Understand the role of private companies in a plan



According to Succession Plus, financial advisors have an untapped role in helping business owners sell their business and understand how it can fit into their retirement plans.

Talk to money managementCraig West, founder of Succession Plus, said the way owners seek to exit a business has shifted from focusing on money to focusing on inheritance.

It meant the way they sought advice and how selling their business would affect their retirement plan had also changed.

“There’s been a big shift from financial harvest where people want to get the maximum dollar amount for the business and towards the legacy out where they want to make sure their business and their people are protected for the future or to keep them in the family. It’s a completely different mindset and strategy.

While sales brokers can facilitate a sale, West said financial advisors have a different role in determining how a potential sale affects a client’s financial plan.

“Most advisors will see a line that says ‘private business $5 million’, but the advisor doesn’t necessarily know if that’s accurate. Worse than that, private enterprise is the part that could really blow up a financial plan if something goes wrong and its value drops to $0.

“It’s not just about the business brokerage transaction, it’s about the overall strategic advice to make sure that if you’re 65 and you’re about to retire, that asset doesn’t fill not all of your financial strategy at once, because it could be traumatic. ”

He recommended advisors undertake research to understand the space or partner with an outside expert to help a client plan their discharge, an area that has become more relevant since the pandemic.

West concluded, “The first thing to establish would be to have a clear view of the true dollar value of the business and the level of risk attached to it?

“Second, advisors need to be involved in implementing the advice and how they can reduce the risk of the asset, ensure it is structured properly and improve its likelihood of selling. This will enable the customer to realize their value and reduce the ripple effect this could have on other parts of the financial plan.”

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