(J.M.) WHAT MAKES A GOOD FINANCIAL ADVISOR?
(D.O.) A good financial advisor and planner will have three traits: education, experience, and the ability to listen.
When it comes to farming, financial planning goes well beyond developing a financial or retirement plan and building a landscape to reach financial goals. Financial advisors need to have an understanding of taxation and legal concepts regarding the farm, as well as an understanding of business and succession planning. Strong experience in estate planning is also a terrific asset.
An advisor must be able to listen. Often, the soft questions asked in relation to farm businesses are as important as the solid specific questions. A farm, like many businesses, may have been in the family for many generations and there may be a desire to keep it that way. The advisor must be prepared to ask many non-financial questions to determine the wishes of the farming entrepreneurs.
HOW DOES A FINANCIAL ADVISOR FIT INTO A LINEUP OF FARM BUSINESS ADVISORS?
The financial advisor is often the quarterback of a farm’s lineup of business advisors that include an accountant for tax and record keeping procedures, a lawyer to provide legal advice and certain agreements (incorporation, will documents, power of attorney, etc), and a bank to provide financing. A financial advisor should bring all of these roles together and fit them into the overall financial direction that a farm business wishes to go. Often with financial planning comes an implementation plan, and the advisor has to have a checklist of when things need to get done and when hard decisions have to be made.
ARE THERE ANY SPECIAL CONSIDERATIONS FOR FARM BUSINESS FINANCIAL ADVISORS
Farming is so diverse, and there are so many different variations of farming. It’s important for the advisor to have an understanding of the business and the family dynamics when it pertains to the makeup of the farm. Open lines of communication are also important. It sounds easy, but communicating with family members to determine objectives, goals, and expectations are so important. It’s important to have clear communication between not only the advisor and the farmer, but also the advisor, farmer, family, and other professional advisors involved in the farm business.
It’s also important to look for an advisor that is designated as a chartered life underwriter (CLU). A CLU should have a good understanding of estate and succession planning and tax and legal matters that relate to farm businesses. A CLU will be able to help a farmer with many of the consideration during the business lifetime and passing the farm to the next generation.
WHAT PRODUCTS AND SERVICES DO FINANCIAL ADVISORS OFFER?
Financial advisors offer an assortment of products and services. They have at their disposal the use of life insurance, disability insurance, critical illness coverage, retirement or fund accumulation products, banking solutions, and financing products.
Advisors provide the service of preparing a financial plan and strategy. The plan is usually a working document that can change over the life of a business. However, the target may not always stay in one place, but as long as there is a target, you always have something to aim and plan for.
ANY ADVICE FOR FARMERS LOOKING FOR A FINANCIAL ADVISOR?
Ask for a referral. Fellow farmers or other business advisors in the agricultural community with experience and knowledge in farm business planning are excellent resources. •