The role of a financial advisor in a startup

 An industrial study estimates having a professional financial advisor in a startup can add more percentage to business returns over the long term and add value to the business. When we make life’s biggest decisions, most look for expert guidance to make thoughtful choices.

Similarly, making essential business decisions gets demanding at times when financial advisors can come up with the best solutions. If you are on a tight budget, look for an affordable startup accountant UK with specialisation or experience in offering financial advice to businesses.

This guide will cover everything you need to know about financial advisors before hiring them into business.

Table of contents

●  Who is a financial advisor?
●  What are the responsibilities of a financial advisor?
●  How much do they charge?
●  Does my startup need a financial advisor?
●  Conclusion

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Who is a financial advisor?

A financial advisor is a life saver for startups offering specialist advice on managing your business finances. Most startups have a tight budget, and mistakenly spending a single penny can impact a business’s financial health. Therefore, they look for an advisor with the necessary skills, qualifications, and experience to save money, time and effort.

They help you in planning your retirement, investments, and money management. These professionals will contact you personally or via calls to understand your business and financial situation. Financial advisors help you set objectives to make sound investment decisions. Each client is treated uniquely according to their need, as some people target to increase their overall income while others may look for legal protection for their family’s wealth.

There are mainly two types of financial advisors in the UK:

1.  Independent financial advisers
They provide unbiased advice about all the financial products available, depending on their comprehensive analysis of the whole market, without any influence from the product providers.

2.  Restricted advisers
They are restricted either to a set of products like mortgages, have an influence on the product providers, or both. They don’t have the legal right to call themselves independent advisors.

What are the responsibilities of a financial advisor?

An advisor’s primary role is to identify a client’s goals and future perspectives. It allows them to determine the risk of an investment and a client’s affordability to manage such scenarios.

Though their roles vary with client demands, listed below are a few common responsibilities they play in startups.

1.  Assess your finances accurately
Certain business-related things, like financial planning, should be left to experts. They help you accurately understand your expenses against your income and provide a clear picture of your current financial situation in business. It ensures you focus more on your needs than your wants.

2.  Offers personalised financial strategy
The all-in-one financial strategy doesn’t fit all businesses, and an advisor can curate a result-oriented approach aligning with your financial goals and current income.

3.  Define short-term and long-term financial goals
These professionals assist owners in defining their short-term and long-term goals and prepare strategies or budgets to acquire them.

4.  Guides you through business transitions financially
As a business grows, it passes through different phases and finance plans play an essential role in these transitions. Your professional advisor will help you prepare for such scenarios so that you don’t end up bankrupt or knocking on doors for financial help.

5.  Assist in choosing the right investment option
An advisor helps you choose the right investment option by understanding the risks associated with it and your affordability to overcome them.

6.  Prevents common financial mistakes
These professionals have experience working in your industry and skills to solve any situation without putting you in financial traps. With their assistance, several businesses save themselves from financial mistakes that may result in bankruptcy.

7.  Determines whether you need a budget
They might look into your financial statements and determine whether your income can cope with the expense and yet make profits, or you need to have a budget. Budgeting for startups is crucial as it allows planned spending and saves unnecessary costs.

8.  Evaluate market trends
They are responsible for researching market trends and offering startups an expert opinion on how they should run their business in a competitive market. Additionally, you can learn about market projections, advanced technologies and other factors that can affect business growth  challenges and capitalise on opportunities.

How much do they charge?

A financial advisor can offer numerous ways to pay them depending on the service you want and the time required.

It includes a fixed fee, an hourly rate, or a percentage of assets. The average hourly rate for certain essential services in the UK is about £150 – £193. If you pay a fixed fee to these professionals, you can expect around £500.

Hire a Startup Accountant

Work with a London-based accountant for tax, accounting, payroll, & EIS/ SEIS needs.

Have a question? Call us on
0203 900 3500
Monday to Friday 9am – 5pm

Does my startup need a financial advisor?

Startup owners often put a lot of their cash into new companies. It makes them focus on business processes to ensure their financial position is safe.

Financial planning in your startup is essential, and choosing a professional is a great option. They ensure you put the proper financial steps and clear the way to success. The crucial part is you have a sound financial plan that clearly outlines how much you can invest, estimation of your overheads and income, and planning for your cash flow.

As mentioned above in the guide, there are several more advantages of hiring a financial advisor, but there is no mandatory regulation in the country for startups. However, as a startup owner, you need to think twice before hiring in-house professionals or outsourcing your financial goals and what you expect from an advisor.


Having a financial advisor in business is like a guardian who knows your current financial situation and protects you from making any wrong decisions. In the UK, you can claim the cost of hiring financial advisors on your self-assessment tax returns, and HMRC pays a part of their charges.

However, you can outsource to accounting firms if you can’t afford to put more money into hiring in-house professionals and pay them competitive salaries with employee benefits.

Top companies employ industry experts to offer the best services to clients and charge you only for the service they provide. Thus, you are saving money and time and gaining the right expertise to prevent a financial crisis in business.

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