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3 Ways a Financial Advisor Can Help Your Business

Good business owners tend to be highly adept at running the daily operations of their business. But great business owners are also keenly aware of where their own competencies end and where the need to outsource begins — both to streamline their daily routine and to optimize the long-term strategy and success of their company.

Legal and tax functions are two of the most commonly outsourced tasks. These advisory services are both universal and invaluable to any owner, but both tend to be reactive, not proactive services. Armed with their very specialized knowledge and skill sets, legal and tax experts respond to specific questions or tasks that are sent their way, rather than working with a business owner to plan for the future.

This system works just fine when a business is operating in a typical rhythm, but what about when considering initiatives like Buy/Sell Agreements, Key Person Life Insurance, Shareholder Agreements, or Employee Stock Option Plans (ESOPs)? Then owners will want to know more than just how to file paperwork; they’ll want a wide-angle view of how certain business initiatives can bolster or alter the trajectory of their company, all the way through to their eventual exit.

Adding a fiduciary financial advisor to an advisory team that may already include lawyers and accountants can help create a cohesive and comprehensive strategy, customized for the particular set of tax, legal, and investing complexities that business owners face. A financial advisor brings to the table a unique combination of wealth management, estate planning, and tax efficiency strategies that can help the business itself, as well as the personal finances of the business owner. Remember, a solid financial advisor has walked many others through the same situations today that other business owners will likely face in the future.

Here are three tangible ways a financial advisor could provide immediate, positive impacts to a business owner:

#1 – Staying Agile in Any Business Climate


Business owners put their heart and soul into their company — and for many, a large portion of their personal net worth is intimately tied to their business. While this can be required in the early years of a business, as a business matures it becomes important for the owner to diversify their wealth across different asset classes and investment vehicles. If the pandemic of recent years has taught us anything, it’s that things can change drastically and with little notice.

Believing in their company is noble and good but having a concentrated exposure to any specific industry or endeavor can expose an owner’s retirement plan to undue risk. A financial advisor can explore options to increase an owner’s liquidity via partial cash-outs in an effort to reduce their overall risk profile.

Staying agile also means being prepared for both the expected and the unexpected. Depending on the legal structure of a business, this could mean implementing shareholder agreements and/or Buy/Sell agreements. These types of preparations keep an owner’s options open and their blind spots protected — regardless of whether they’re considering a business transition soon, or several years down the road. Taking actions today to broaden future opportunities to both the company and to the owner personally provides a palpable benefit. It can benefit employees, the owner’s financial state — and not to be understated, their peace of mind.

More diversification and reduced blind spots mean more time for the owner to run the business with the precision it deserves, and to do so with less fear of what the financial future could mean.

#2 – A Partnership Can Yield Dividends for Years


Having a fiduciary strategy partner who understands long-term investment and estate objectives in addition to an owner’s business finances can provide benefits for many years. Knowing the current appetite of capital in the private equity markets, for instance, is a key insight for a business owner — especially an owner who has been considering selling the business or seeking more liquidity from their business interests.

Despite the macroeconomic disruptions seen lately, buyer appetite remains strong, and capital is still actively chasing deals for small and mid-sized companies. But as many business owners know, myriad macroeconomic variables are affecting day-to-day operations across the entire globe at any given time, and each could have rapid effects on company valuations. Having someone a phone call away who can help to evaluate pulse readings on trends in a company’s region, and someone who knows the entire financial picture of a company and its owner, can be invaluable.

Of course, as trends inevitably shift and appetites change, so may an owner’s exit strategy or even their business structure. Having a longstanding partner for strategic insight matters most of all when making these high-impact changes within a company.

#3 – Solid Succession Planning


Because nobody starts a new business thinking about a succession plan, let’s amend the popular business/self-help trope to say, “Begin Today with the End in Mind.”

Succession planning done right requires years of preparation, not months. Once a business has matured, it becomes crucial to find a fiduciary partner to openly assess how various exit strategies would play out, with no outside pressure or influences.

Part of a prudent early stage exit strategy is getting an objective valuation of a business. Internal estimates can be inadvertently biased or myopic; outside financial counsel is key to truly understanding not just what a business is worth, but how others will view that company’s value.

Surveys have found that less 1] than 50% of business owners have a written plan in place to account for business transition or succession, even in the event of unforeseen circumstances like incapacitation, disability, or death. Starting on these necessities is a good gateway to considering broader exit strategy goals and understanding how different scenarios would fit into the retirement and estate plans of the owner.

A financial advisor can give unbiased, unfiltered, and purely objective analysis of how different types of succession plans, business sales, and other exit strategies could look and how they’ll impact personal income streams, tax pictures, and overall wealth planning. Some even have in-house lawyers and CPAs to assure that all of these strategic insights are vetted through current legal and accounting best practices.

And since an independent fiduciary has no outside incentive or commissions on a sale of a business, their function is simply to provide insight on the implications for the business and for the owner’s estate and wealth management plans. After all, market research firm Cerulli Associates estimates that over $65 trillion[2] in business owner assets will be transitioned to heirs or sold to third parties in the next 25 years.

Many business owners don’t think seriously about succession or their broad exit strategy until they are right up against a decision. Don’t be caught off guard; a rushed process without thoughtful consideration and strong due diligence could yield a lower return than you deserve and more tax burden than is necessary.

If you are a business owner looking for financial clarity around your business and personal finances, contact SYM to help. SYM Financial Advisors works with business owners as they navigate the complexities of long-term strategy, diversification, and wealth management transitions. Their independent advice can facilitate tax-efficient outcomes across the full spectrum of business transition and estate planning goals.



Disclosure: The opinions expressed herein are those of SYM Financial Corporation (“SYM”) and are subject to change without notice. This material is not financial advice or an offer to sell any product. SYM reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs and there is no guarantee that their assessment of investments will be accurate. SYM is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about SYM including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request.

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