3 Ways Advisors Can Support Business Owner Clients Now

Business owner recording expenses for tax purposes, on a laptop

Growing up, I watched my father, a former Mexican migrant worker, work hard to create a thriving business from nothing.

This experience left me with an appreciation for the many hats hard-working business owners must wear to address the variety of challenges they face.

I also learned that business owners can't do it alone.

While they are likely skilled at running the business they built, they often need assistance from experts who can bring specialized solutions to address opportunities that go beyond day-to-day operations.

Today, many American business owners have concerns about the state of the American economy according to a new survey from the Nationwide Retirement Institute, which sheds light on what's keeping them up at night — and opportunities for financial professionals to step in with specialized solutions to address some of their biggest challenges.

The majority of small business owners (72%) and mid-market business owners (51%) rate the current condition of the U.S. economy overall as 'poor' or 'fair.' It's not surprising that inflation is their top concern.

As a result, many feel like they are struggling to make financial decisions impacting their business and personal financial security.

One thing is clear — American business owners need help from financial professionals.

The good news is many are interested in talking to one.

While less than half (45%) of the business owners we surveyed say they currently work with an advisor, about two-thirds (65%) said they either have met with one in the past six months or plan to do so in the next six months.

Through our survey, these business owners highlighted a number of topics they'd like to discuss with an advisor.

Three stood out for me as prime opportunities.

Here are some ways you can meet your business owner clients where they are with solutions to address some of their biggest challenges.

Enhancing Their Personal Retirement Plan

This year, more Americans will turn 65 than at any point in history, and many of them are business owners who should be starting to think about the next phase of their career journey.

A surprising number of business owners told us that in the past year they have decided to push their retirement date back.

Reasons include concern they haven't saved enough to provide the income they will need in retirement or that they have had to reduce the amount they save due to current economic conditions.

This includes about a third (36%) of business owners in the 60 to 65 age range, with about one in five telling us they aren't even thinking about retirement right now.

That's why I recommend you start your conversations with business clients by focusing on their personal retirement plans.

For many, it all boils down to the risk many retirees face today: outliving their income.

Most of these individuals have spent their lives focused on building their businesses and, like many investors, accumulating assets.

That leaves a notable gap when it comes to planning for decumulation for an uncertain amount of time in retirement.

Advisors can step in to help build a strategy that will boost their confidence, including a plan for claiming Social Security and identifying other sources of guaranteed income, which could include annuities or other income strategies.

Succession Planning

It's also notable that many business owners have failed to develop a succession plan, according to our survey, which may contribute to their lack of personal retirement confidence.

After all, if they walk away without a plan, that could have a tremendous impact on the legacy of the business they dedicated their life to building and the people who depend upon them for employment.

In fact, only 30% of small business owners have a succession plan.

Those who don't have one are considering various alternatives: selling their business to a family member or trusted employee; closing their business and liquidating assets; transitioning ownership to a co-owner or business partner; or exploring the possibility of selling to an external buyer or investor.

Advisors with business clients should consider proactively bringing solutions to the table to help them address this challenge.

Help them create a formalized written plan now, taking into consideration future leadership and the financial implications of this transition.

If they plan to sell, a good place to start is helping them assess the value of the business.

Consider life insurance solutions to fund buy-sell agreements, which can provide a lump sum to surviving business owners or buy out the previous owner's share.

Estate planning strategies might help them minimize tax implications and facilitate the transfer of assets, protect their wealth and ensure it passes to their beneficiaries.

Addressing Gaps in Employee Benefits

Business owners aren't the only ones feeling the pinch of inflation. Workers are finding their spending power is on the decline.

As a result, many employees are telling their employers they need more compensation or better benefits in order to stick around.

For a leader who depends on talent that's hard to replace, this can be a major threat.

Business owners told us attracting and retaining employees is a top challenge they expect in the next year. As a result, more than four in 10 (44%) have already or are planning to improve retirement plan offerings for their employees.

Only about one-third of the business owners we surveyed say they currently work with a third-party administrator for employee retirement benefits or an employee benefits consultant.

This represents an opportunity for advisors to step in and bridge the gap.

If employee benefits are not part of your skill set, you can strengthen your relationship with clients by bringing the right kind of benefits specialist to the table to help them understand their options.

Don't limit your conversation to retirement benefits. There may be additional opportunities to add voluntary benefit offerings.

In some cases, the cost of these benefits can be passed on to employees who view these new offerings as a plus, regardless of the increased cost.

For a business' most integral employees, a deferred compensation plan might help them remain loyal.

Consider corporate-owned life insurance solutions, which can provide a tax-efficient way to fund these benefits.

Be Proactive

Don't wait for your phone to ring.

Business owner clients told us they need help from financial professionals now.

Whether they are new or existing clients, when you engage them proactively with opportunities to address their key challenges, you can strengthen and build your relationship and grow your business.

Credit: Shutterstock

Juan José Pérez is president of Nationwide Financial Corporate Solutions.