WealthManagement Magazine

Getting In By Taking the Worry Out

Small business owners work hard. Even if they're smart and good at what they do, they'll still sweat away their youth before making it. It'll also take some luck to hit the jackpot selling their businesses while they're still young and healthy enough to enjoy the money. When it happens, however, many sellers experience a sudden panic about their futures. There's tremendous fear, says Gregory Hurlbrink,

Small business owners work hard. Even if they're smart and good at what they do, they'll still sweat away their youth before making it. It'll also take some luck to hit the jackpot — selling their businesses while they're still young and healthy enough to enjoy the money. When it happens, however, many sellers experience a sudden panic about their futures.

“There's tremendous fear,” says Gregory Hurlbrink, a broker and certified financial planner at Legg Mason, a subsidiary of Citigroup, in Baltimore. “They've worked their whole lives for this, and they're afraid that if they make mistakes now they'll have to start all over again.”

Hurlbrink, 43, knows what he's talking about. He's made a handsome living dealing with anxious small business owners who sell their businesses for millions of dollars long before they reach traditional retirement age. Over the past decade, some 400 former small business owners have opened accounts that have yielded Hurlbrink close to half of his $4 million in annual production. Since he began courting the small business owners, he says his assets under management have increased fivefold, to about $725 million.

Building this niche business, culled from his local supply of small firms that are sold or shut down annually. Hurlbrink scoured the local press and online sources for company sales, met with attorneys and accountants who work on mergers and acquisitions and made cold calls — five a month to strangers selling their small businesses — before establishing himself well enough that his new clients now come from referrals.

Along the way he picked up a couple of basic ideas about what fretful sellers of small businesses want — and don't want — from a broker. First, these former business owners, who had spent their whole careers dealing with the risk of failure, don't want to continue to do so in retirement. Secondly, absent the steadying support from business associates that they had come to rely upon while focused on building their business, they need a thorough, conservative professional at their side.

“Many of them had a chief financial officer when they were running their businesses,” Hurlbrink points out, “Now, they're looking for something of a ‘personal’ CFO, someone to quarterback everything from wealth management to philanthropic advice. That's what I try to be.”


One client drafted Hurlbrink as his quarterback three years ago. He is the same age as Hurlbrink and had just sold the Baltimore auto-parts manufacturing business he had spent a decade building for $10 million after taxes.

The client was thrilled with his success, but, as he told Hurlbrink when he came to see him after being referred by another client, that was the past. In what Hurlbrink calls his “discovery phase,” he found out that the newly-minted millionaire was worried about how he would pay for the education of his three small children, buy the oceanfront home he had always wanted and support his family comfortably for the 40-plus years he could expect to live — or how he would provide for his family if he didn't live that long.

Over a period of about nine months, the two met regularly at Hurlbrink's office and corresponded by email and phone. Hurlbrink helped develop a plan that would put the client at ease, from choosing investments, to working out an estate plan, to buying more insurance. He took care of the worst-case scenario first: He increased the client's life insurance to a $5 million policy from the $1 million policy that he had at the time.

The broker also quickly answered his client's concerns about his children's education. He set up a 529 college savings plan by investing $110,000 — the most a couple can invest in a single payment for their children's college education without incurring the gift tax — for each of their children.

After taking care of the client's family, Hurlbrink found out from his client what he needed to live on. He then developed a relatively conservative investment strategy, combining stocks and bonds with alternative investments that, while offering no guarantees, would likely help him get the income he wanted without seeing his assets eaten up by inflation.

Feeling more confident about the future, the client bought the sprawling oceanfront home he wanted and now spends much of his time with his family and engages in philanthropy.


Jerry Karstetter, a 45-year-old broker with RBC Dain Rauscher in Spokane, Wash., also acts as a personal chief financial officer — complete with a financial team — for former small business owners. For example, after his client sold his Spokane-based telecommunications firm for more than $7 million a few months ago, Karstetter brought in the client's insurance agent, accountant and estate attorney to help develop a plan for his financial future.

Creating a team was good for both client and advisor. With a team behind him, the client grew more confident about his financial future. He found it easier, after a lifetime of being devoted to growth, to accept living on a fixed income. Karstetter benefited because, having assembled the team, he became the central figure in making the client's future secure and, therefore, was in a better position to gain his confidence. “I acted as the leader of the team,” says Karstetter. “If you can position yourself that way, you're viewed as the ‘go-to’ person.”

Karstetter also brought in the man's wife for a meeting. She had fears of her own that she hadn't expressed, but which needed to be dealt with, says Karstetter. The husband was a very active person — a classic type-A personality — who had been devoted to his business, yet he had not discussed with her what he would be doing with all the time he now had on his hands. At the meeting, he talked about how he was going to work part-time on another business venture and devote himself to charity. The wife was relieved.

Once everyone's on board, there's an ongoing education process to help the client get up to speed on retirement finances just as they would experience with a new business. Educating the client also helps build trust in the financial advisor. “Relationships with these people usually take longer to solidify,” Karstetter says. “They're very astute. Their needs are usually much more complex, and their assets greater, than your typical client. They're always testing you with questions about estate taxes, 529 plans, etc. And, you have to have the answers. Testimonials of how you've helped others in similar situations are the best way to earn their confidence.”

Helping demanding customers like these means having the right skills and access to tools. “The industry has improved the tools available to us to help meet their needs,” Karstetter says. “There are great programs out there on converting wealth to income. Reps looking at this market should definitely take advantage of these kinds of tools.”

Dain's wealth-management program, he says, has vastly increased his knowledge, his understanding of the small business owner and his ability to edge out competitors. However, adds Karstetter, “If you don't have expertise in a particular area, don't hesitate to bring in someone who does.”

The prep work is worth the effort, he says. “Successful business-sellers are very desirable clients,” he says. “If you do a great job for them, they're very likely to refer you to their peers.” Indeed, Karstetter recently landed a $4.5 million account from a friend of the former telecom entrepreneur who recently sold his real estate business.


After a year or so, advisors say, when they've worked out a retirement plan with which both are happy, the nature of the relationship with these clients changes. They're more relaxed about their finances and are happily pursuing other activities, says Hurlbrink. What they want then “is an informed, competent and honest advisor who'll make suitable recommendations, offer good service, monitor the situation and — most importantly — stay in touch.”

TAGS: Archive
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.