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Financial Advisors Can Boost Business, Says Guidebook

[ 0 ] Jul. 9, 2012 | SBO Editor

Pershing LLC, a BNY Mellon company, announced the release of Building a Business with Business Owners, a new guidebook that focuses on how  financial advisors can meet the increasingly specialized personal and business needs of entrepreneurs.  Because business owners’ personal and professional lives are so strongly intertwined, Pershing concludes, advisors have a tremendous opportunity to grow their businesses by helping entrepreneurs untangle their often complex financial situations.

“Offering specialized services to high-net-worth business owners represents an attractive, and potentially lucrative, market opportunity for financial advisors,” said Kim Dellarocca, director, Pershing. “Increasingly, we are seeing advisors consulting with entrepreneurs on issues such as cash-flow management, capital allocation and borrowing – value-added services and advice that generalist financial advisors cannot match.”

According to Pershing, a growing number of advisors are developing niche business expertise to supplement their traditional offerings, differentiate themselves and drive growth, as industry competition intensifies and pressures on margins escalates. For advisors, taking advantage of this trend presents some serious challenges, including freeing up resources to gain the necessary knowledge and developing new compensation arrangements for clients with low levels of investable assets.

Pershing recommends that advisory firms with limited marketing resources focus on achieving deep penetration in a narrowly defined target market, with no more than five potential market segments yielding optimal results. In the new guidebook, Pershing also warns that because many business owners and entrepreneurs direct the bulk of their personal savings into their business rather than money management accounts, advisors who charge clients a percentage of assets under management run the risk of under-compensation. Instead, advisors should consider premium fee arrangements to offset the added expense of working with entrepreneurs.

“For business owners,” Dellarocca added, “signing on for these specialized services can be enticing, and can make them more efficient. But entrepreneur clients may need to be convinced that the advisors they select are true experts in their businesses, are not overpromising, and can work effectively with existing service providers.”

According to the guidebook, key areas where entrepreneurs can benefit from specialized advisory services include:

  • Cash Flow and Financing: Supporting and sustaining both business and personal spending needs, as well as structuring financing for start-up and expansion.
  • Risk Protection: Insight into insurance products, hedging strategies and legal assistance.
  • Benefit Programs: Group health or 401(k) plans, non-qualified retirement plans and insurance benefits.
  • Wealth Management: Integrating personal financial planning and business planning, especially in the areas of tax efficiency, liquidity, estate planning, and wealth transfer.
  • Business Planning: Aligning business strategy with personal life and financial goals, encompassing tax planning, succession planning, business valuation, equity transfer and business succession.

To obtain a copy of Pershing’s Building a Business with Business Owners, visit pershing.com

Pershing LLC, a BNY Mellon Company, is a leading global provider of financial business solutions to more than 1,500 institutional and retail financial organizations and independent registered investment advisors who collectively represent approximately 5.5 million active investors. Located in 23 offices worldwide, Pershing and its affiliates are committed to delivering dependable operational support, robust trading services, flexible technology, an expansive array of investment solutions, practice management support and service excellence. Pershing is a member of every major U.S. securities exchange and its international affiliates are members of the Deutsche Börse, Irish Stock Exchange, the London Stock Exchange and the Australian Stock Exchange. Pershing LLC is a BNY Mellon company. Additional information is available at pershing.com.

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Category: Features