A full 40% of small-business owners have no retirement savings or pension plan in place, the survey found. Additionally, 75% have no written plan on how they intend to fund their retirement.
“Business value can fluctuate significantly over the years, so it’s important to have personal retirement savings outside of your business,” says Dave Maraman, president of M&I, a division of BMO Financial Group. “Additionally, should the unexpected arise, such as a major health issue or needing to sell the business sooner than expected, having a retirement nest egg is important.”
Financial advisers can help small-business
owners set up a Simplified Employee Pension Individual Retirement Account (SEP
IRA) and establish other savings portfolios, says Tina DiVito, head of the BMO
Retirement Institute. Advisers who specialize in small business could have
great success working with this target market by aligning with an accountant, a
tax specialist and a lawyer, DiVIto says. They key is to make small-business
owners realize that professional financial advice is critical to build a
retirement savings portfolio independent of a small business.
“A financial professional can also help develop a detailed financial retirement plan that outlines your goals and progress,” she says.
Since small-business owners and entrepreneurs are so single-mindedly focused on their businesses, DiVito suggests that financial advisers tell these clients that saving for their retirement is like investing in themselves. “Although it’s tempting to concentrate solely on investing in their business, small-business owners owe it to themselves and their family to have personal retirement savings to help ensure a comfortable retirement,” DiVito says.
Advisers and their clients can find more information on estate and retirement planning at the BMO Retirement Institute microsite here.