Xentum | A business owner meets a financial planner…what should they be talking about?

A business owner meets a financial planner…what should they be talking about?

February 21, 2019 - 3 minutes read

Posted by Claire Parker

To be brutally honest, many financial planners are pretty far off the mark when it comes to working with business owners. Much of their expertise lies in planning for older clients whose lives, although varied, are likely to be stable and their futures more predictable. This approach to financial planning cannot be transferred when working with younger business owners. Here are several reasons why:

Young business owners don’t know where they’re heading

Older clients generally have a more accurate picture of where they’re heading. They’re likely to have a list of things they know they want to do in their retirement and have a “nest egg” that is relatively stable. This makes Long Term Cash Flow and Goal Planning perfect for such clients.

The picture for young business men and women is extremely different. Quite rightly, few people under the age of 45 have a clear picture of where they’re heading in life. Of course, whatever age you are life has plenty of twists and turns. Young business owners, however, are likely to experience plenty more ups and downs than the average person. This means they need to employ a financial planner who understands the sometimes turbulent world of the modern entrepreneur.

Financial planners should be getting deep into their younger clients’ business goals. For many businessmen, their personal cash flow and business cash flow are inseparable. These mean that new businessmen’s financial plans should be aligned to the daily, weekly and monthly cash flow projections of the business. At Xentum we’ve seen an approach focused on short term goals based on business performance deliver amazing results.

Risk for a business owner is a reality

Risk tolerance and capacity for loss questionnaires are a staple of the finance industry and something that the FCA are fond of. While they can be effective for some clients, it’s hard to capture entrepreneurial risk in a questionnaire – it’s a part of everyday life.

An accident in the workplace, a damage to your brand’s reputation or the loss of a major client are potential risks that could compromise a young business owner’s financial stability at any time. Financial planners need to understand that business owners already have enough risk in their life. They need someone who is close at hand and isn’t going to add even more risk into their already risky lives.

Technology can streamline business owner’s experience of financial planning

If you’re a business owner technology is already likely to be a large part of your life. You probably use a whole host of software, from a CRM to Google Hangouts, everyday. You understand how technology reduces friction and speeds up processes. Your financial planner should understand this too.

Financial planners shouldn’t limit their client interactions to face to face meetings. While worthwhile, business owners are likely to be incredibly time poor. Financial planners should introduce a technology driven approach to their service and keep their meetings concise and to the point.

Going beyond technical advice

Young business owners need more than ‘hot’ investment tips and quick tax savings. While these are valuable, the real benefit comes from a good working partnership and offering long-term guidance. These are worth much more than a quick saving; they can help businessmen work towards much more comprehensive goals like “minimising stress in your personal life so that the precious free time you have can be used for the important things”. Tangible results are incredibly important, but financial planning can be about so much more.

To sum it up

Financial planners who have adapted their service for young business owners can deliver great value. A great financial planner and business owner working are truly a force to be reckoned with, working together to achieve real growth.

However, not all financial planners do this. Many don’t understand the fast paced world in which young business owners operate. At Xentum we do things differently. We understand the modern business environment because we work in it too. Sound like we could help? Drop us a line.