In today’s investment market, some people enjoy being aggressive with their
personal assets and the risks they take.
For some, these risks turn into excellent
investment returns, but for others they
become a lesson in managing money safely. Some of these same people are business owners responsible for their employees’ investments, whether in pension or
profit-sharing plans and, to a certain
extent, 401(k) plans. Therefore, it is
important for people to remember that
investment objectives for personal and
business investments are simply not the
same, says Dan Crawford, senior vice
president and managing director of
NexTier Wealth Management.
“If you are a business owner developing a
retirement plan for your employees, you
should not take major risks with employees’ money,” says Crawford. Retirement
plans are often less aggressive than personal investments because others have a
stake in the outcome of the investment
returns. It is also important to seek help
from a professional provider when dealing
with investments that affect employees,
the future of your business and your personal future.
Smart Business spoke with Crawford
about selecting a wealth management
provider and the benefit of investing in a
team of professionals.
Where can business owners find qualified
providers, and what information must owners have prepared?
To find qualified providers, it is important
to ask friends and other successful business owners for referrals. Ask around, find
out what is working for them, and why.
The company’s accounting firm should
be able to educate the business owner
about the advantages and disadvantages of
numerous retirement plans available, the
right time to start investing, how much
money the company can afford to invest,
and tax implications. Before meeting with
a provider, a business owner should understand the types of benefit plans and the
purpose of their retirement plan.
Owners realize that the success of their business is because of their employees, so
they may choose retirement plans that give
back to their employees.
How can using an investment provider benefit the future of a company?
Once a company decides to offer an
employee benefit plan, a wealth management provider should design the best plan.
Providers should give clients unbiased
investment advice and offer an open architecture investment platform and best-of-breed investment approach. It is important
for a provider to search the entire realm of
investment opportunities to find investments that will best serve the needs of both
the business and its employees.
The level of professional experience is
important to evaluate. One should ensure
that a provider’s book of business contains
benefit plans similar to yours. Providers
should be experienced in working with
like-size businesses, since retirement plans
have specific compliance and regulatory
issues. A provider should be familiar with
the regulations with which your company
Also important are a firm’s investment
philosophy, its process, and how it delivers its services. It is also important to review the performance track record of
the products in which your company will
Finally, price should be fully disclosed. It
is recommended to find a provider who
charges an asset-under-management fee.
This fee arrangement aligns the provider’s
interest with the business owner and eliminates a potential conflict of interest with
What are important characteristics to look for
in a wealth adviser?
Business owners need someone they can
trust who will look out for their best interest. There should be a sense of personal
integrity from the provider, who must work
for the business owner, not the provider’s
firm. There should be active listening in
order to design a retirement plan to help
businesses reach their goals.
Providers should not make promises on
which they cannot. They should engage
additional experts when they are not familiar with a specific application or product in
which you are interested.
There is a risk in choosing a sole
provider. A team of providers can help a
company with individual levels of expertise and knowledge to help the overall
plan. A team also helps prevent disruption
if there is turnover with your provider,
since each member is familiar with the
A larger organization provides the client
with a higher level of stability and comfort.
If the sole provider with whom you are
working commits fraud, it may be difficult
to recoup your losses. Conversely, the larger organization is there to protect and represent you should illegal activities and losses occur.
DAN CRAWFORD is senior vice president and managing
director of NexTier Wealth Management. Reach him at