Your financial team is not just a business advisor

There are three groups of people you should consider when making business decisions:

• The "Inner Circle": This includes you, your spouse, your children, and any other family members who will be financially affected by your decisions. It also includes business partners that own equity in your company.

• The "Constants": These are professionals who serve as a consistent advisory presence in your personal, financial, and business life. They include CPAs, wealth managers, business advisors, and a board of advisors, if you have one.

• The "Mercenaries": This group is comprised of experts you bring in on an as-needed or project basis. It includes investment bankers, estate planning attorneys, and consultants of all flavors.

It is important to carefully select your "constant" team. These are the people who will be closest to your business and your family, and they will play a critical role in helping you create and implement strategic initiatives.

The "mercenaries" won't necessarily be a party that you are meeting with and talking to consistently, but they are essential to the execution of your plans. Their selection should hopefully be made in conjunction with your CPAs, wealth managers, and advisors. Because these two groups will interface during projects so that you don't have to be involved in the minutia, it's important that they have a good working relationship.

Here is an example of how these three groups can work together:

You are at lunch with your wealth manager and mention that you are considering making one of your key employees a partner at your firm. You tell them you have been planning on this for a while and have already had your business attorney start drafting up the legal documents to change the operating agreement, structure the transfer, etc.

I stop you to ask a few questions (yes, I have inserted myself into your hypothetical scenario):

• "What are your goals behind structuring transaction? Are you giving them a gift, or are they buying their equity?"

• "If this is a gift, are you aware it will likely be a taxable gift that will reduce your estate tax exemption dollar-for-dollar above the annual gifting limit?"

• "When you update the operating agreement, you'll also want to reevaluate your buy-sell agreement. If your new partner leaves, dies, gets divorced, etc., you need to make sure you have exclusive rights to buy those shares back. Additionally, have you consulted with your insurance agent about covering the buy-sell with insurance in the event of your employee's death?"

• "I also know you met with an industry consultant last year who put the wheels in motion on the strategy to start moving your business away from owner dependence. Now that you've gotten to the execution stage, will you reengage the consulting firm to consider next steps, if there are any?"

• "Finally, have you considered the effect this transfer of ownership may have on your family's personal financial situation? Let's revisit your valuation and long-term transition plan to ensure the value of the shares you are selling/gifting are more than supplemented by the increase in value of your business as a whole."

As you can see, what started as a "simple" transaction that only involved one professional quickly became a much more complex process that required the expertise of an entire team.

While this is clearly more work, the consequences of improper execution can be severe. Make sure you are surrounding yourself with the right people and develop a consistent cadence with your most trusted advisors to discuss goals, ideas, and concerns.

Click here for a useful infographic from the Exit Planning Institute regarding your financial team.