Financial advisors can grow their practices by concentrating on helping small business owners, says Josh Sailar, an investment advisor with Miracle Mile Advisors, a financial services and wealth management firm based in Los Angeles.
Sailar specializes in helping entrepreneurs successfully combine their personal and business financial planning.
“For many business owners, the business itself represents the largest asset on his or her balance sheet,” Sailar says. “This fact, combined with the heightened emotions often associated with running a small business or its transition or sale, leaves many business owners feeling uneasy about their long-range retirement, estate and wealth transfer planning.
“When you are at a crossroad between business and personal planning, you can end up with a patchwork of different planners and different plans,” he adds. “I streamline the process. Advisors in this niche need to set the family goals and the business goals. You should never do one without the other.
“Entrepreneurs need a quarterback for their advisors,” says Sailar, who charges a flat fee for services provided.
“The founders of Miracle Mile all came from brokerage firms or institutional backgrounds and now deal with ultra-high-net-worth clients. I wanted to offer that same high-touch service to small and mid-sized business owners,” he says.
Holding a concentrated investment is inherently risky, but it is sometimes unavoidable for the owners of small businesses, Sailar says. Advisors for business owners should consider some sophisticated money management and investing strategies, such as buying put options and equity collars, to hedge their risks and protect their assets, he says. For this they need a business-oriented advisor.
Before the business owner is ready to begin leaving the business, advisors need to map out a plan to minimize income taxes for both the entity and the individual so it can be implemented in conjunction with a sale process, Sailar says.
In addition, he adds, advisors should determine post-transaction cash flow and retirement needs and help with modeling various proposed transaction structures and include the identification of specific correlation risks for investments following the transition.
The advisor who can successfully provide these types of services to the entrepreneur, will be able to assist the business owner during the operation and after the sale of the business, but will also have the opportunity to work with succeeding generations in the family, Sailar says.