7 Mistakes Companies Make When Choosing An Advisor

1. Hiring an Advisor Who Is Not a Fiduciary

By definition, a fiduciary is a person or organization that is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy.

Cornwalls Capital Australia Pty Ltd (AFS representative no. 001283354) is an authorized representative of CS & Co Manager Pty Ltd (AFSL license no. 495639). The regulatory obligations for AFS licensees and their representatives include fiduciary duties.

2. Hiring the First Advisor You Meet

While it’s tempting to hire the advisor closest to home, or the first advisor in the yellow pages, or an advisor, your friend recommends, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you. 

3. Not Asking about Credentials 

Other than licenses, ask about capabilities, track record, past achievements, and deals or projects or mandates successfully completed.

At Cornwalls Capital, we are research-focused and therefore have research capabilities. What’s more, we are buy side driven, which means when we take up a mandate, more often than not, we already have the investors, funders and lenders that may be interested in the deal or project or opportunity. 

4. Choosing an Advisor with the Wrong Specialty

One size does not necessarily fit all, nor can one put a square peg into a round hole. Not every advisor can do everything.

At Cornwalls Capital, we specialize in:
· Listings: IPOs and Back Door Listings
· Mergers & Acquisitions
· Capital Raising

5. Picking an Advisor Who Doesn’t Know How To Say No

Too often, companies surround themselves with “Yes” people who say yes more often than they should to avoid upsetting or displeasing anyone in order to keep their job. 

A healthy client-advisor relationship rests on the principle that we must sometimes agree to disagree, so as to bring different, if not needful, perspectives and insights, although at the end of the day, it is the client who ultimately makes the decision, rightly or wrongly, for better or for worse.

6. Choosing the Cheapest Advisor

You don’t need to pay an arm and a leg for the best advice, but then again, best advice doesn’t come cheap. Don’t be “Penny Wise Pound Foolish” or “You Get What You Pay For”. 

You need to understand how advisors are paid. 

All too often, companies engage advisors who only charge success fees. These are typically advisors who don’t put in sufficient work if any at all, but success doesn’t come without hard work. 

At Cornwalls Capital, we believe in putting in the commitment, the hard yards, and have no qualms doing so, and therefore like to work with clients who recognize and believe that hard work should be rewarded and compensated.

7. Hiring A Consultant Instead of an Advisor 

Generally, the single largest difference between consulting and advising is the length of the relationship.

Typically, consultants are brought in to address a specific problem during a particular time. 

An advisor, on the other hand, works with a company on a long-term basis, pursuing pre-set goals from the initial relationship genesis. 

With the consultant, the relationship is transactional, whereas an advisor will dive into the many areas of your company to help you achieve more. 

Finally beware of advisors who are driven, if not pressured, by the need to meet targets or budgets. Case in point: Initial public offerings (IPOs), for many advisors, an IPO is a means to an end, i.e. a number in their budget and their journey with you ends with the IPO. For us at Cornwalls Capital, an IPO is just the beginning of your journey.