Second of Three Parts. In the first of this three-part series on high-net-worth business owners, we examined the financial needs of their businesses (see NU, Sept. 12, 2005). This exploration revealed extensive planning opportunities relating to such areas as succession plans, continuation plans, business valuations and business life insurance.
In this, the second part of the series, we will tease out the personal financial planning needs of HNW business owners as distinct from their business planning needs.
An often heard comment from financial advisors is that business owners are a highly saturated market when it comes to personal financial planning. At first glance, results from the 2005 Phoenix Wealth Survey appear to validate this perception.
High-net-worth business owners, for example, are significantly more likely than HNW non-business owners to report that they have a personal financial advisor (71% vs. 67%), and are also more likely to report receiving financial guidance from a more diverse set of advisors such as attorneys, private bankers, insurance agents, investment bankers and accountants.
The especially high penetration rate of accountants as advisors in this market also confirms the commonly held viewpoint that there is a significant “spillover” from business planning to the personal financial planning of the HNW business owner.
High-net-worth business owners are more likely than non-business owners to report that they have an estate plan in place (58% vs. 54%), as well as a formal written financial plan (43% vs. 35%). Additionally, they own most financial products to the same extent or greater than their non-business owner counterparts. Finally, as a group, HNW business owners are found to be much more “engaged” than their non-business owner cohorts when it comes to financial matters, as shown in Chart 1.
On the surface, there would not appear to be a wide range of unfulfilled personal financial planning needs within the HNW business owner market. However, further analysis appears to indicate one big exception to this commonly held broad generalization.
Specifically, this exception is in the area of retirement planning. Making the case regarding the opportunity for personal retirement planning in the HNW business owner market begins with the findings in Chart 2.