American businesses that have been run by successive generations of the same family may become rarer as owners opt for an alternative succession route.
A survey of financial advisors by Edward Jones has found that 72% of business owner clients are not intending to pass their business operations on to a family member with around half saying that business partners are the most likely successors.
The firm says that financial advisors and other trusted counsel should be involved in the succession plan and most FAs who took part in the poll said that successors should be part of the planning too. However, while 90% of respondents have handled at least some aspect of business succession planning, 36% believe clients could be doing more to be prepared.
This includes planning earlier for succession and meeting with advisors more frequently.
“For owners, it can be a complex and emotional process to even consider handing off a business that they have invested energy, time and money into over the years,” said Jesse Abercrombie, CEPA, financial advisor at Edward Jones. “Instead of going at it alone, business owners can and should lean on financial advisors and a team of professionals to provide trusted guidance and an outside perspective at every step of their entrepreneurial journey – including during something as sentimental as succession planning.”
Eight in ten FAs said that discussing business succession plans with clients is important but this is not limited to financial aspects with 61% citing establishing a timeline and milestones for the succession process as important.
Among the biggest challenges during the transition period are maintaining business continuity, financial planning and ensuring adequate resources for the transition, and legal and regulatory complexities.
“Similar to how individual investors manage their personal finances, business owners should engage financial advisors early and often to ensure their succession plan is adaptable and highly strategic,” said Abercrombie. “Working with a financial advisor can help provide business owners with a framework to ensure they’re on the right path to prepare their business for the future.”
Also, Orion has added BlackRock, Fidelity, and Vanguard to its custom portfolios suite, and RedBlack has set up a new headquarters after crossing a trillion-dollar milestone.
Also, New York-based Legacy Edge Advisors names its first-ever CEO, while Novare Capital Management hires a Vanguard veteran with a multigenerational planning focus.
Asset managers are racing to bring private market products to retirement plans, but cost and liquidity concerns linger.
Treasury's latest tax-exemption crackdown on private schools lands in the wake of a separate push to restrict refundable credits for some immigrant filers.
Workforce trust measures predicted which companies came out ahead during COVID-19. The same dynamic may now be playing out across the AI transition — and the data suggests the spread could be just as wide.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income