Growth area for advisers: 'Accidental entrepreneurs'

Some are helping laid-off clients start their own businesses

Nov 14, 2010 @ 12:01 am

By Deborah Nason

Deep job losses from the Great Recession, combined with dried-up job markets, have created a class of “accidental entrepreneurs” — people who start businesses because they have few other options.

Financial advisers, seeing more and more of these entrepreneurs-by-default, are finding themselves serving as business coaches and even touching on aspects of career coaching.

“We found that there was a tremendous need for consultation for folks who are losing jobs, especially those between the ages of 50 and 60,” said Russ Story, a certified senior adviser who is president of Story Wealth Management Group in Albany, Ga. The firm is located in a rural area that has been pummeled by layoffs in agriculture and manufacturing.

Mr. Story said that he has seen about 20 clients in the past two years who have sought self-employment out of a sense of desperation. As a result, he has developed a program geared toward people in transition.

“We're serving as a concierge to guide them in identifying solutions. We determine their skill sets and make a logical evaluation of their chances of success.” Mr. Story said.

“I use my professional network to make introductions and advocate for them,” he said.

These services, which go beyond traditional adviser functions, are a big hit with his clients.

“These services have contributed to making 2010 the best year I've had in over 20 years,” Mr. Story said.

“The most important thing you can do is help clients understand what it's going to take to re-create themselves,” said Richard Colarossi, a fee-based certified financial planner with Colarossi & Williams in Islandia, N.Y. He has worked with about a dozen would-be entrepreneurs over the past two years.


“They're looking for some positive affirmation. We need to be supportive and listen,” Mr. Colarossi said.

“There's a complete difference in psychological makeup of a true entrepreneur who is willing to take risks and a reluctant entrepreneur who is trying to survive,” he said. “A lot of it is helping them understand the implications of their actions.”

As an entrepreneur himself, he counsels his clients on such topics as marketing plans, networking and the amount of energy needed to run a business.

“I coach them and reinforce their steps,” Mr. Colarossi said.

“First off, we deal with the emotional impact [of the decision-making process] — whether depression, fear or excitement,” said Leslie Strebel, managing partner of the Strebel Planning Group in Ithaca, N.Y. As a planner and a business consultant, she works with many would-be entrepreneurs.

“If clients have exhausted their job options and don't know what to do, we explore options for them based on their work experience and education, and industry trends,” Ms. Strebel said.

“We then develop a business plan integrated with the client's personal financial plan. We also team up with professionals such as corporate attorneys, employee benefits specialists and business brokers,” Ms. Strebel said.

“One of our special services is helping clients find funding sources. We counsel clients on obtaining lines of credit and drawing up contracts for borrowing from family,” said Dan Serra, a CFP with Strategic Financial Planning in Plano, Texas.

“We educate them about different types of [Small Business Administration] loans: which is the best one for them, and the pros and cons. We refer them to local bankers to apply for SBA and/or non-SBA sources,” Mr. Serra said.

“We may also confer with bankers and review banking documents, and we have an in-house tax specialist who does business tax planning,” he said.

“Two years ago, I can't even name one client who had been laid off. I've worked with eight in the last year, and six of those are considering startups,” said Shane Johnston, vice president of Blue Summit Wealth Management in La Mesa, Calif.

“We've done a lot more financial projections in the last 18 months — it gives the clients a level of comfort to know the worst-case scenario, and it helps them see solutions,” he said.

“We started proactively marketing this to clients. Our business has grown in this area substantially,” Mr. Johnston said.


Laid-off workers with long résumés aren't the only accidental entrepreneurs.

“I have young kids — in their early 20s — coming to me to read their business plans. Their parents [her clients] are sending them,” said Phyllis Carlton, a CFP and business consultant with Carlton Advisors, a fee-based firm in West Linn, Ore.

“Entrepreneurship has become more popular with young people over the past couple of years for several reasons: There are no jobs, they're teaching entrepreneurship in the schools, and more companies are outsourcing,” she said.

“Kids are realizing this is a good time to start a business. They're a lot savvier than [young adults] of 10 years ago, and they're interested in being coached,” Ms. Carlton said.

“They're not expecting to graduate and make a lot of money,” she said. “They're learning from their parents what not to do.”


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