Working with business owners can often be challenging for advisors.  Complex problems, complex solutions and multiple parties weighing-in on the conversation can create a lot of work and result in procrastination by the client.   For the business owner, the time, complexity and coordination of multiple professionals to get a solution can cause frustration, confusion and feelings of vulnerability…we call this being “Puzzleman”.

With the right process, this can be fixed.

First, understanding how and why business owners think differently about solutions is key to finding the best and easiest path to providing the right answer to their questions.   For most business owners, the business is their largest single asset.  It’s non-diversified and illiquid, but in their mind provides the best rate of return on capital because of their control over the asset.  So insurance and investment solutions are met with a wary eye…the returns are “lower” than what they believe reinvesting in the business is worth.   Yet they still ask for solutions to wealth management problems like mitigating taxes, saving for retirement, having life insurance to provide for emergencies, etc.

Against this backdrop, how can you as a producer work with Pacific Life to find the right answer?

Here are some simple tips to follow:

  • Better interviewing yields better information.  It’s important that you and the case design team know the following:
    • How is the business structured?
    • How many owners and what  percent of the business do they each own?
    • How many total employees?
    • What is the value of the business?
    • What is the goal the owner most seeks to achieve?
    • HOWEVER..resist using a fact-finder.   This is asking too much unnecessary information.  The owner won’t understand why you’re engaging in such an elaborate interview when they expect your expertise and resources to have easy answers (HA!).
  • Often business owners will express a need to “buy some term insurance”, or need to “fund a buy-sell agreement” or “save on taxes”, etc.   Rather than accept this request at face value, it’s important to dig a little deeper.  For most business owners, planning needs will fall into one of four key areas:
    • Succession
    • Retirement
    • Estate
    • Key Stakeholders.
  • A request like “I need some term insurance” is related to one or more of these planning areas.  So ask the owner what concerns are really on their mind?  Is this “need” related to planning / thinking about any of these key planning areas?
  • Choose one solution / concept to present at a time.   A good conversation about one idea may yield far more insight into the owner’s thinking and take you in  a completely different direction.  Too many choices and details can lead to confusion, frustration and feelings of vulnerability (e.g. “Puzzleman”) on the owner’s behalf which, at best, causes procrastination or worse, a complete rejection of taking any action.

Not everyone is comfortable dealing with business owners.  It takes time and experience to grasp their different way of thinking and how to respond on their terms.  For further insight to how business owners think and best practice interviewing skills, view our video below, roam around our website or feel free to give us a call to discuss any particular situation.  We’re happy to help.

Marshall+Viliesis, LLC is a consulting firm providing valuation and succession planning to business owners and work closely with advisors to bring clarity and a team approach to business owner planning, resulting in better outcomes and true integrated planning for your business owner clients.

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