees and Conflicts
A transparent flat‑fee or tiered AUM schedule beats hidden insurance “trails.” Demand a sample invoice and a list of revenue sources (advisory fees, insurance, referral payments). Remember: cheapest and best rarely appear in the same contract—clarity outranks low‑ball promises.
Red‑Flag Answers
• “We act in a fiduciary capacity… most of the time.”
• “We mainly work with retirees.” (But you’re a 35‑year‑old SaaS founder.)
• “We don’t really talk to CPAs—different worlds.”
Readiness Checklist
☐ Entity structure optimized (LLC‑S‑corp, C‑corp, QSBS)
☐ Quarterly cash‑flow forecast in place
☐ Owner exit goal defined (timeline + valuation)
☐ Retirement plan benchmarked to peers
☐ Written fee schedule from each advisor candidate
FAQ
Do business owners need both a CPA and a financial advisor?
Yes. CPAs keep you compliant; advisors turn profit into owner wealth and exit strategy.
How do small businesses pay advisors?
Most common: $5 K–$15 K flat planning, 0.5 %–1 % AUM, or a hybrid retainer.
Advisor vs. fractional CFO—what’s the difference?
Advisors optimize owner wealth; fractional CFOs manage day‑to‑day operational finance, KPIs, and cash flow.
When should a business hire a financial advisor?
Once revenue tops $500 K or any decision (exit offer, partner buy‑in) meaningfully affects owner wealth.
What certifications matter most?
Look for CFP®, CFA®, or CPA/PFS plus Series 65 for fiduciary RIAs.
Author: Kimi, Co‑founder of Sam’s List
Kimiwrites about what she’s learning while building Sam’s List and shares honest takeaways from her conversations with accountants and financial advisors across the country. None of this is financial advice—just the stuff most people wish someone told them sooner.
