<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=275610486160139&amp;ev=PageView&amp;noscript=1">

Many owners of private businesses won’t be able to retire on the value of their business alone.  This group of owners will need to pre-fund their retirement.  In my opinion one of the best ways to do this is through the use of a qualified plan.

Most of us know about qualified plans through the use of terms like 401(k) plans, SIMPLE plans, profit sharing plans, or defined benefit plans.  If you work with business owners I believe you must become an expert at the use of the various plans that are available to owners.

Of the 6,000,000 private businesses in this country over 80% of them do less than $1,000,000 in sales.  This group almost always needs help with reaching financial independence.  Here are some steps that you use to help:

Demonstrate to the owner that they need a retirement plan.  We have a tool called the four boxes of financial independence.  This illustration helps a business owner understand where they are on the road to financial independence.

A great deal of the time an owner will find that their business will not get them to financial independence by itself.  Having a way of illustrating this is important to get a business owner to listen to ideas on how they can reach financial independence.

Many business owners we speak with think their business will allow them to retire.  Our four boxes program helps the owner understand why they usually need more than their business for financial retirement to become a reality.

Next, ask an owner how much they want to save.  The various qualified plans have a large variation in how much an owner can save in their account.  A SIMPLE plan might only be able to have $14,000 saved in it.  A defined benefit plan could have as much as $200,000 put in the owners account. 

Understanding how the various plans work and how much can be saved in each can improve your value as an advisor to your business owner clients.  Remember that the important question for the owner to answer is, “how much do you want to save?”

Find a quality third party administrator.  Most qualified retirement plans have to have a third party administrator work with the plan.  The job of these people is to make sure that contributions are allocated properly to each employee’s account (Including the owner).

Teaming up with a quality TPA firm will allow you to bring a competent specialist in to work with you on designing a plan that helps an owner achieve their saving goals.  I believe having great specialists you can work with makes your value as advisor increase with your clients.

Have you taken the time to help your clients learn methods that will allow them to leave their business in style?  If not, why not?

Josh Patrick

I have put together a case study that uses what I call the four boxes of financial independence.  This case study will give you a method that is easy to use to see if you are on the right track to reach financial independence after you sell your business.  To get this case study, click on the button below.



Securities and Investment Advisory Services offered through NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Stage 2 Planning Partners and NFPSI are not affiliated.


This article is published for residents of the United States only.  Registered Representatives and Investment Adviser Representatives of NFP Securities, Inc. may only conduct business with residents of the states and jurisdictions in which they are properly registered.  Therefore, a response to a request for information may be delayed.  Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed.

Topics: financial independence planning, for advisors, qualified plans

Posts by Tag

See all

Subscribe Here!