Business owners sometimes create a great deal of wealth for themselves and their families, so it's understandable that many planners seek them out as clients. But current and former business owners are often not the easiest, most cooperative clients. Some can be independent to the point of prickliness, others may be sure that they know best and often need substantial persuasion before agreeing to take professional advice.

"They're a control-oriented group, very successful and used to calling the shots," says Karen Altfest, principal advisor and executive vice president for client relations at Altfest Personal Wealth Management in New York. "They've done something well, and they kind of can't get over it. If they wanted to do it all themselves, that's an option, but instead they come to argue with you."

Not every planner wants to have that argument. For those who aren't thrown by their quirks, however, business owners can be excellent clients - particularly for planners who know what to expect and have considered how they'll handle the challenges that business-owner clients can present.



Business owners who want financial planning advice are in varying stages of life, says Matthew Tuttle, founder and CEO of Tuttle Wealth Management in Stamford, Conn. "Some are younger, some are getting on in years, some have sold their businesses or are looking to sell their businesses."

Business sellers tend to be middle-aged and older, Tuttle says, though he does have a client who is in his twenties and is being courted by a bigger company that wants to buy his firm for $4million or so, Tuttle says. "Every once in a while you come across some young kid who had an idea and really hit it out of the park."

Most business owners are men and are very accustomed to being in control, planners say. "Men start with control issues already, and businessmen have a second layer on top of that," says Richard Schroeder, principal at Schroeder, Braxton & Vogt in Amherst, N.Y. "A successful business owner feels like he needs to be in control because that's how he's built his firm and how he's succeeded."

That need for control may make it more difficult for a business owner to take advice, even advice that he's actively sought out. Some business-owner clients want planners to operate the client's way. Others may accept help, but only after substantial - sometimes numerical - proof that the planner's methods will bear fruit.

"You get a little push-back from this population," Altfest explains. "We had a guy who had been sold a lot of insurance products and had misconceptions about them. He thought they had guarantees that they didn't have. We suggested he make changes, and he really needed proof on why he should consider making changes." This approach, she adds, can make it difficult for planners to feel as if they are developing a warm, trusting relationship with these clients.

At the outset, some business owners are ready to begin the financial planning process, while others are consumed with the process of selling their businesses. Both groups may be courted by planners, all interested in increasing assets under management by helping clients reinvest business sale proceeds.

"Every financial planner on the planet is looking for money in motion," Tuttle says. "As soon as it becomes common knowledge that a business owner is selling, you see the sharks circling, waiting for the sale to happen and to pitch the owner on what to do with the money." That, too, can make it difficult for an advisor to develop a client relationship with current or recent business owners.



Tuttle manages many of these challenges, he says, by getting involved with business owners long before they actively pursue a sale. His firm is in partnerships with CPAs around the country, many of whom refer business-owner clients, especially those older than 50.

"They may have no intention of selling, but it's something we want to get them thinking about," Tuttle says. "We educate them about exit strategy options and all the issues that come with a sale."

When business owners get closer to selling, Tuttle helps them find the right lawyers, mergers and acquisitions experts, and private equity firms. "We know who wants what, we prescreen it and we put the team together," he says.

If an owner doesn't want to sell their company, Tuttle can also help groom an internal or family successor. Either way, Tuttle puts his firm first in line to manage post-sale liquid assets.

"We want to show you the way well before you ever think about selling, because once you think about selling, chances are you'll work with us because we've already put the plan together. Then who will get the assets? The Merrill Lynch guy who shows up once you have a check in your pocket, or the guys who walked you through an entire process that began five years ago?" Tuttle asks.

Business owners may talk about a life of relaxation, but relatively few occupy hammocks for long. Instead, they often start another business or invest in one. And though they may put substantial sums into new ventures, former owners typically want help as they create personal financial plans. Their demeanor, however, may suggest that they're not eager for planner input.

Some owners rule firms with an iron fist. This group often includes older business owners with relatively simple companies, especially in industrial fields. Unlike owners who build teams and delegate jobs, these executives have typically succeeded by relying on their own opinions and ways of accomplishing tasks. As a result, they're slow to take advice.

Altfest counsels patience as planners earn these clients' trust. "It helps to be very patient, listen for a long time first and understand that they're not going to give up control," Altfest says. "They trust themselves very, very strongly. They may not readily accept that they're wrong."

Such business owners often respect credentials suggesting that a planner is an expert, including advanced degrees, book authorship and appearances in publications they respect. References from friends and other legal and financial professionals help too. "You may get more of their ear if you can give good business advice," Altfest says. "That will give you a lot more credibility."

So can a willingness to do things their way or a combination of your way and theirs. Schroeder recalls a business-owner client he had early in his career.

"There started to be some dips in the market, and he started calling and saying, 'I think we should do this, I think we should do that,' not because he didn't feel comfortable risking money, but because he felt out of control. I worked with him as well as I could, having frequent lunches to explain that managing investments is not like managing a business, that active management usually works against you."

Ultimately, though, the client left Schroeder's practice. Schroeder approaches similar clients differently now.

"I don't force them into an entirely passive investment strategy," he says. "We either keep part of their money separate and let them invest it in business ventures, or let them keep and run an unmanaged account."

Those clients still benefit from a planner's expertise. "We execute the trades, so they get cheaper transaction fees and we can pass along research and keep track of the overall portfolio," Schroeder says.



Strong confidence in themselves and their companies is a fine thing when a business owner is still at the helm, but it can be a stumbling point when it's time to diversify stock holdings.

"We see people who aren't the owners but are in the C-suite in a public company, and it can be awful to get that firm's stock away from them," Tuttle says. "One client was high up in a regional bank, and we only persuaded him to diversify his holdings after his first $1 million loss. His CPA had told him to diversify for years, but he was worried about capital gains. Now he doesn't have a capital gains problem. He has a capital loss to carry forward."

Schroeder handles this issue by treating diversification and outside management as separate concerns. "You can still persuade someone to diversify the money they manage themselves," he says. "Or you can try to diversify some of the holdings. Don't try to wrest everything away."

Mark Thompson, a senior vice president at Thompson Wealth Management in Melbourne, Fla., addresses the problem by putting investment decisions last in the planning process. He begins with long- and short-term cash flow analysis, identifying goals, developing an estate plan and creating an investment policy statement that outlines benchmarks, evaluation frequency and triggers that will change the investment structure.

"We let them make all the decisions and involve them in every part of the process," Thompson says. "A lot of business owners are natural planners. If you go through the process properly, the choice of investments is much easier. It's funneled down to what actually meets their goals, and they've been engaged in the process the entire way."



Many planners say they particularly enjoy getting to know their clients and forming warm, trusting relationships. It often is quite time consuming.

"I saw a prospect yesterday who has been here for three meetings," Altfest says. "He's young, very successful and thinks he wants financial planning help. He grilled us and grilled us, analyzing and processing everything. That's who he is. He doesn't mean to be unpleasant."

This is typical of her business-owner clients, Altfest says. "They want to see the evidence, they want to see the facts. They're not as interested in the personal, and that makes it more difficult to establish a relationship."

Keeping this group's expectations and preferences in mind can help a relationship grow more quickly. For starters, be responsive, many advise. "This isn't the population you leave sitting in your waiting room while you finish a phone call," Altfest says. "They're used to special treatment, lots of 'yes,' things being ready for them."

Take an interest in their business lives, she suggests. "They like it if there's some synergy," Altfest says. If you've seen other people in the same field, show that you know something about the industry. Ask questions. "They love talking about their own business, and you'll learn things you can show to the next person," Altfest says.

Expect that it will take more time than usual for these clients to reveal some personal matters. "I have a client who is a very successful business owner, and his wife had a large inheritance and has her money somewhere else. I didn't know that until I'd known him for about a year," Altfest says.

In the end, it's not possible to build a successful relationship with every business-owner client. "I have a client now who is an elderly man, still working," Altfest says. "He and his wife have both called and yelled at members of my staff. They're lovely to me, but if you're yelling at my staff, then it isn't working."

Ultimately, she adds, "If you have someone who isn't going to be pleasant to work with, then you don't need to work with them."



Ingrid Case, a Minneapolis financial writer, is a former editor at Bloomberg News. She is the author of Your Own Two Feet (and How to Stand on Them): Surviving and Thriving After Graduation.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access