Business Owners Are More Confident With Adviser Collaboration

Nonetheless, economic uncertainty and market volatility continue to be top concerns when it comes to business owners achieving their financial goals.

By DJ Shaw

TD Wealth has announced the findings of its annual “Retirement Readiness” study, revealing that mass affluent business owners, or those with more than $100,000 in investable assets, are more confident about their ability to retire than they have been in the past. The study saw such business owners report a sizeable 13 percentage point increase (up to 95% compared with 82% in 2020) when asked about their confidence in the ability of their financial plan to generate needed income during retirement.

Additionally, the study found that virtually all high-net-worth business owners (97%) also expressed confidence that their financial plans will be able to generate the income they need during retirement—an increase from 94% in 2020 and 95% in 2019. High-net-worth business owners were defined as those with investable assets of $500,000 or more.

But, amid a pandemic, there are still concerns, TD Wealth notes. Economic uncertainty and market volatility remain top concerns when it comes to business owners achieving their financial goals this year. However, emerging as additional top concerns for business owners in 2021 were inflation and rising interest rates, especially as the country continues to grapple with the economic recovery in the wake of the COVID-19 pandemic.

“While business owners today are concerned about the external pressures that may be potential threats to their retirement confidence, they also continue to understand that a successful path to retirement means staying the course and weathering short-term volatility for potential longer-term success,” says Ken Thompson, head of U.S. wealth shared services, TD Bank.

The study shows that despite continued uncertainty, 62% of business owners reported that they did not make any changes to their retirement planning because of the pandemic. Of business owners who did make adjustments to their retirement planning, they cited changes such as asset allocation (44%), making plans to postpone retirement (34%) and lowered contributions to retirement (32%).

Hybrid Advice  

TD Wealth found that 59% of business owners reported that they work with a financial adviser, and many said this leads to greater confidence in their financial success in the long term. According to the survey, confidence is higher among business owners with a financial adviser (55%) than those without a financial adviser (43%).

“Financial advice moved to center stage over the past 18 months, and business owners are seeking out personalized advice and investment opportunities to meet their shifting needs. Hybrid and digital investing solutions are table-stakes for the wealth management industry, but the financial adviser is here to stay,” says Alyson Klug, head of U.S. wealth national sales, TD Bank. “While the industry is seeing a rise in clients wanting to be more hands-on with their investing, those same investors must be comfortable investing and have the time to invest on their own, as well as be armed with the right information needed to invest. If any of those three pieces are missing, there is value to be found with having a financial adviser relationship to help ensure greater confidence and create a goals-based financial plan.”

As business owners grow more confident in their retirement plans by working with a financial adviser, many, and particularly younger business owners, are also increasing their communications with their advisers. According to the study, 76% of business owners reported a change in the frequency of their communication with their adviser over the past year, and 63% of business owners under the age of 34 communicated more with their adviser over the past year than they had previously, compared with 26% of business owners aged 55 and older.

Further, the survey found that 43% of business owners used an automatic, digital investing platform, and usage was 46% higher among younger business owners aged 34 and below.

The ‘Great Resignation’

According to TD Wealth, business owners were not immune to the growing trend of individuals choosing to leave their place of employment for new opportunities, as 42% of high-net-worth business owners reported that they lost employees because of the pandemic, compared with 37% of mass affluent business owners. The survey also found that 36% of business owners reported difficulties in hiring new employees in 2021, citing COVID-19 health concerns (64%), salary or wage offerings (35%) and the location of their business (33%) as reasons that they have had difficulties.

“Despite the challenges that business owners continue to face in the wake of the pandemic, many found financial partners paramount,” Thompson says. “A financial institution and adviser not only can help business owners with establishing financial goals and a long-term investment plan, but they can also act as an objective sounding board to help business owners navigate the many stages of their financial and business lifecycles.” 

The study found that business owners found a bright spot in outside advice, as 77% reported that they were at least somewhat satisfied in their bank’s role in helping their business over the past year. Of business owners who work with a financial adviser, 82% reported that they felt supported by their adviser over the course of the past year.

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