Success in business comes from hard work, determination and effective execution. However, to derive more value from their success, entrepreneurs need financial strategies rooted in unbiased advice. Unfortunately, the conflicts of interest inherent in traditional wealth management models can distort even the best laid plans, undermining efforts to achieve personal and business goals in the process.

Non-conflicting financial advice – where advisers prioritize their clients' interests over those of their employers – leads to effective decision-making and consistent follow-through. This is especially important for business owners who need to react quickly to market changes. Understanding how to provide unbiased guidance is essential to sustaining growth and achieving long-term success financial stability.

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The impact of independent financial advice

An encounter I had about 20 years ago crystallized my view of these matters. I was sitting down with a famous tech entrepreneur shortly after my then-employer, a large investment bank, had helped him launch a stunning IPO. My goal was to review his family's finances and secure him as a wealth management client—a high-stakes endeavor given his importance and the potential for a profitable multi-generational relationship between my firm and his family.

The meeting was going well from my perspective when the entrepreneur turned to me and asked, “Why should I pay retail when the money I bring to the table makes me an institutional-level client?” Before I could get my head around that, he added, “And why would I take my financial advice from the country that makes the products I use to execute the financial plans I design?”

The tech mogul's questions forced me to consider what I now know for sure: Some entrepreneurs view traditional financial advice models as a set of rules that favor the house. Over time, this knowledge inspired me to rethink how financial advice should be delivered to business owners. What follows is the distillation of this approach, developed over the years, to define new and fairer wealth management rules, along with advice on how business builders can provide financial advice that actually meets the needs of theirs.

Contrasting Models of Intermediation and RIA

The traditional brokerage model, which still dominates the market, can present conflicts of interest. For example, advisers' investment recommendations may be influenced by undisclosed incentives that encourage them to favor the firm's proprietary products over third-party offerings. Additionally, brokerage-based advisors may be under pressure to “sell” clients on domestic banking or related insurance products. In this environment, you are always being sold.

In contrast, entrepreneurial advisors with their independent registered investment advisors (RIAs) – fiduciary entities supervised by the Securities and Exchange Commission – are obligated to put their customers' needs first, without pressure to promote specific products or solutions. Unlike their brokerage-based counterparts, who are trained to focus on short-term, sales-oriented results, RIA owners have no incentive to favor one investment manager over another. Their long-term success depends on their time-proven and growing reliability. This encourages independent RIAs to provide access to a wide range of investment products, allowing them to make recommendations tailored to each client's needs, goals and risk appetite.

Reducing conflicts of interest and promoting unbiased, client-focused advice within a framework of transparency and flexibility is particularly suited to entrepreneurs, who need unfiltered information to make informed decisions.

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Key considerations for choosing an advisor

Outcome? Entrepreneurs seeking effective financial advice should at least:

• Choose an advisor who operate under the fiduciary standard, which means they are legally bound to act in your best interest – and ask them to do it in writing!

• Look for open investment options. If an advisor cannot offer a wide range of investment products other than those associated with their firm, it must be a difficult transition for the business owner.

Choosing an independent RIA-based advisor has the added benefit of ensuring that the client's assets are held by an unaffiliated “custodian”—a financial institution responsible for holding and protecting a client's securities and other assets under management. in RIA. This preserves client assets in the event that the RIA goes under, and, because it results in two separate reports being sent to clients, increases transparency. Among the well-known custodians in the independent RIA space are Charles Schwab and Fidelity Investments.

Another, perhaps surprising, advantage of working with an RIA-based advisor appears on the technology front. Recent advances in fintech and RIA platform services are leveling the playing field for independent advisors relative to large firms, with independents enjoying access to tools previously exclusive to Wall Street brokerages. This near parity of technology allows for scalable and adaptable financial strategies to keep pace with the complex needs of entrepreneurs.

Among the additional advantages of RIA platforms are:

• Scalability: As your business grows, your financial strategies can adapt seamlessly.

• Efficiency: Improved technology integration ensures faster service and more accurate investment tracking.

• Flexibility: Advisors can tailor their services to your unique needs, without the limitations of proprietary product offerings.

The independent RIA model fosters a competitive and innovative environment that benefits entrepreneurs. Ensuring advisers act in their client's best interest, this model offers more choice, better technology and improved service.

Taking action for financial success

Securing the right financial advice is essential for entrepreneurs who often juggle personal and business financial goals. To accomplish this, begin by evaluating your current mentoring relationship. Assess whether your advisor is operating under a fiduciary standard and whether your assets are held by an independent custodian. Next, research independent RIAs to find advisors who offer transparent, flexible, and personalized financial strategies. Finally, make sure your advisor uses the latest technology for efficient portfolio management and decision support.

By following these steps, you can build one financial advisory relationship that aligns with your interests, providing the expertise needed to manage complex financial challenges. This proactive approach ensures that your financial strategies adapt to your evolving needs, ultimately supporting your long-term success. Aligning your financial advice with your personal and business goals is essential to achieving financial stability and growth in an ever-changing market environment.

Connected: How to choose the right financial advisor – a guide for entrepreneurs