Choosing the Right Advisor for Your Family Business: Make Sure you Ask
Did you know that
only about one third survive as family owned businesses into the second
generation and only 12% make it to the third generation? With this in mind it
is clear that they deserve and require expert advice from uniquely qualified
and trained advisors.
The risks and rewards are great for families in business. Significant
relationships and assets are at stake with much to lose and much to gain.
Yet, surprisingly, family businesses often don't ask the right questions
before they hire an advisor or consultant and end up with advisors not
equipped to deal with the complexities they face. As one business owner
(family business, by the way) claims, an 'educated consumer is our best
One question often neglected is "How will you work with other
professionals involved?" Increasing number of family businesses are
turning to a variety of specialists, rather than placing all their personal,
financial, and legal affairs in the hands of one person. They are also
realizing that families in business have uniquely complex issues that require
the services of a specially trained and experienced professional. They also
are more likely to want one trusted advisor to coordinate the other
professionals. There are several models of consulting teams, based on how
they work together, the level of coordination and their commitment to each
other. Here are several categories of consulting teams*:
- Interdisciplinary - pre-existing team/firm
- Multidisciplinary - advisors in study group, know
each other's work
- Accidental - connect only through client, work
together with little coordination
- Dysfunctional - unknown to each other, even if
working with same client, no coordination
As family businesses
become more sophisticated and aware of best practices, they will and should
ask and expect more of their advisors. The following questions should begin
any client /advisor relationship:
Questions to Ask a Family Business Advisor you are Interviewing to
Work with your Family Business:
- Have you received special training in working with
family businesses? If so, where and what?
- Do you belong to the Family Firm Institute? Have you
fulfilled the requirements for the Certificate in Family Business
- What issues to you see in the family, business and
- Can you provide us with references?
- How would you help us deal with them? Where would you
- What is the scope of the work? What will it cost?
- Do you belong to a professional society or group that
delivers continuing education focused on the special challenges of
family businesses? Do you participate in these?
- Do you have a network of professionals who you can
call on to help you with the complexities?
- Are you willing to work with my advisors? How will
you prevent the 'team' from becoming dysfunctional?
If you don't get
satisfactory answers to these questions, keep looking!
*Hilburt-Davis & Dyer. Consulting to Family Businesses,