moneyFYI
Financial Freedom Is Merely Organized Common Sense
Dealing With Professionals
The real world changes too fast and it is too complicated to know everything you need to run your business or your financial plan.
You need skilled help. Accountant, lawyer, banker, investment adviser, and financial planner are the common ones.
The problem is finding the helpers and using them effectively after you find them.
Getting the right one.
Time is money and changing takes a lot of time for the new professional to get up to speed. That could cost a lot. You do not want to change unless you must. A little time up front will save you problems later.
Look for at least the following:
- Has the skills you need to fulfill the tasks.
- Operates tactically and in response to your well formed strategy.
- Has the time available to meet your needs
- Has back-up staff
- Good communicator
- Has a reputation as easy to work with
- Can and will act as your conscience when you stray from the path
- Will tell you the truth even when you don’t want to hear it.
Price is an important aspect, but price and cost are not the same thing. Agree on a method to determine the price but do not go for the fixed price deal. That seldom works out for either of you. For lawyers, accountants and the like, hours times a rate plus out of pocket expenses is normal. Usually the rate is conditioned by the expertise and experience of the provider. In an accounting firm, tax experts typically charge out higher than auditors.
Do not look for the lowest price. If the rates are low it is almost a certainty that the capability is too. Then the cost (price plus other factors) becomes higher.
Do not accept, no matter what the other characteristics may be, someone who expects to make the decisions. Decisions are yours. The professional’s task is to provide you with the knowledge you need and the options available. Nothing more.
Do not deal with anyone who fails to ask what you are trying to achieve. Strategy is yours alone. Be sure you have one. If you don’t, some professionals will make up one for you and then find the perfect tactic to deal with it. Not a good scene.
Look for independence. Especially with investment and insurance people. Be sure they can deal with most of the products available not just the ones offered by one company.
After you have connected, you need to know what the professional expects.
Being a Good Client
Be honest and open in communicating your hopes, fears, expectations and resources. Professionals are extremely fact based. If you give them the wrong tools to work with, you will not get what you need.
Ask for advice before you make decisions. Every professional has had to fix easily avoided problems that clients brought to them after the deal was done. This is costly, wasteful might be a better word, and harms your relationship. It is as if you don’t trust them.
Here is an example of a client asking for and getting advice before doing a deal. It is about a century old, and deals with potential problems under the then-new Sherman anti-trust act. The professional is famed Philadelphia lawyer, John Grover Johnson. It goes like this.
Client to Johnson: “Am negotiating with A to acquire his company. Is merger possible?”
Johnson to Client, “Merger possible. Jail certain.”
Be sure that the professional knows that he is required to implement a deal, not necessarily required to perfect it. Some professionals want to make a 99% deal when a 95% one will do as well for a quarter of the cost. Be sure to set out the ground rules and be willing to accept risk when the non-perfect deal is chosen. My experience has been that clients like good enough answers sooner and cheaper as opposed to righter, more expensive and slower. Be sure you know what risk you are accepting when you choose sooner and cheaper.
Listen to the advice and take it unless you can express to the professional the reason for not doing so. For example, about 1/3 of all prescribed medication is not purchased. If you don’t trust the professional, you have the wrong one.
Be sure to have an engagement letter so each knows what to expect. It might take a while to develop but it is worth it.
Sometimes things change. As a last resort quit and move on. The price to move is usually less than the cost to stay on with someone who does not meet your needs and your terms.
Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com
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