In the traditional advisory relationship, clients often rely on their financial advisor for guidance on reaching short- and intermediate-term goals. Financial advisors have the opportunity to strengthen and grow this relationship while expanding client lifetime value, by looking beyond their clients’ immediate and near-term goals. This includes identifying, understanding, and proactively addresses the evolving needs of clients as their life circumstances change over time.

Clients who are also business owners represent a largely untapped opportunity for financial advisors, especially as they approach retirement age and experience a shift in their life goals, priorities, and plans. What’s more, given the potential value of their companies, business owners may fall into the category of high-net-worth client without the financial advisor realizing it.

The ability to meet the needs of business-owning clients creates a key competitive advantage for financial advisors. To better understand this opportunity and how to act on it, let’s follow the hypothetical client journey for James, a 67-year-old business owner.

Seeking Guidance on Selling a Business

In addition to his $1.2M portfolio, James also owns a car parts manufacturing business valued at $12M. Running this business leaves James little time to engage with his portfolio; as such, he’s a hands-off investment delegator. Ready to retire, James wants his financial advisor, Leslie, to advise on the sale of his $12M business and manage his increasingly sophisticated wealth management needs resulting from the sale.

Not realizing that James has the potential to become a high net worth client, Leslie runs the risk of overlooking a significant client opportunity. Even if she understands the value of the business sale, Leslie doesn’t have the business succession planning resources to meet James’ needs. Given the lack of proactive response to his request, James assumes that Leslie does not have the expertise or experience to facilitate the sale of his business. After all, Leslie has never communicated business succession as one of her core capabilities. Seeing no other alternative, James seeks out a specialty wealth advisory team that offers the breadth of services his circumstances require. In doing so, he takes the proceeds of his $12 million business sale and his $1.2 million portfolio with him. Leslie loses the client and the potential future revenue.

Building Business Succession Awareness for Financial Advisors

How else might have this relationship between James and Leslie developed? Instead of losing James as a client, let’s image that Leslie works with a wealth management partner who offers specialized business succession expertise to help James navigate this critical decision and expand his lifetime client value.

Collaborating with this wealth management partner, Leslie takes the time to learn about their advisory services and business succession planning capabilities. Leslie proactively establishes to her business-owner clients that she has the team and capacity to assist with business succession planning. As part of this awareness-building effort, Leslie hosts a bi-annual business success planning webinar for her business-owner clients and prospects, and regularly sends out educational materials fully informing clients of her and her partner’s capabilities.

Once a year, Leslie reaches out to each business-owner client, inviting them to join a 1:1 call with her and her partner to discuss business succession planning services. She also becomes a credentialed Certified Exit Planning Advisor, further solidifying her position as a trusted expert resource for business succession.

Having built awareness for business succession planning through her practice, Leslie is well positioned to retain a client like James when he’s ready to sell his business.

Beyond Business Succession Planning: a Full Suite of Solutions

Leslie’s decision to partner with a business succession planning expert is a wise one. But it’s equally important for financial advisors like Leslie to make sure they’re choosing the right partner. At Sandro Wealth Management, we collaborate with financial advisors to expand their advisory offerings with a comprehensive range of wealth management solutions, including business succession solutions. Through our network of trusted business succession experts, we help financial advisors meet their business owner needs by:

• Assessing the business valuation and company’s worth for sale, and developing strategies to maximize the business’s value before the sale. 

• Creating buy/sell agreements, preparing the legal documents, and exploring financing options for potential buyers through Banking as a Service.

• Develop an exit strategy for James in preparation for the sale, including identifying strategies for tax mitigation, trusts, charitable donations, and more.

• Creating estate planning strategies, working with our network of legal experts to identify the best structures.

• Exploring retirement planning and insurance planning strategies, and conducting risk management to assess and minimize potential financial risks.

• Providing ongoing financial advisory services to manage tax implications and meet the client’s long-term needs and goals.

Adding Lifetime Client Value

Back to Leslie. Let’s imagine that Leslie partners with Sandro Wealth Management, and the resulting outcome. Because she proactively educated her business-owner clients about her practice’s business succession planning services, James is already aware of and confident in Leslie’s capabilities. Instead of finding another wealth management firm to assist with his business sale and succession planning, and taking his investment portfolio with him, James turns to Leslie and her Sandro Wealth team for those services.

Leslie plays a critical role in the successful sale of James’ business, and is entrusted with the $12 million proceeds from the sale on top of the $1.2 portfolio management. Leslie, with Sandro Wealth by her side, supports James and grows her revenue by providing a range of additional advisory services including estate, trust, retirement, and insurance planning, risk assessment and management, tax mitigation, and charitable giving. James is so pleased with the outcome, he refers Leslie to other business owners, as well as members of his immediate and extended family.

Meet the full wealth management needs of your business-owning clients.

Contact Sandro Wealth Management to discuss integrating Business Succession into your practice offerings.

Disclosures:

Sandro Wealth Management, LLC (“Sandro Wealth”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Sandro Wealth and its representatives are properly licensed or exempt from licensure. 

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. 

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

Diversification does not ensure a profit or guarantee against loss. Past performance shown is not indicative of future results, which could differ substantially.

Investing in private funds involves a risk of loss that each existing and prospective investor should understand and be willing to bear. Existing and prospective investors are reminded to read fully and carefully understand these risks as outlined in Offering Documents and to discuss these risks with the Advisor.

No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All investments include a risk of loss that clients should be prepared to bear. The principal risks of Sandro Wealth Management LLC strategies are disclosed in the publicly available Form ADV Part 2A