As the leading innovators in the Exit Planning space, the BEI team talks daily to hundreds of advisors across the globe about their experiences with Exit Planning. More specifically, we talk to professionals in a variety of disciplines who are on the fence: sharing their aversions and hesitations about adding Exit Planning to their existing offerings.
In digging deeper and monitoring these uncertainties about Exit Planning work, there are common responses that are typically along the lines of one of the following:
- “I can’t seem to get clients engaged or interested.”
- “I don’t have the bandwidth to do this myself or the staff available to assist with it.”
- “I don’t have much Exit Planning knowledge and don’t know what my training options are.”
While each advisor has their reasons for concern, we feel it's our duty to challenge them and knock down the roadblocks of reluctance with proof that Exit Planning can actually elevate an advisor’s existing offerings and broaden their reach.
Addressing the Roadblocks
Lack of Clients and Client Interest
Half the battle of Exit Planning work is convincing your owner clients of the importance of planning for their future. Just as you might be hesitant to add Exit Planning to your core services, they are hesitant to admit they should start thinking long-term. The fact is that 100% of business owners will exit their business, whether they planned for it or not.
Another fact that will be supported with statistics in the 2022 BEI Business Owner Survey (coming soon!) is that business owners are considering Exit Planning earlier in their ownership cycle than ever before. Not only does this mean that the demographic audience available to you is expanding, but the ways in which you can reach them are changing too.
The key is to not throw in the towel too early in the process of seeking clients. Putting in the work to market your service as an effective solution to the problem that owners may or may not know they have might take some time. Some effective ways that BEI Members have found success have been utilizing their BEI license to enact automated e-newsletters, using assessment tools for discovery, installing a referral strategy and leaning into social media for outreach.
- Lack of Time & Bandwidth
The truth about time is that everyone wishes they had more of it. Just as you may be worried about the lack of time you have to add this service to your offerings, your clients stand by the idea that they don’t have enough time to plan.
As their advisor, it is your job to acknowledge and articulate to them the dangers of not planning. By waiting, your client may not build enough business value to sell for their desired amount, they might neglect training next-level management, or some unforeseen death or injury might occur.
Both you and the business owner will appreciate putting the time in beforehand versus wishing you had made more of a plan once the transition event happens. After all, the role of an Exit Planning Advisor is to optimize the business owner’s time based on their goals, which in turn, will help to prioritize your own time.
From our perspective, there are two solutions that ease time and bandwidth challenges: adopting a repeatable process and connecting with a network of professionals. BEI Advisors adhere to the Seven Step Exit Planning Process and have found value in being able to repeat proven steps with their clients from identifying exit goals to business continuity planning and more. In addition, gaining access to the BEI Network allows for collaboration between advisors across different disciplines to share expertise and strategies.
- Lack of Exit Planning Knowledge & Training
Lack of knowledge and training typically falls back on having a shortage of time. However, it’s worth repeating that putting the time in will lead to more clients and more profitability in the long run. It’s easy to use inexperience as an excuse to tack on one more thing to your list. But, having a solid understanding of what options are available when it comes to Exit Planning training can determine how to fit it into your schedule.
As far as BEI training goes, there are two paths to obtaining the Certified Exit Planner (CExP) designation, the industry’s highest certification to perform Exit Planning services: either beginning with one of three BEI Licenses and then doing the series of courses, or beginning with the series of three courses. To learn more about each path’s pricing, download the info sheet below.
The Bottom Line
As with any new personal or professional venture, there is always risk. At BEI, our mission is to provide indispensable tools for advisors like you - that’s why we’ve designed tools to save time, create consistency, and deliver high-quality solutions to current and prospective business owner clients.
To explore more Exit Planning content that will help you overcome your hesitations, start with diving into some of our free content:
- Weekly Exit Planning educational webinars
- The Why We Plan podcast
- Content shared on BEI social media
- A conversation with the BEI Team – schedule a meeting!
Register for our upcoming webinar, The BEI Path to Exit Planning Success, where we’ll discuss in detail the time commitments and requirements involved in BEI educational courses. We’ll cover how both BEI education and BEI licenses will ultimately help you resolve challenges brought on by lack of time, bandwidth, knowledge and client engagement.
When an advisor is approached with the concept of Exit Planning, it is common to be met with aversion or disinterest in adding those services to their practice. Perhaps they feel the planning work they do is the same thing as Exit Planning, or maybe they feel their business owner clientele are not in need of those services due to their age or place in the ownership cycle.
However, as data has been collected on the state of the economy and the interests of the modern-day business owner, insights suggest that the market for Exit Planning is larger and more vast than ever before.
Every few years, BEI produces a Business Owner Survey. While the 2022 report is in its final stages of preparation, there is one insight we couldn’t wait to share:
Business owners are thinking about Exit Planning at an earlier age than ever before.
While this might not come as a huge shock, this insight suggests that Exit Planning Advisors will not only be working with business owners who are younger in age, but that they may face new obstacles and a different outlook than in years past.
Business Owner’s Outlook
While the above insight might suggest that younger business owners are in a rush to retire, that may not be the case. In a 2021 study by Wilmington Trust, it was reported that confidence in the future of the US economy has declined, as well as confidence in the ability to gain new prospects for their products and services.
With an emphasis on adopting digital tools and a rapidly changing business landscape, insecurities over technology have accelerated the owner’s interest in Exit Planning and they feel that getting out of their business may be a better solution in the long-term. Business owners are weighing the pros and cons of these factors to determine when the right time is for them to exit, leading them to consider their Exit Plans earlier than ever before.
How Exit Planning Advisors Can Help
The above outlook and insecurities of a business owner are only heightened by the headlines. While you may not be able to fully settle anxieties or quiet the whispers of a possible recession, inflation hikes, wars, labor shortages, the list goes on; the reality is that the economy has both tailwinds and headwinds.
A 2022 mid-year market review by Edelman Financial suggested that these negative headlines don’t often tell the full economic story. For example, it was reported that in the first half of 2022:
“Beneath the GDP contraction, consumer spending remained strong and nonfarm payroll gains averaged more than 480,000 per month, remaining the tightest job market in decades, driving massive wage gains.”
Headlines don’t always focus on the good news. As an Exit Planning Advisor, having a firm grasp on data, both current and historical, can help put the state of the economy into perspective for your clients. Encourage them to follow the data, not their emotions.
Exit Planning Advisors can help their clients earn greater value from all of their collective assets. It would be ill-advised to let younger business owners assume that even by contributing the maximum amount to a 401(k) plan each year, for example, would give them enough to be financially independent at age 50.
Encourage owners to diversify their assets and find additional passive income streams to more rapidly generate wealth that will sustain long-term. An advantage of working with an Exit Planning Advisor for a business owner is that they will build a team of advisors who can recommend different diversification approaches. These could include tax strategies, different kinds of insurance plans, or even establishing an estate plan, all to protect their wealth and their family in the future, even when the market rises and falls.
Determine Lifestyle Plans
As is true with any business owner in any stage of their ownership cycle, if a younger owner desires to sell their business and retire, it is still crucial to determine what they want their post-exit life to look like. The New York Times recently reported that millennials specifically dream of stopping work, or doing only fulfilling work, 15 years before their parents did.
However, these aspirations are colliding with the reality that they will likely not be able to accumulate enough savings to do so. Despite the struggle and the means to save more, the 2022 Retirement Insights Survey from TIAA revealed that millennial workers, ages 25 - 39 have nearly 40% confidence in their ability to plan for retirement. This indicates that business owners in this age group will need to be approached about Exit Planning at an earlier stage.
No matter the confidence level, the key for an Exit Planning Advisor is to really nail down what their plans for retirement actually are. Whether it’s the time to travel and spend with their family, the ability to volunteer more, or something else, knowing the dreams and lifestyle needs of a business owner aspiring to exit makes the difference in mapping out strategies to get them there.
Having the knowledge that more and more business owners may want to exit sooner, or at the very least have it on their minds earlier, broadens the number of prospects you have for Exit Planning. Targeting business owners closer to the start of their business will only reap more positive benefits by lengthening the time you’ll spend with them doing Exit Planning work.
While every Exit Planning engagement is different and has timelines driven by each owner’s exit goals, time binds all decisions. It is advisable to start planning for an exit at least five years in advance, but 10+ years is even better. Knowing that, as well as the fact that younger business owners want to retire, may broaden your opportunities as an advisor and help you shift focus.
As mentioned, the Exit Planning Market has expanded (beyond Boomers) and the 2022 BEI Business Owner Survey, which will be released soon, will report on what else that means for advisors. Knowing that younger generations have increased interest in Exit Planning supplies ample opportunities for those involved in or looking to get started in the Exit Planning space.
Once released, the BEI Business Owner Survey will dive deeper into these opportunities, what other trends have shifted, perceived obstacles, and more!
To explore more Exit Planning content, start with diving deeper into:
- Free, Exit Planning educational webinar
- The Why We Plan podcast
- Content shared on BEI social media
- A conversation with the BEI Team – schedule a meeting!
Special guest, Dan Finn founder, president, and CEO of Finn Financial Group will be presenting a deep-dive webinar on structured installment sales. Positioned as a valuable deal strategy and solution to capital gains tax challenges, Dan will cover:
A review of relevant sections of the Internal Revenue Code and revenue rulings which permit their use,
The evolution of Structured Installment Sales (how they came into being),
In this webinar, BEI CEO Jared Johnson will host a Q&A session on the importance of cash flow in an Exit Plan. Joining him will be Carl Lutz, CExP and proud user of Cash Flow Mapping, as well as Jennifer Sauter, CFP® and Director of Customer Success at Cash Flow Mapping. Cash Fow Mapping (CFM) is BEI’s latest partner whose software provides the missing piece of the business succession plan: cash flow.