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For as long as MassMutual has been asking business owners who is their “most trusted advisor,” the answer has always been their Certified Public Accountant. However, according to a new study “The 2023 State of Owner Readiness,” conducted by the Exit Planning institute (EPI), there has been a shuffle in the rankings as stated by today’s business owners. According to the study, the CPA is now the third most trusted advisor following their “financial advisor” (first) and “attorney” (second).
According to EPI, this shift in the rankings is influenced by two major factors.
- First, the age and demographics of today’s business owners.
- Second, the deep investment into financial education, content building, and role positioning that the financial services industry has made in exit planning over the last several years.
Boomers and Gen X shift the narrative
From a generational perspective, Baby Boomer business owners who sold their companies in the last few years indicated health, age, uncertain economic conditions, and higher-than-typical valuations were the leading factors in deciding to sell and exit their companies, according to information in the study supplied by DealWare. As these Baby Boomers were on the precipice of exiting, they begin to seriously look at mitigating financial risk, having an estate plan, and managing their so-called Wealth Gap (the difference between what they need in terms of income to maintain their lifestyle in retirement and the actual value of their business).
Considering that their businesses are likely 80 percent or more of their entire net worth and understanding that they will need the income from their companies to fund their current lifestyle, financial professionals were leaned on heavily to help ensure they exited their businesses on their terms — both personally and financially.
Generation Xers are widely known as a generation who builds companies to sell. They tend to rely on advice and education when making financial decisions — something that the financial services industry has recognized over the past several years. Gen Xers tend to be savers, more pragmatic in their financial planning views, and feel concerned about their ability to ever truly retire. Thus, they naturally gravitate towards their financial professional to help ensure their long-term personal financial plans are built with the vision of the business and their core values of work-life balance top of mind.
Quarterback is the most important position on the field
One cannot discount the effort and investment the financial services industry has placed into connecting and engaging with business owners who look to build value and align their personal, financial, and business goals. According to the 2022 MassMutual Business Owner Perspectives Study, over 80 percent of business owners believe their business and personal well-being are intertwined and over 85 percent value an advisor who can handle both their personal and business planning needs.
In addition, when asked who their top go-to advisor is for various business and personal planning tasks, the financial professional was ranked Number 1 for “determining the value of the business” and “unlocking the wealth trapped inside my business when I exit” — two pillars of effective exit and retirement planning.
Astute financial professionals have tapped into the notion that business owners want a professional to be the “quarterback” of their advisory team and are looking for a “one-stop shop” when it comes to planning. They are looking for someone to step up and take the lead. Business owners have a lot on their plates and having a professional who can corral the best thinking of all their various advisors is something that enables owners to focus on the most important task at hand — running their businesses. (Learn more: How business owners can build a strong team)
The choice is yours
There are a lot of factors that go into bestowing the title of “most trusted advisor” on any professional. And there are many out there who are trained, experienced, and credentialled to work with business owners. But the bottom line is that when you find someone you trust, who acts with integrity, puts your personal and business needs above all else, and understands the sacrifices it took to be a successful business, you have the foundation of an extremely beneficial relationship.
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