Welcome to Financial Advisor IQ

Business Owners Need More Estate Planning

May 22, 2017

Financial advisors may have a lucrative untapped niche. While business owners are more likely to have a wealth transfer plan than employees, close to half of them don’t even have a will, according to a survey cited by CampdenFB.

While 39% of business owners have a full transfer plan, 49% have yet to make a will, according to an RBC Wealth Management survey cited by the publication.

The study, which polled 384 business owners in the U.S., Canada and the U.K. with an average net worth of $6.4 million, also found a direct correlation between the level of wealth and the likelihood of being prepared. Among owners with more than $10 million in liquid assets, 58% have a full plan in place, compared to 19% for owners with less than $1 million, according to the survey.

Part of the reason for the “reluctance” about creating a plan is due to the delicacy involved in dealing with the topic of succession, John Younger, RBC managing director for business owners and entrepreneurs, tells CampdenFB.

But Younger says that business owners are educating their children at a younger age. On average, they start talking about finances when the children turn 25, while about 20% of younger owners say they plan to start even sooner, when their children turn 18, Younger tells the publication.

Meanwhile, there’s also a marked difference between the approach to their own wealth among generations, he tells CampdenFB. Older business owners, particularly those who’ve lived during wartime, are far more likely to penny-pinch, he says, while their children in turn encourage them to enjoy the fruits of their labor.

By Alex Padalka
  • To read the CampdenFB article cited in this story, click here.