Business owners use advisors in a different way from other investors, and to capture this market advisors must focus on a holistic approach that includes tax planning, according to new research from Spectrem Group.

Business owners may be quite reluctant to use financial advisors, not seeking advice until they feel they have "significant wealth" - a subjective level which can be very high for some. Their preferred financial provider is a full-service broker. 

Business owners are ahead of the curve when it comes to digital and social media, with many saying they are comfortable using Twitter. More than a third of business owners spend over 21 hours per week at their PCs/Macs, using their computers to research investments, pay bills and access online accounts.

“Business owners are comfortable with technology and advisors should appropriately expect business owners to connect via these mediums. That means response times are shortened since access to communication channels is more available,” said Spectrem.

Long-term concerns = holistic planning

Some of the biggest concerns of ultra-wealthy business owners specifically are: business revenues, health, and financing education for their grandchildren. Perhaps due to this long-term approach, coupled with health concerns, Spectrem says that wealthy business owners are interested in finding out about long-term care options as part of holistic planning. Mass affluent business owners meanwhile are more worried about retirement planning and financing education for their children.

Taxes are another concern to all business owners, but while it is the wealthiest business owners who have traditionally worried most about taxes the volatile political environment means owners of smaller businesses such as S-corporations or limited partnerships could be impacted. This is an area where advisors can help clients, keeping abreast of relevant developments and raising these issues with them. Likewise, business owners may not be aware of estate planning issues they face and this is an area advisors can proactively address.

Generally, most business owners have investment and financial plans but, according to Spectrem’s research, advisors would do well to look beyond these and take a holistic “life concerns” approach to dealing with this clientele. Another point for advisors to be aware of is that business owners may not be able to diversify, and that their success is often therefore closely tied up with the success of the overall economy.  

“Advisors and providers who will most effectively service business owners in the future must have a holistic approach rather than an investment only approach. As regulations and tax laws change, these investors will be appreciative of a proactive knowledgeable approach to solving their financial issues,” said Spectrem.