Many advisors have clients who own businesses, but fewer are well-versed in helping those business owners plan for their future, or the future of their businesses. Other advisors may want to grow their business owner clientele. Learning to address the needs of the business owner niche may help advisors attract new clients, strengthen existing relationships and provide better service.
To learn practical steps for advisors to bolster their service to business owners, we spoke with two advisory firm executives – Craig Robson, Founding Principal and Managing Director at Regent Peak Wealth Advisors, and Drew Jones, Executive Advisor at Modern Wealth Management – as well as the founder of an engagement platform designed to promote growth for advisors and business owners: Jason Early, Founder and CEO of RISR.
We asked each of them: What are the top three considerations that advisors serving business owners should surface to drive deeper relationships with their clients?
Their responses follow.
Craig Robson, Founding Principal And Managing Director, Regent Peak Wealth Advisors
One of the many benefits of being an advisor who owns a privately held business is that you understand the challenges facing a business owner. This unique perspective allows you to provide advice tailored towards this critical segment of a wealth advisory practice.
First, be an influential part of their circle of trusted advisors (others may include their CPA, attorney or health professional) so you become invaluable to your client. Learn everything you can regarding the business owner’s company, industry, trends, key vendors and strategic partners to help them both today and into the future. By doing so, you become an objective sounding board to the owner.
Next, within the financial services industry, identify ways to enhance the value and experience of their business. Examples include advice on specific retirement and/or equity compensation plans, lending facilities and banking partners, and employee education meetings for their benefit plans.
Finally, integrate their business with their financial plan, since, in most cases, their company represents the largest portion of their net worth. Within their plan, specifically focus on valuation metrics, potential liquidity challenges, key person and succession planning, potential overweight sector optimization, and timing of a liquidity event. This will illuminate both the opportunities and risks that need to be addressed in the client’s life journey.
Drew Jones, Executive Advisor, Modern Wealth Management
Implementing a holistic approach to client service is essential for building deeper relationships with clients, particularly given the complexities faced by small business owners.
Understand the client’s business and their personal goals: As an advisor, we want to fully understand the client’s business and personal goals, while recognizing how their business fits into their overall financial picture regarding both current and future aspirations. We aim to offer customized solutions by leveraging industry experts who align with their business model and personal plan. These experts specialize in areas such as tax planning, risk management, retirement planning and strategies, estate and succession planning and investment management.
Proactive education and communication: Providing written or video content that serves as educational resources on topics like tax planning, cash flow management, risk management, estate planning, investments and market commentary can be beneficial to the client. Regularly scheduled reviews and check-ins are important, as they allow clients to discuss any changes in goals or business circumstances, market conditions, planning opportunities, as well as how those factors may impact their financial plan.
Use your network and be a resource: Lean on and leverage subject matter experts and professionals such as CFPs, CPAs, CFAs, attorneys, risk management, employee benefits consultants and business valuation consultants. Be a part of the plan and make the introduction so the client feels supported and has access to necessary resources. Business owners face many responsibilities in growing their business. Look for ways to be a partner in their success and offer advice and support when and where you can.
Jason Early, Founder And CEO, RISR
Trust is the foundation of serving clients. Advisors who inspire meaningful conversations with clients build trust faster and drive deeper relationships. The same is true for business owner clients.
The problem: It’s hard to initiate meaningful conversations with business owners without understanding how they see the business fitting into their life plans.
Advisors can drive deeper relationships with owners by helping them reflect on a few key questions:
What do you consider a successful exit from your business?
All owners will ultimately exit their business in some fashion, but a 2021 PwC study revealed that only 34% had a written succession or exit plan.
Though buy-outs are an exciting possibility, most private businesses will transition to successors – such as children, executives or employees – or generate income until retirement.
Advisors can better engage owners by helping them consider a variety of exit options.
How are you balancing diversifying your wealth with growing the business?
Owners see their business as their most important income-generating asset. Helping owners consider whether to allocate cash from the business towards retirement or reinvest it to grow the business positions advisors to have more meaningful planning conversations.
How reliant are you on a liquidity event to achieve your life goals?
Many owners stake a portion of their retirement needs on a liquidity event at exit but can’t say how much they need to fund their goals given the rest of their portfolio.
Assessing this “value gap” and understanding what the business needs to be worth sparks more open retirement and estate planning conversations.
Jeff Berman, Contributing Editor & Reporter at Wealth Solutions Report, can be reached at jberman@wealthsolutionsreport.com.
