An estimated 90-95% of all businesses in the United States are family-owned businesses, said John Gephart, second vice president, Union Central Life Insurance Company, at the LIMRA Advanced Sales conference here.
“Everyone wants to sell to family business owners; they’ve got an awful lot of money,” he said.
Gephart estimates that family businesses make more than $1 trillion in purchases every year, and that number is growing by $100 billion a year. “Out of that $100 billion a year, there’s got to be some in there for life insurance.”
So how do agents tap into that market? Gephart explained that agents need to get an understanding of the attitudes of the family business owner. “These are typically very aggressive types.”
The family business owner can be defined as an entrepreneur, he said, and agents should consider all the characteristics of the entrepreneur to understand the traits of the family business owner.
“Because of fierce competition, they are very inward. They are reluctant to share information,” he said.
This unwillingness to share the intimate details of their business finances is a detriment to the entire financial planning process, he said.
Gephart noted that since most entrepreneurs work hours extending far beyond normal business hours, “it’s a real challenge when trying to schedule time to meet them.”
Once a planner does get a meeting, business continuation discussions may open up other family issues not apparent on the surface.
“If a business owner has 3 kids and only one of them can take over the business, that’s a lose-lose situation,” he said.