Financial planners often overlook clients' biggest assets

Small business owners are often underprepared for retirement, with many failing to set aside funds to meet future needs. However, few financial planning firms take advantage of this untapped market by helping clients grow their largest pre-retirement asset: their businesses.

A recent survey by SCORE, the business mentoring group, found one-third of small business owners do not have retirement savings plans. American Express Open Forum found that 30 percent of owners have not even computed how much money they will need once they retire. Another survey by MassMutual said one third of the business owners surveyed have no retirement assets beyond their own businesses. Mass Mutual also found that 58 percent of small business owners turn to their spouses for financial and business advice rather than seeking expert counsel.

Advising entrepreneurs and business owners on growing their most significant asset is the major focus at Prism Financial Concepts, according to D. Tyler Heymann, founder, investment advisor, and financial architect at the Scottsdale, Arizona, financial planning firm.

Earlier in his career, Heymann noticed that financial advisors rarely focused on helping clients grow their own businesses. He built Prism specifically to help entrepreneurs make better use of their capital to improve both their personal and business lives.

“Over a 20-year period,” Heymann said, “I came to realize that while financial advisors are a trusted source of guidance on meeting financial goals, they are largely ill-equipped to understand how to measure the potential of a business; to advise entrepreneurs on how to allocate resources between their business interests and their personal investments; or how to provide context that is critical to understanding when to do this.” He added, “Part of that is a lack of training and experience; partly it is not an area where the industry focuses.”

Learning about each client’s business is difficult yet valuable work, Heymann continued. Improving a company’s results to increase income and valuations can be significantly more valuable for clients than simply increasing ROI on conventional investment assets. As 64 percent of owners surveyed by MassMutual indicated their businesses are their largest assets, growing their companies directly supports their current financial needs as well as their eventual retirement.


Heymann said his firm follows a “four pillars” approach to retirement planning, focusing on:

• Ownership of the client’s business. Helping entrepreneurs grow their businesses over the long term provides a stable source of income.
• Real estate ownership that gives clients real, lendable assets on their balance sheets.
• Traditional stock market investments.
• Cash and cash-like instruments to provide liquidity and meet current needs.

“We address the traditional parts of building wealth and reaching financial independence,” Heymann said, “but with a heavier emphasis on business, as that’s our customer base. Everything starts and ends with a living financial plan that shows we are on track. We provide organized records to help clients see their progress and to understand how the four pillars support their retirement.”

Financial education is another critical component of Prism’s approach, Heymann said. Helping clients become more financially savvy makes collaboration easier. As a fee-only firm, he added, Prism advisors do not sell products, so they can provide unbiased and objective advice.

“Our mission is to empower investors to make the best use of their capital through education in partnership with their advisors,” he added. “We provide services to people who appreciate the value of going through the planning process, and we encourage them to ask questions to better understand what they do not already know. Our entire deliverable is built around the idea that we never take advantage of anybody's knowledge gap.”

He added, “That’s my favorite thing about what we’ve built: it’s an education-first model.”

For more information on Prism Financial Concepts, visit: prismfc.com