Financial Planning & Investment Models for Business Owners: Choosing the Right Advisor for Your Goals
- Jeremy Shipp
- Sep 18
- 6 min read
Updated: Sep 19
You’ve spent years building your business, and now it’s time to sell. This will be one of the most significant events of your life. However, there’s something that many HVAC business owners overlook: the impact of the sale on their overall financial planning.
Contractor owners can be particularly guilty of this. You may tend to gravitate more toward business operations versus number crunching.
You may have challenges answer key questions about your sale. How does the money from that sale actually align with your overall plan? Will the timing of the deal help achieve your long-term goals?
If you find yourself in this position, remember that you’re not alone. Many business owners face the same situation. You recognize you need help, but selecting the right financial advisor isn’t always straightforward.
The truth is that advisors operate in different ways, and not all models are suitable for every business owner. Your decisions will influence the advice you receive, the strategies you implement, and ultimately, the results you achieve.
This article will guide you through the most common financial advisor and investment models, clarify key distinctions such as fiduciary duty and independence, and help you align your goals with the appropriate advisor type and investment approach.
Common Advisor and Investment Models Explained
The financial advisory world isn’t one-size-fits-all. Learning about some of the most common models will help you understand the trade-offs and choose the one that best matches your style, needs, and goals.
A. Do-It-Yourself (DIY)
Some business owners prefer to manage their investments directly. If you enjoy having complete control, know how to conduct thorough research, and like making your own financial decisions, the DIY approach might appeal to you.
● Great for hands-on owners who appreciate independence.
● Considerations: You need time, expertise, and emotional discipline, especially when markets fluctuate. If you’re not careful, emotions can cause mistakes that cost you a lot of money.
B. Asset-Based (AUM) Model
In this model, the advisor charges a percentage of the assets they manage for you, typically ranging from 0.5% to 1.5% per year.
● Pros: This model is straightforward to understand, and many investors prefer it because it’s a “set it and forget it” kind of relationship.
● Cons: Many AUM advisors focus mainly on investments and may overlook other parts of financial planning. Since they earn money by managing your assets, their advice can be biased, potentially conflicting with your overall goals.
C. Flat-Fee (Fee-Only) Advisors
Flat-fee advisors charge a set amount for their advice, no matter what your assets. This method eliminates product commissions and provides clarity about what you’re paying for.
● Pros: Clear and simple pricing.
● Cons: The quality and range of advice can vary significantly. Be sure to ask what’s actually covered by the fee to ensure it meets your needs.
D. Comprehensive Planning
Think of this as hiring a consultant for your financial life. You pay a one-time planning fee, and the advisor creates a detailed strategy to help you achieve both personal and business goals.
● Pros: Comprehensive, impartial advice that isn’t connected to selling investment products.
● Cons: You’ll need to pay upfront or with a retainer, and you may still need to determine how to implement the recommendations.
E. Hybrid Comprehensive Planning and AUM Model
This is a blended model that combines the best of both worlds: a planning fee for comprehensive advice, plus optional asset management if you want the advisor to execute the plan.
● Pros: A hybrid model provides unbiased, thorough planning and access to professional investment management.
● Cons: Ensure that the planning side stays the primary focus and isn’t overshadowed by asset management.
Fiduciary vs. Non-Fiduciary Advisors: Why It Matters
When you hire someone to help manage your financial future, you want to ensure their recommendations truly prioritize your interests. That’s where fiduciary duty comes into play. You might think that all advisors have a fiduciary duty to their clients, but that’s not always the case.
● Fiduciary Advisor: These advisors are legally obligated to act in your best interests, disclose conflicts of interest, and be transparent about fees and recommendations.
● Non-Fiduciary (Broker): Brokers are held to a “suitability” standard, meaning they only need to recommend something suitable, which may not necessarily be the best option for you. Remember that they make their money by selling products (to you), and that may conflict with your best interests.
Your takeaway: A fiduciary advisor ensures that you get advice focused on what’s best for you, not just what’s profitable for the advisor’s firm.
Independent vs. Captive Advisors: The Freedom to Choose the Best Solution
You’ll find both captive and independent advisors, and they are not all the same.
● Captive Advisor: A captive advisor works for a brokerage, bank, or insurance company (not for you). They’re often limited to that firm’s products, which means you won’t have access to all the options available.
● Independent Advisor: An independent advisor can source solutions from the entire marketplace, providing you with access to a wider range of options.
Why independence matters: You want solutions designed around your goals, not constrained by a corporate playbook. Independence often offers the freedom necessary to create truly personalized strategies.
Key Questions to Ask Any Potential Advisor
You should interview financial advisors, so be sure to come prepared. The right professional will appreciate your questions. Begin with these:
1. “Are you a fiduciary advisor in every aspect of your relationship with me?”
Why it matters: Some advisors act as fiduciaries only sometimes. For example, they might serve as a fiduciary when giving advice but switch to a broker role when selling investment products. Asking this question forces clarity and shows whether they will always be legally required to put your interests first or only when it’s convenient.
What it clarifies: Whether you can fully trust that they’re working for your benefit, not their firm’s, or to improve their commission check.
2. Do you charge standalone fees for comprehensive financial planning, or are your fees mainly asset-based?
Why it matters: Advisors who earn only through asset-based fees may focus on growing your portfolio instead of addressing issues such as tax strategy, succession planning, or estate planning goals. A standalone planning fee indicates they can provide you with comprehensive advice that isn’t tied to managing your investments.
What it clarifies: Whether you’re paying for a genuine financial strategy or just investment management disguised as planning.
3. “Are you independent, or do you represent specific financial products or companies?”
Why it matters: Remember, advisors tied to a single firm (a captive model) might be limited to recommending that firm’s funds, insurance policies, or financial products. Independence typically means they can explore the entire market to find what best suits you.
What it clarifies: Whether the recommendations you receive are truly the best options available or just the best options offered by one company.
4. “What specifically does your comprehensive financial planning service include if I pay a standalone fee?”
Why it matters: “Comprehensive” means different things to different advisors. For some, it might include retirement and investments. Other advisors could add tax planning, succession strategies, business exit planning, and estate considerations. You need to understand exactly what you’re getting for your money.
What it clarifies: Whether the advisor’s scope of work aligns with the complexity of your life as a business owner, and whether you’ll need to bring in other specialists to fill gaps.
Common Pitfalls to Avoid
As you consider potential advisors, watch out for these warning signs:
● Confusing asset management with comprehensive planning. Some advisors promote investment management as “full planning,” when in reality, you’re not receiving broader strategic advice.
● Hidden fees. If compensation structures aren’t crystal clear, be cautious. Hidden fees can significantly impact your situation. Make sure you know what you’re paying, when, and why.
● Firm restrictions. Captive advisors can only provide limited solutions, which might stop you from reaching the best financial outcome.
Conclusion: Empowering Your Choice
Choosing a financial advisor isn't about selecting the “best” model in isolation. The aim is to find a model that aligns with your goals, values, and the level of involvement you desire. There’s no universal solution that works for every business owner.
Begin by understanding yourself. What are your goals, both personally and in your business? Where do you want to end up after everything settles? What is most important to you? Then compare advisor models to your desires and needs.
By understanding advisor models, fiduciary duty, and independence, you can cut through the confusion and focus on what matters: finding clarity, alignment, and real value in your financial future.
The right advisor relationship ensures that your plan aligns with your personal and business goals with confidence. When you choose wisely, you’re building a partnership that helps you navigate your financial future with clarity and peace of mind.
Authors: Jeremey Shipp, Retirement Capital Planners and Valerie Mellema, Words You Want
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