The latest CEG Insights research reveals that entrepreneurs have changed in some important ways that are having a major impact on their relationships with financial advisors—what they expect from them, the building blocks that create loyalty, and how they want to be served.
Are you changing with them—or are you still operating under old and outdated assumptions? The answer could have profound consequences for the future of your practice.
With that in mind, here are five significant ways in which entrepreneurs today are evolving—along with four action steps you can take to position yourself for success with this key client demographic.
The changing entrepreneur
1. Entrepreneurs are highly engaged. CEG Insights found that approximately 81% of entrepreneurs are actively involved in their investments—and that percentage rises to nearly 90% among Gen Z and Millennial entrepreneurs. They’re not waiting for you to tell them what to do—they’re informed and opinionated. What’s more, some 85% of entrepreneurs want to involve their children or grandchildren in their wealth planning efforts.
Ultimately, this tells us that entrepreneurs have outgrown the traditional “financial quarterback” model many advisors use. Today, they want a true coach—someone who provides leadership in helping them see what’s around the corner, who challenges their existing thinking, and who understands them at an extremely deep level in order to help them perform their best.
2. Entrepreneurs’ loyalty to advisors is in flux. Entrepreneurs still value your advice, as evidenced by the fact that roughly 72% of the business owners CEG Insights surveyed are currently working with a financial advisor. The problem: More than 41% have switched their primary advisor within the last three years.
The leading reason: a lack of communication or responsiveness, cited by 44% of business owners. That factor ranked ahead of the issues advisors tend to assume drive departures, such as investment results.
The fact is, clients don't experience your capabilities. They experience your communication of those capabilities. So there can be a lot of extraordinary work going on behind the scenes by you and your team. But if the entrepreneur doesn't know about it or feel it, then it's essentially invisible and as if it never happened.
3. Major life events are a major risk. More than 53% of entrepreneurs said they would begin searching for a different advisor immediately following a major life event, and another 38% would begin that search within three months. The most important trait they want to see: documented experience and expertise with their specific situation.
That tell us that entrepreneurs view their current advisors as people who understand where they are today, but not where they’re headed. The upshot: If you want to keep your business owner clients when they experience a big life transition, you need to establish your expertise in those areas well before the event itself occurs. If you wait until a business owner exits their company to explain that you’re an expert in business planning, it’s too late. If you wait until an inheritance occurs to introduce your estate planning capabilities, you’re too late. Get out in front of moments like these.
4. Entrepreneurs want family-office-level coordination. Traditionally, family offices served people with maybe $50 million or more. But today, approximately 45% of entrepreneurs believe a family-office-style experience should be a standard offering before an investor reaches $10 million. And about 20% essentially said it should be advisors’ standard offering.
The reason: Entrepreneurs’ financial lives have become extremely complex compared to business owners of the past. But very few advisors have the capabilities and relationships in place to coordinate all that complexity for their clients.
5. Entrepreneurs aren’t slowing down. Nearly 60% believe they’re likely to live to age 100—and nearly the same percentage say their best ideas are still ahead of them.
The upshot: Entrepreneurs today aren’t likely to fully retire for many years—and many will never retire. Expect lots of second and third acts from business owners after they exit their companies, including mentoring younger generations and engaging in passion projects. They want their financial resources to help fuel those initiatives rather than simply to fund traditional retirement lifestyle pursuits.
Action steps for advisors
Given this evolution, there are a few key moves advisors should consider making right now to capture the entrepreneur opportunity in front of them.
1. Assess your understanding. Make a list of your top entrepreneur clients and ask yourself what you actually know about each one. Not just the balance sheet, but what's happening inside their business, what's keeping them up at night, whether they’re thinking about selling, what their spouse thinks about the next chapter of their life, and so on. If you have clear answers to those questions, then you're coaching. If you only know about their assets, you're probably still quarterbacking.
2. Create a transitions map. Map out the transition that each of your top entrepreneur clients will most likely experience over the next three to five years. Then ask yourself, “Have I clearly demonstrated to them that I am capable in that area and prepared to help them navigate that transition?”. If the answer is no, that needs to be the topic of your next conversation.
3. Refine your communication strategy. Instead of sending all entrepreneur clients generic communications, reach out to each one with personalized messaging about topics that are highly relevant to them. Business owners don’t want more stuff from you—they just want the valuable stuff. That might mean content about a new tax development that could impact their business, a reminder about their succession planning, or a conversation about bringing family members into the business.
4. Build your bench. If your best entrepreneur client called tomorrow with a problem entirely outside investment management—maybe a valuation question, an asset protection concern, a family governance issue—is there someone that you could confidently and immediately bring into that conversation? If the answer is, "I'd have to find somebody," then your network isn't ready to help entrepreneurs deal with these types of transitions. It’s time to build up your bench of specialists.
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