The position of Finance Director (FD) in business is generally held in high esteem and in many instances the role is considered to be second to the Chairman/Managing Director.

The position affords the incumbent the opportunity to become actively involved in all aspects of the business in order to facilitate good planning and reporting practices. On occasions this high level cross-functional activity may not be enjoyed or even welcomed by the Finance Director’s peers.

Whilst it would be expected that larger organizations would appoint a full-time Finance Director, there are many reasons why such an individual may not be employed by many small and medium sized businesses.

There are situations that are most suited for engaging a Finance Director and these include:

The owner losing control of the business – not knowing how the business is performing – no management accounts – no cash management
Rapid business growth without a senior financial professional to assist in setting a robust strategy and plan for the future
Businesses that absorb all available cash with increases in working capital potentially restricting growth and capital expenditure.
Established businesses with poor profitability and/or with an unacceptable cash generative history.
Businesses facing external pressures to make financial improvements to satisfy personal or corporate commitments from banks or investors.
Business owners that plan to exit and seek help to maximize the business value.
In the above situations the small business owner may gravitate back to the work with which he/she is most comfortable or to the work that is necessary to meet the immediate business demands. This action is taken at a time when the business may be becoming more complex, undergoing change and potentially be at greater risk of failure. In such circumstances the services of a Financial Director are essential to maintain the good management and success of the business. Affordability is one key reason why a full-time Finance Director may not be employed in the small business. However, the cost of a full-time FD may be prohibitive but it does not eliminate the need for a person to fill the role. In addition there may not be sufficient work to actively engage a full-time finance director, what then are the options?
Consider the appointment of a Part Time Finance Director.

An increasing trend amongst small and medium sized business owners is to appoint a Part time Finance Director, albeit the person may not be formally appointed to the board – thus becoming a virtual FD.

The part time FD will only work sufficient time to discharge the commitments of the position; this then represents a significant saving against employing a full time person. Typically one to three days each week would be worked which would be a cost effective solution for the small and medium sized business owner.

Would the role of the part-time Finance Director differ from that of a full time person? No, the responsibilities of the position; be it part-time or full-time would be the same; only the time worked would be different.

The part time FD would become conversant with the business, take responsibility for accounting, cash management and advise and report on the financial performance of the business.

However, a virtual or part time Finance Director would provide several advantages including:

Containing costs. The financial skills required in the business would only used when the business needs them.
Usually experienced in different business sectors and different sizes of business. This would provide the opportunity for the part time FD to transfer the skills, best practices and knowledge gained in one industry to another.
Offering the business owner unbiased and independent opinions.
Freeing-up management time to enable other specialist functional directors to concentrate their work in areas most beneficial to the business.
Providing input into the strategic decision making process.
Advising on general business matters.
Adding credibility of the business to third parties, particularly banks, finance providers and other professionals.
Consulting with auditors, solicitors and other professionals on behalf of the business.
Ensuring good management and accounting practices are implemented and compliance with statutory requirements.
What traits should the part time Financial Director possess? It will be important for the business owner to be able to work with and trust his part time FD. In addition the Finance Director should demonstrate an interest in the business and be willing and able to transfer his knowledge and skill into the business. The part time Finance Director should become an integral part of the management team and take responsibility for and be accountable for his/her actions and at all times act professionally.

Many startup companies believe that they do not need a lawyer to help them with their business dealings. In the early stages, this may be true. However, as time goes on and your company grows, you will find yourself in situations where it is necessary to hire a business lawyer and begin to understand all the many benefits that come with hiring a lawyer for your legal needs.

The most straightforward approach to avoid any future legal issues is to employ a startup lawyer who is well-versed in your state’s company regulations and best practices. In addition, working with an attorney can help you better understand small company law. So, how can a startup lawyer help you in ensuring that your company’s launch runs smoothly?

They Know What’s Best for You

Lawyers that have experience with startups usually have worked in prestigious law firms, and as general counsel for significant corporations.

Their strategy creates more efficient, responsive, and, ultimately, more successful solutions – relies heavily on this high degree of broad legal and commercial knowledge.

They prioritize learning about a clients’ businesses and interests and obtaining the necessary outcomes as quickly as feasible.

Also, they provide an insider’s viewpoint and an intelligent methodology to produce agile, creative solutions for their clients, based on their many years of expertise as attorneys and experience dealing with corporations.

They Contribute to the Increase in the Value of Your Business

Startup attorneys help represent a wide range of entrepreneurs, operating companies, venture capital firms, and financiers in the education, fashion, finance, health care, internet, social media, technology, real estate, and television sectors.

They specialize in mergers and acquisitions as well as working with companies that have newly entered a market. They also can manage real estate, securities offerings, and SEC compliance, technology transactions, financing, employment, entertainment and media, and commercial contracts, among other things.

Focusing on success must include delivering the highest levels of representation in resolving the legal and business difficulties confronting clients now, tomorrow, and in the future, based on an unwavering dedication to the firm’s fundamental principles of quality, responsiveness, and business-centric service.

Wrapping Up

All in all, introducing a startup business can be overwhelming. You’re already charged with a host of responsibilities in which you’re untrained as a business owner. Legal problems are notoriously difficult to solve, and interpreting “legalese” is sometimes required. Experienced business lawyers know these complexities and can help you navigate them to avoid stumbling blocks.

Although many company owners wait until the last minute to deal with legal issues, they would benefit or profit greatly from hiring an experienced startup lawyer even before they begin. Reputable startup lawyers can give essential legal guidance, assist entrepreneurs in avoiding legal hazards, and improve their prospects of becoming a successful company.

This startling figure comes from a recent review of the financial advice offered from the big four banks by the Australian Securities and Investment Commission (ASIC).

Even more startling: 10% of advice was found to leave investors in an even worse financial position.

Through a “vertically integrated business model”, Commonwealth Bank, National Australia Bank, Westpac, ANZ and AMP offer ‘in house’ financial advice, and collectively, control more than half of Australia’s financial planners.

It’s no surprise ASIC’s review found advisers at these banks favoured financial products that connected to their parent company, with 68% of client’s funds invested in ‘in house’ products as oppose to external products that may have been on the firms list.

Why the banks integrated financial advice model is flawed

It’s hard to believe the banks can keep a straight face and say they can abide by the duty for advisers to act absolutely in the best interests of a client.

Under the integrated financial advice model, there are layers of different fees including adviser fees, platform fees and investment management fees adding up to 2.5-3.5%

The typical breakdown of fees is usually as follows: an adviser charge of 0.8% to 1.1%, a platform fee of between 0.4% and 0.8%, and a managed fund fee of between 0.7% and 2.1%. These fees are not only opaque, but are sufficiently high to limit the ability of the client to quickly earn real rates of return.

Layers of fees placed into the business model used by the banks means there is not necessarily an incentive for the financial advice arm to make a profit, because the profits can be made in the upstream parts of the supply chain through the banks promoting their own products.

This business model, however, is flawed, and cannot survive in a world where people are demanding greater accountability for their investments, increased transparency in relation to fees and increased control over their investments.

It is noteworthy that the truly independent financial advisory firms in Australia that offer separately managed accounts have done everything in their power to avoid using managed funds and keep fee’s competitive.

The banks have refused to admit their integrated approach to advice is fatally flawed. When the Australian Financial Review approached the Financial Services Council (FSC), a peak body that represents the ‘for-profit’ wealth managers, for a defence if the layered fee arrangements, a spokesman said no generalisations could be made.

There are fundamental flaws in the advice model, and it will be interesting to see what the upcoming royal commission into banking will do to change some of the contentious issues surround integrated financial advice.

Many financial commentators are calling for a separation of financial advice attached to banks, with obvious bias and failure to meet the best interests of clients becoming more apparent.

Chris Brycki, CEO of Stockspot, says “investors should receive fair and unbiased financial advice from experts who will act in the best interests of their client. What Australians currently get is product pushing from salespeople who are paid by the banks.”

Brycki is calling for structural reform to fix the problems caused by the dominant market power of the banks to ensure that consumers are protected, advisers are better educated and incentives are aligned.

Stockspot’s annual research into high-fee-charging funds shows thousands of customers of banks are being recommended bank aligned investment products despite the potential of more appropriate alternatives being available.