Last week celebrated the end of one phase of a legislative process, which may impact the U.S. pensions, annuities and the Employee Retirement Income Security Act (ERISA) tax-qualified sales. In support of the National Association for Fixed Annuities (NAFA), I had the opportunity to join a group of associations in visiting the offices of Senator… Read More
Estate Planning Archives - Page 2 of 2 - Creative Edge
As you and all of your business owner clients know, getting started on your own is accompanied by taking a risk. Business success is hardly a sure bet, but taking appropriate precautions and planning carefully can help minimize the potential for obstacles that could damage or dismantle the company you work so hard to build…. Read More
From the time we are born through our time growing old, we’re constantly expanding our minds and learning new things. Whether taking our first steps, earning our diploma or settling into retirement, we must adjust to changing circumstances and adapt to life as we know it. Many people attribute this to the never-ending process of education. As American philosopher John Dewey once said, “Education is not preparation for life; education is life itself.” And nowhere is this more evident than in the life insurance business.
In part two of this series, we discussed the basic outline for helping your business owner clients begin to plan and prepare an exit out of their firm. Once you’ve worked together to review the situation, define the runway, identify the outlook and select the appropriate method of sale comes the most critical part of the transition process – structuring the deal. Depending on whether or not an internal or external successor has been chosen, there are a number of factors that can impact the success (or failure) of the transaction. Once these are recognized comes the hard part of exit planning for many agents and advisors: following through with the deal and actually leaving the business to enjoy retirement.
In part one of this series, we discussed the importance of helping business owners recognize and acknowledge the need for an exit plan. After all, according to a Wells Fargo/Gallup Small Business Index poll conducted in 2010, 47% of small business owners plan to never retire! Is that out of a desire to work or a perceived need to? It’s our job as the advisor to bring to light that we will not be able to work forever, and the businesses we’ve worked so hard to build can play a critical role in creating the retirement we want and deserve. In order to succeed in retiring profitably, as in business, we have to plan. Choosing the appropriate time to sell and maximize the value of the business as an asset is not as simple as listing it and waiting for the phone to ring – careful thought and preparation is imperative.
Part 1: Identifying current status and timing the exit strategy
In last month’s Case Consulting feature, we discussed a situation in which a client was looking for upside earning potential with no downside market risk for an asset he wanted to leave for loved ones. Given his particular situation, Creative Marketing helped identify an annuity that met his needs and gave him the flexibility he desired. However, it’s possible that similar needs for a different client would lend themselves to a life insurance conclusion. If you have clients who are uninsured or underinsured and are looking for tax-free savings potential, consider offering them the benefits afforded by life insurance. And just like many good things, they often come in threes.
Even in today’s rapidly changing industry, financial and insurance professionals can always count on a couple constants when charting out a business plan. First, there is a need to identify and capture new markets. Second, there is a goal to better serve existing clients with new product and service offerings.