Most Are Self-made Entrepreneurs Focused on
Growth and Impact, but Lack Exit Strategy
Many business owners are not taking enough steps to protect
their personal and family’s financial assets, according to a study
of business owners and entrepreneurs by U.S. Trust. The survey also
shows that business owners struggle with competing priorities
across their work, personal, and financial lives, which can take a
toll on their health.
Sixty-one percent of business owners do not have a formal plan
for transferring ownership of their companies when or if they sell
the business or transfer ownership to family members, the survey
found. The findings, drawn from the responses of 118 business
owners with at least $3 million in investable assets, were part of
the 2015 U.S. Trust Insights on Wealth and Worth® survey.
“For many owners, their business lives and personal lives are
closely intertwined. But those two sides often don’t get equal
attention,” said Keith Banks, president of U.S. Trust. “Owners can
realize the value of their lifelong work and provide for their
families with a well-thought-out plan for the future. What we’re
seeing is that they are so wrapped up in the day-to-day task of
running their companies that they could ultimately put their
financial security and legacies at risk.”
The lack of a succession plan could undercut their other
priorities, such as providing financial security for their
families. While just 16 percent expect to pass on their companies
to their children or other family members, 62 percent consider it
important to leave a financial inheritance to their heirs. Still,
81 percent acknowledge they’ve never talked to a professional
advisor about succession planning. The top reasons owners say they
haven’t drawn up a formal plan include:
- They aren’t ready to retire.
- They have postponed making a
decision.
- Their families or colleagues are
already aware of their informal plans for the future of the
business.
- Their wishes for the business have been
outlined in a will.
- They are too busy with the daily
operation of their business.
Pressure, pride and the importance of healthMost high net
worth and ultra high net worth business owners surveyed are
self-made. Nearly six in 10 grew up in middle- or lower-income
households. Three-quarters (77 percent) of the respondents are
entrepreneurs who founded their businesses. Another 15 percent
acquired a company or bought out their partners, while 8 percent
inherited their firms.
The 2015 U.S. Trust Insights on Wealth and Worth survey found
that many business owners and entrepreneurs share at least five
similar attributes:
- A passion for their business: Nine in
10 (92 percent) business owners say they have a clear sense of
purpose for their lives, and three-quarters (75 percent) consider
meaningful work an important aspect of their purpose.
- Personal and business lives that are
closely intertwined: A high proportion of business owners’ finances
are tied up in their companies. Forty-four percent say most of
their income and financial assets are linked to their firms. For
owners under the age of 50, that is especially true; 64 percent say
their business represents most of their income and assets.
- A focus on health, family and financial
security: Seventy-six percent say their health is their most
important personal asset. Yet, 35 percent say they’ve sacrificed
their health for the sake of their careers.
- A strong sense of responsibility for
the needs of others: Seventy-nine percent say they typically put
the needs of others ahead of their own. Partly as a result, 59
percent say their personal, work, financial and social goals often
conflict with each other.
- A desire to give back to society: Nine
in 10 (92 percent) business owners say that giving back to society
is important, if not essential, to their lives, and place greater
relative importance on giving back than non-business owners.
Business is personalGiven the personal liability that
comes with many business structures, business owners are concerned
with how the business affects their personal reputation and wealth.
They worry about work and personal threats such as:
- Guarding their personal reputation (56
percent).
- Protecting their businesses from
lawsuits (44 percent).
- Defending their data from hackers or
cyber attacks (42 percent).
- Finding business advisors they can
trust (33 percent).
- Access to credit (24 percent).
“Business owners’ personal identities are closely tied to their
companies,” Banks said. “They are passionate about their
enterprises. Running a company is a tremendous source of pride for
them. As devoted as they are to their businesses, they have to be
sure to avoid unnecessary risks that could jeopardize the
reputations they are trying to protect.”
Taking care of employeesBecause they often see their
businesses as extensions of themselves, owners believe it is their
responsibility to take care of their employees. Ninety-three
percent say they would not cut the number of workers they employ to
manage their tax or business risk. And, while 24 percent are
concerned about the cost of employee health coverage, 96 percent
have continued to provide health benefits since the Affordable Care
Act went into effect.
The complete 2015 U.S. Trust Insights on Wealth and Worth survey
findings can be found at www.ustrust.com/survey.
Survey MethodologyThe 2015 U.S. Trust Insights on Wealth and
Worth® survey is based on a nationwide survey of 640 high net worth
and ultra high net worth adults, of which, 118 are business owners,
with at least $3 million in investable assets, not including the
value of their primary residence. Respondents were equally divided
among those who have between $3 million and $5 million, $5 million
and $10 million, and $10 million or more in investable assets. The
survey was conducted online by the independent research firm
Phoenix Marketing International in January 2015. Asset information
was self-reported by the respondent. Verification for respondent
qualification occurred at the panel company, using algorithms in
place to ensure consistency of information provided, and was
confirmed with questions from the survey itself. All data have been
tested for statistical significance at the 95 percent confidence
level.
U.S. TrustU.S. Trust, Bank of America Private Wealth Management
is a leading private wealth management organization providing vast
resources and customized solutions to help meet clients’ wealth
structuring, investment management, banking and credit needs.
Clients are served by teams of experienced advisors offering a
range of financial services, including investment management,
financial and succession planning, philanthropic and specialty
asset management, family office services, custom credit solutions,
financial administration and family trust stewardship.
U.S. Trust is part of the Global Wealth and Investment
Management unit of Bank of America, N.A., which is a global leader
in wealth management, private banking and retail brokerage. U.S.
Trust employs more than 4,000 professionals and maintains 97
offices in 31 states.
As part of Bank of America, U.S. Trust can provide access to a
broad range of banking solutions for individuals and businesses,
and an extensive retail banking platform.
Bank of AmericaBank of America is one of the world’s largest
financial institutions, serving individual consumers, small and
middle-market businesses and large corporations with a full range
of banking, investing, asset management and other financial and
risk management products and services. The company provides
unmatched convenience in the United States, serving approximately
48 million consumer and small business relationships with
approximately 4,800 retail financial centers and approximately
15,900 ATMs and award-winning online banking with 31 million active
users and approximately 17 million mobile users. Bank of America is
among the world’s leading wealth management companies and is a
global leader in corporate and investment banking and trading
across a broad range of asset classes, serving corporations,
governments, institutions and individuals around the world. Bank of
America offers industry-leading support to approximately 3 million
small business owners through a suite of innovative, easy-to-use
online products and services. The company serves clients through
operations in all 50 states, the District of Columbia, the U.S.
Virgin Islands, Puerto Rico and more than 35 countries. Bank of
America Corporation stock (NYSE: BAC) is listed on the New York
Stock Exchange.
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U.S. Trust operates through Bank of America, N.A., and other
subsidiaries of Bank of America Corporation.
Bank of America, N.A., Member FDIC.
© 2015 Bank of America Corporation. All rights reserved.
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version on businesswire.com: http://www.businesswire.com/news/home/20150623005167/en/
Reporters May Contact:Julia Ehrenfeld, U.S. Trust,
1.646.855.3267julia.ehrenfeld@bankofamerica.com
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