Small business owners are turning to financial advisors for a more holistic approach, according to new research.
Voya Financial’s findings suggest the scope of advisor conversations with small business clients is widening as owners are increasingly bringing up workforce retention, succession planning, fiduciary duties, administrative burden, tax-efficient benefit structures and long-term financial commitments, rather than sticking to retirement plan mechanics alone.
That shift is changing what owners expect an advisor to deliver with 95% saying that their advisor should be capable of helping employees save above standard plan limits, while 92% said their advisor should be equipped to support employee retention efforts.
Ninety-one percent placed greater value on advisors who can advise on executive compensation, and 69% wanted help navigating tax-efficient ownership transitions.
"Many owners and advisors begin with a retirement plan discussion, but find it quickly evolves," Vaillancourt said. "Business owners are looking for guidance that connects their people strategy, financial strategy and long-term vision for the business."
Voya pointed to several tools advisors are using to address these priorities, including employee stock ownership plans that create pathways to ownership while helping preserve company culture and keep businesses locally rooted.
Non-qualified deferred compensation plans are also being used alongside traditional qualified plans to help retain senior leaders, while corporate-owned life insurance is being used to fund long-term benefit obligations in a tax-efficient manner. Simplified retirement plan structures are additionally being adopted to ease administrative load so owners can focus more on running the business itself.
Voya said its research points to a broader opportunity for advisors to help small businesses take a more integrated approach, one that ties together retirement planning, benefits, workforce strategy and long-term business goals.
"At a time when we're reflecting on the spirit of American enterprise that built this country, small businesses remain central to our communities," said Amy Vaillancourt, president of Retirement at Voya Financial. "What's changing is that more owners are looking beyond day-to-day operations and traditional retirement plan support – and turning to trusted advisors to help sustain and grow their businesses for the long term while expanding access to the financial plans, benefits and guidance that enable employees to build more confident, secure futures."
While small businesses face challenges, support among their neighborhood customers remains strong, even if expectation is flaky.
The poll found that nine in ten respondents from the general cohort would be upset to see a favorite local business close its doors, but 77% of respondents said they were not confident that it would survive another five to ten years.
Seventy percent said they would be more inclined to support a business that gives employees an ownership stake, and 86% said it matters that profits generated by local businesses stay within the community.
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