Investing & Economy

Small Business Owners Overlook Financial Planning

Y.O.Y.O. economy players often need advisor support

Small businesses owners who are part of the “Y.O.Y.O.” economy – short for “You’re On Your Own” – often fail to consult with financial services professionals who could help them plan for the future.

Research by The American College found that 60 percent of small business owners had not consulted a financial advisor to construct a plan for their personal or business future. The survey also found that fewer than one-third of business owners had a formal plan to manage expenses and income during retirement; had estimated how much capital they would need for retirement; or had created a succession or sale plan for their business.

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Kevin A. Brown, CLU® ChFC, president and owner of Gateway Financial Advisors in Albuquerque, said the majority of his clients operate are part of the “Y.O.Y.O” economy.

“In my world, that mostly means people that are private practice owners, such as attorneys and dentists,” Brown explained. “There are also people who have come into money. They might be rolling over a 401(k) plan because they changed jobs, or they’ve inherited money. Sometimes they are about to retire, and they need to figure out what to do with their money after they are no longer working.”

Brown addresses those clients’ needs through his P.A.I.L. planning program, which stands for “Protection, Asset Management, Income for Retirement, and Leaving a Legacy.” The P.A.I.L. approach looks at each client’s entire financial situation, develops independent recommendations, and creates a roadmap to help them reach individual financial goals for each stage of their lives. The program incorporates such tools as the eMoney financial planning software platform.

pail“The plan is the basis for everything we do,” he explained. “Everybody is different. We’re really trying to figure out what each person wants, what's important to them, and how much volatility they are willing to handle. We want to get a feel for their situation, their attitude, and their experience. It’s an ongoing process that puts people first.”

Brown added he tries to keep things as simple as possible for each client. He uses concrete terms and makes the approach accessible so people can understand what he is proposing and what is happening with their portfolios.

“I don’t want to be intimidating,” he added. “I want to be sitting on the same side of the table as the clients to help them make better decisions.”

At one presentation he attended, Brown said, a financial advisor stated that about a third of Americans prefer to do their own planning and investing by themselves, and they are capable of doing so. Another third believe they can handle their own financial planning but soon find they are not capable. The other third know they cannot do it alone and do not want to try.

Brown said he believes automated trading platforms and robo-advisor apps appeal to those who prefer handling their own financial planning.

“But there are still two-thirds of the people who either want help, or try it and realize that they need help. Even though technology is available, there are still a lot of people who want to have that connection with a real person. Our practice is all about helping the clients.”

For more information on Gateway Financial Advisors, visit kevinbrownfinancialadvisor.com

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