THE BLOG
01/13/2015 05:52 pm ET Updated Dec 06, 2017

This Is Why You Need a Personal CFO

Think for a minute about the personal wealth you're creating through your business. That wealth can have a huge impact on your own life, your community and even the world at large -- if you take the right steps to make smart decisions about your money.

Trouble is, as busy entrepreneurs we're so locked in on ensuring our business success that we typically pay scant attention to our personal finances. We let important tasks slide -- or, worse, take on complex issues like tax and estate planning that we're not ideally suited to address.

Even the help we get doesn't always truly help us. Pat Foley is a Robert W. Baird & Co. financial advisor with The Foley Group, a team that specializes in advising business owners and executives. As he noted in a recent interview with AES Nation: "Most entrepreneurs are sorely lacking coordination when it comes to their finances. They might have an attorney, a CPA, a wealth manager and an insurance guy and assume they're all set. Unfortunately, none of those professionals ever talk to each other, and that usually leads to costly mistakes."

The solution: A personal Chief Financial Officer -- someone to help you keep your personal financial life healthy, just as you have a CFO in your business to address those key financial issues in your firm.

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Why, exactly, might you want a personal CFO? As Foley points out, the financial side of any family unit is a lot like the financial side of a business. In both cases, crucial decisions must be made about spending, saving, investing and planning for future growth. And if you're like most business owners, your strong suit is in leading and inspiring people -- not in tackling the financial details. Just as with your business, you and your family need a financial leader who can present you with good financial ideas, act as a sounding board, create a financial road map for you, and work with you to ensure that you are hitting your goals.

And as you'll see, a personal CFO can help streamline an entrepreneur's complex financial life and all the moving parts that are required to manage it.

Finding a true personal CFO

What does a Personal CFO look like -- and how can you find one? After all, with more than 400,000 financial advisers practicing, you need to be able to tell a true personal CFO from a glorified salesman.

Here are three characteristics that top Personal CFOs possess. You should expect -- indeed, demand -- that any advisers you work with or are considering engaging with possess these key traits.

1. They use a defined process to address your full range of needs. You'll have no trouble finding plenty of advisers who focus mainly or exclusively on investments. In contrast, Personal CFOs also go well beyond investing to solve the full range of challenges that entrepreneurs face and need to solve. For most of us, those concerns can run the gamut from mitigating taxes, to selling our businesses and transferring our assets to heirs, to protecting our wealth from being stripped from us due to lawsuits and other unjust actions, to charitable giving and philanthropy in our communities. Getting expert guidance in all of these and other areas is crucial to the long-term financial health of entrepreneurs and their families.

2. They look beyond your finances. One of the most valuable services that all Personal CFOs offer is a discovery process. It involves the Personal CFO asking a broad range of questions to understand you beyond just your financial statements and gain a deep recognition of your most important values, aspiration, interests and fears. Essentially, a discovery process helps you (and the Personal CFO) gain much needed clarity on where you are today, where you want to be down the road, and how to go about closing the gaps. Why is this important? As entrepreneurs, we're not just in business to get more business -- we also want to realize a great quality of life for ourselves, our families and other people and causes that are important to us. Personal CFOs understand that fact, and leverage the discovery process to help deliver comprehensive guidance.

3. They work with teams of specialized experts on your behalf. No one person -- not even the smartest financial adviser in the world -- is a top-shelf expert in all of the varied and complex areas of finance that entrepreneurs need help with. That's why Personal CFOs make a point of building and working with teams of experts in all of the key areas that impact entrepreneurs. In Foley's case, for example, he has access to a team of experts that includes CPAs, estate planning attorneys, business consultants, risk managers, M&A professionals -- even intellectual property attorneys and long-term care specialists. These experts meet regularly to discuss clients' needs and look for opportunities to help clients' build and protect their wealth. In my own case, one strategy that was identified for me enabled me to save upwards of $600,000.

The upshot: Your family and your community are counting on you to make smart decisions about your personal financial affairs. You owe it to them to get it right -- and a personal CFO is the best resource to make it happen.

For more sage insights, bold ideas and actionable strategies from today's top entrepreneurs, check out the interviews at AES Nation.