How to hire an advisor

Are you up for one of the biggest decisions you'll ever make?

By Louis Moseatello

Many family businesses look for outside help when dealing with interpersonal conflicts that become business problems. And a growing band of people who call themselves advisors are all too happy to service them, for fees that frequently reach several thousand dollars a day.

Because fees are so high and licensing is nonexistent, it's not surprising that family business consulting has attracted its share of the good, the bad, and the downright ugly. For a company in distress, survival may depend on the ability to distinguish between the highly skilled consultants and those whose primary interest is in financing their second home on Hilton Head with billings from your account.

What are some guidelines to ensure your family gets the best help available?

The consultant may disagree with your definition of the problem. "It happens all the time," says Peter Davis, director of the Division of Family Business Studies at the Wharton School. "A client says 'We need to establish ground rules for entry of the third generation.' And after five minutes with them it becomes clear that it's the second generation that's in chaos over family issues," he says.

It should also be clear that there is no conflict of interest-that the advisor is not selling you something else, legal services for instance, in addition to the family advisory services.

You should be confident in an advisor's skills and sensitivity to the issuesand a high level of personal chemistry should exist between all parties.

When meeting a candidate, ask him to submit, in writing, his assessment of the problem, his recommendations, and the cost of his services. Beware of any consultant who promises you the moon, or guarantees results.

Family business issues are multi-dimensional. Many troubled firms require both the skills of a psychologist and the expertise of an estate planner. Narva suggests you only deal with advisors who can marshall both the technical skills, such as law or finance, needed to deal with business, and the interpersonal skills needed to deal with families.

Does the advisor have experience in dealing with situations like yours? Don 't let claims of confidentiality dissuade you from insisting on speaking with some previous family clients who had similar problems.

So, who is it going to be? Don't let the selection process become an excuse to procrastinate. It's worth the trouble to find the best advisor you can.

 

Louis Moscatello is a senior editor at Family Business.