Working with Business Owners

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Jul 10, 2007 3:48 pm

My practice to this point has mostly been built on typical retail accounts.   


I would like to focus the next few months on meeting business owners who already have a relationship with the bank.


That being said, I would most appreciate constructive feedback on the following from those who open many corporate accounts.


I see many corporate accounts on the bank side with relatively large balances in accounts such as "business checking"  "business money market" etc.       My hesitation is can I treat these accounts the same way I treat my typical retail accounts at it pertains to shifting money from the bank to investments?


My instincts tell me to approach these corporate/business accounts similarly except to focus on the average daily balances to get an idea of how they are actually using the account on a daily basis.


If there are many transactions and accounts have wild swings perhaps it would be best not to "touch" these accounts and leave them be.


Conversely, when these accounts are relatively dormant with consistent balances perhaps this would be a better opportunity for the investment side.


Of course in any meeting concerning opening corporate account there will be opps. for handling their retail accounts as well.


Thanks in advance for any feedback.


Scrim

Jul 10, 2007 4:04 pm

If you want to help business owners, you really need to learn the insurance side of the business.  Why would a successful business owner take money and put it in retail investments instead of investing in their own business?

Jul 10, 2007 4:17 pm

Your opening to business owners would be to suggest that for capital that they aren't using on a daily basis, they would be getting a much better return in a money market brokerage account with check writing capablities. The deposits that you see at your bank may be just the tip of the iceberg.   I have several businesses who routinely keep 500k to 750k in various mmkts that pay 4.6%  to 5.12 % compared to a bank mmkt at less than 1%.  When they need the cash they write a check to the bank "working account".   Check with your B/D for options. I have about 20 mmkt funds to choose from.


Once you have earned their trust that you are looking out for their best interest (be sure to let them know that you don't get any commissions for these accounts ) you can start to discuss retirement planning (Simple IRA, 401K) and like anon says insurance issues like business succession, non qualified plans, executive bonus, disability insurance etc.    Most business owners are not going to invest in securities other than in a retirement plan.


Many small and mid sized businesses have no idea of the planning and tax saving opportunities out there for them.  Position yourself as an educator. Be the go to guy for their business planning questions.

Jul 10, 2007 4:27 pm
Dust Bunny:

Your opening to business owners would be to suggest that for capital that they aren't using on a daily basis, they would be getting a much better return in a money market brokerage account with check writing capablities. The deposits that you see at your bank may be just the tip of the iceberg.   I have several businesses who routinely keep 500k to 750k in various mmkts that pay 4.6%  to 5.12 % compared to a bank mmkt at less than 1%.  When they need the cash they write a check to the bank "working account".   Check with your B/D for options. I have about 20 mmkt funds to choose from.


Once you have earned their trust that you are looking out for their best interest (be sure to let them know that you don't get any commissions for these accounts ) you can start to discuss retirement planning (Simple IRA, 401K) and like anon says insurance issues like business succession, non qualified plans, executive bonus, disability insurance etc.    Most business owners are not going to invest in securities other than in a retirement plan.


Many small and mid sized businesses have no idea of the planning and tax saving opportunities out there for them.  Position yourself as an educator. Be the go to guy for their business planning questions.


Thanks for the feedback guys.   


 How come you feel they won't invest in securities besides a retirement plan?   Business owners by nature should not be risk adverse.


BTW, we do get a .25% trail on most brokerage money markets :)


scrim

Jul 10, 2007 4:57 pm
scrim67:
Dust Bunny:

Your opening to business owners would be to suggest that for capital that they aren't using on a daily basis, they would be getting a much better return in a money market brokerage account with check writing capablities. The deposits that you see at your bank may be just the tip of the iceberg.   I have several businesses who routinely keep 500k to 750k in various mmkts that pay 4.6%  to 5.12 % compared to a bank mmkt at less than 1%.  When they need the cash they write a check to the bank "working account".   Check with your B/D for options. I have about 20 mmkt funds to choose from.


Once you have earned their trust that you are looking out for their best interest (be sure to let them know that you don't get any commissions for these accounts ) you can start to discuss retirement planning (Simple IRA, 401K) and like anon says insurance issues like business succession, non qualified plans, executive bonus, disability insurance etc.    Most business owners are not going to invest in securities other than in a retirement plan.


Many small and mid sized businesses have no idea of the planning and tax saving opportunities out there for them.  Position yourself as an educator. Be the go to guy for their business planning questions.


Thanks for the feedback guys.   


 How come you feel they won't invest in securities besides a retirement plan?   Business owners by nature should not be risk adverse.


Mostly because business owners want to keep as much of their business capital short term and liquid except for retirement plans where they can be made to see the value of long term investments.   Their capital is for equipment and other business purchase and operating costs that may suddenly be extra ordinary. 


I have very very few business owners who just have stock or mutual fund investments in their own personal names.  Those that do, have mucho discretionary income and are long established businesses. Not your normal mom and pop shops.


Business owners by nature feel more comfortable in investing in themselves, their own businesses and trust themselves instead of the markets.


Although, you can suggest margin accounts for those who would be on the fence in investing vs liquidity.  There are some restrictions on those types of accounts.


Retirement plans and insurance are the ticket for business owners..


BTW, we do get a .25% trail on most brokerage money markets :)


I know.  Me too.  Technically....that's not a commission  .


scrim

Jul 10, 2007 5:10 pm

DB and anon pretty much stated what I was going to say. 


Check out Top Gun Producers and search for the "5 Ways Out of Business."  I will warn you though, if you cannot or do not know how to sell DI/Life, you're wasting your breath. You cannot compete on investments, as has already been stated.  Group retirement plans are one way to go, but it'll take a looooooong time to build up critical mass.

Jul 10, 2007 5:13 pm

How come you feel they won't invest in securities besides a retirement plan?   Business owners by nature should not be risk adverse.


If you had a successful business, would you rather invest in your business or someone else's business?

Jul 10, 2007 5:49 pm
deekay:

DB and anon pretty much stated what I was going to say. 


Check out Top Gun Producers and search for the "5 Ways Out of Business."  I will warn you though, if you cannot or do not know how to sell DI/Life, you're wasting your breath. You cannot compete on investments, as has already been stated.  Group retirement plans are one way to go, but it'll take a looooooong time to build up critical mass.




Any good resources for leaning to sell DI/Life

Jul 10, 2007 10:43 pm

Thanks again.


I will focus on building my "retail" accounts AND perhaps open up some money market accounts for the business customers.  


At the very least it should build good will which is hard to quantify in real terms but has to be a good thing.


Scrim

Jul 11, 2007 10:48 am
anonymous:

How come you feel they won't invest in securities besides a retirement plan?   Business owners by nature should not be risk adverse.


If you had a successful business, would you rather invest in your business or someone else's business?



Liquidity. 

Jul 11, 2007 10:51 am

Any good resources for leaning to sell DI/Life


You definitely need a good mentor.  If your DI and Life business has to go through a grid, it will be tough to do it profitably.