Financial Advisors Can Boost Business by Helping Entrepreneurs Balance Professional and Personal Wealth, According to New Pershing Guidebook

May 16, 2012

Guidebook Also Offers Strategic Advice on How Advisors Can Develop Expertise in Cash-Flow Management, Borrowing and Other Growth Areas

JERSEY CITY, N.J. — Pershing LLC, a BNY Mellon company, today announced the release of Building a Business with Business Owners, a new guidebook that focuses on how financial advisors can meet the increasingly specialized personal and business needs of entrepreneurs. Because business owners' personal and professional lives are so strongly intertwined, Pershing concludes, advisors have a tremendous opportunity to grow their businesses by helping entrepreneurs untangle their often complex financial situations.

“Offering specialized services to high-net-worth business owners represents an attractive, and potentially lucrative, market opportunity for financial advisors,” said Kim Dellarocca, director, Pershing. “Increasingly, we are seeing advisors consulting with entrepreneurs on issues such as cash-flow management, capital allocation and borrowing — value-added services and advice that generalist financial advisors cannot match.”

According to Pershing, a growing number of advisors are developing niche business expertise to supplement their traditional offerings, differentiate themselves and drive growth, as industry competition intensifies and pressures on margins escalates. For advisors, taking advantage of this trend presents some serious challenges, including freeing up resources to gain the necessary knowledge and developing new compensation arrangements for clients with low levels of investable assets.

Pershing recommends that advisory firms with limited marketing resources focus on achieving deep penetration in a narrowly defined target market, with no more than five potential market segments yielding optimal results. In the new guidebook, Pershing also warns that because many business owners and entrepreneurs direct the bulk of their personal savings into their business rather than money management accounts, advisors who charge clients a percentage of assets under management run the risk of under-compensation. Instead, advisors should consider premium fee arrangements to offset the added expense of working with entrepreneurs.

“For business owners,” Dellarocca added, “signing on for these specialized services can be enticing, and can make them more efficient. But entrepreneur clients may need to be convinced that the advisors they select are true experts in their businesses, are not overpromising, and can work effectively with existing service providers.”

According to the guidebook, key areas where entrepreneurs can benefit from specialized advisory services include:

  • Cash Flow and Financing: Supporting and sustaining both business and personal spending needs, as well as structuring financing for start-up and expansion.
  • Risk Protection: Insight into insurance products, hedging strategies and legal assistance.
  • Benefit Programs: Group health or 401(k) plans, non-qualified retirement plans and insurance benefits.
  • Wealth Management: Integrating personal financial planning and business planning, especially in the areas of tax efficiency, liquidity, estate planning, and wealth transfer.
  • Business Planning: Aligning business strategy with personal life and financial goals, encompassing tax planning, succession planning, business valuation, equity transfer and business succession.

About Pershing

Pershing and its affiliates provide global financial business solutions to advisors, asset managers, broker-dealers, family offices, registered investment advisor firms and wealth managers. A financial services firm located in 23 offices worldwide, Pershing provides business-to-business solutions to clients representing 6 million active investor accounts on the U.S. platform. Pershing affiliates are members of every major U.S. securities exchange, and its international affiliates are members of the Deutsche Börse, Australian Stock Exchange, Irish Stock Exchange, London Stock Exchange and Toronto Stock Exchange. Pershing LLC (member FINRA/NYSE/SIPC) is a BNY Mellon company. Additional information is available on pershing.com, or follow us on Twitter @Pershing.

About BNY Mellon

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of June 30, 2016, BNY Mellon had $29.5 trillion in assets under custody and/or administration, and $1.7 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.