In a recent survey of VIP Forum members, 63% of firms reported that business owners’ focus on business, not personal financial issues is the primary challenge in serving business owner clients. However, The VIP Forum’s proprietary survey of wealthy business owners indicates that providing valuable advice on personal financial issues (e.g., retirement planning, asset allocation), not business issues, is the most significant driver of business owner loyalty. This presents firms with a bit of a dilemma—business owners are difficult to engage in personal financial advice, yet this personal financial advice is essential to win their loyalty.
Many firms have invested in specialized resources to serve business owners—individuals with specialized knowledge on the distinct personal and business advisory needs of business owners. However, firms fail to formalize partnerships between front line advisors and these specialists, resulting in a lack of role clarity, ad-hoc coordination and under-utilization of business planning specialists as a valuable input into personal financial advice. In short, the specialists become a wasted resource.
We spoke with one member, Goodwin Financial, a pseudonym for a large North American regional bank, who solves this problem by 1) formalizing the advisory structure for business owners, and 2) leveraging the business as a tool to engage business owners in personal financial advice.
Key Insight 1: Formalize the advisory structure for business owners.
Goodwin employs a two-tiered wealth planning structure for business owners–wealth planners embedded on client teams and a Business Owner Planning Group, comprised of individuals with experience and expertise in planning for business owners across the complete business life cycle.
Key Insight 2: Leverage the business as a tool to engage business owners in personal financial advice.
To ensure business owners’ personal financial plans reflect decisions made about their businesses, embedded wealth planners and specialized business planners work closely together. For example, if a business owner decides very quickly to sell his business, the wealth planner works with the business planning specialist to understand the current valuation of the business, creates an appropriate retirement income strategy for the client, and then communicates to the business owner how the decisions he makes about his business also affect his personal wealth.
So essentially Goodwin uses the business—what the business owner cares about most—as an entry point to engage the client in personal financial advice. Learn more about Goodwin’s business owner strategy, by accessing the full case study: Two-Tiered Business Owner Planning Structure
