When you are meeting someone for the first time, it is customary to ask the question “So, what do you do for a living?”
When advisors ask the question of prospects, it takes on immediate and significant meaning.
An individuals’ occupation can play a huge role in how they invest. It can affect risk tolerance, short-term and long-term planning, retirement matters and wealth transfer plans, as well as countless other matters.
Spectrem has been studying investors segmented by occupation for several years, and has discovered that Business Owners carry a great deal of weight and responsibility that investors in other occupations do not have. As a result, Spectrem’s focused study – Serving Business Owners – takes an in-depth look at investors who own a part or all of a business, whether it be small or large.
The specific insights in the study are telling and detailed, but it’s most important to understand how occupation affects investor-advisor conversations.
Consider how Business Owners differ from other investors for a moment. These are people who may have started a firm from the ground up, required a loan to get their business off the ground, still owe money on those loans and must be very careful with all of their funds as a result.
Or, they may have bought their way into an existing business and have forged new concerns related to their investments.
Either way, a long and explicit conversation about the financial needs of the business could lead to a long and lucrative conversation about current and future investment decisions, both business and personal.
One of the most telling points from the study shows that while 55 percent of business owners use the same financial advisor for business and personal matters, another 26 percent want to use the same advisor but can’t. Why can’t they? It’s because their personal advisor does not offer the services they need for business purposes, or vice-versa.
These investors are often using banks, attorneys or accountants to provide some of the services they could easily receive from a financial advisor if they had reason to trust the advisor could handle those business needs.
But when an investor turns elsewhere for business advice because their personal advisor cannot help them, that would be disappointing for both the investor and the advisor, who is missing an opportunity to be a one stop shop for a very business businessman and investor. If an advisory firm is not in the position to expand services to meet the needs of all business owners, it should at least have someone knowledgeable in those services to recommend to the investor. Those providers would hopefully return the favor in some form down the line.
Business owners clearly have insurance needs that other investors do not have. Likewise, they are probably in need of regular guidance and service of their employee benefits packages, and that is another opportunity for advisors to either provide the service or provide the name of a firm they would recommend to provide those services.
Young business owners are different than older ones, and female business owners are different than their male counterparts. All of these segments are researched in the Spectrem report.
Wise advisors have come to realize that there is no question they can ask of an investor that does not seem to have some effect upon investment decisions. However, one of the most impactful questions, for both the investor and the advisor, is “So, What do you do for a living?”