How Allianz Can Help Financial Professionals Understand and Better Serve the Business-Owner Community – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.ℱ

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Articles
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be an INNsider.
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Allianz Life Insurance Company of North America
 Archive: Allianz Life Insurance Company of North America
Order Prints
September 1, 2022 Allianz Life Insurance Company of North America No comments Views: 0
Share
Share
Tweet
Email

How Allianz Can Help Financial Professionals Understand and Better Serve the Business-Owner Community

By David R. Foster Sponsored By Allianz Life Insurance Company of North America

To enable financial professionals in providing much-needed strategies for small-business owner clients, Allianz Life Insurance Company of North America (Allianz) Advanced Markets commissioned a survey* of small-business owners to uncover the unique challenges they face.

The survey revealed concerns in three areas: key employee compensation strategies, business succession planning strategies, and estate planning strategies.

The need for this information was recognized in response to last year’s interview with David R. Foster, JD, AEP, CLU, ChFC, CAP, FLMI, Advanced Markets attorney and senior director of Advanced Markets at Allianz. In that interview, he expressed the importance of understanding the challenges of small-business owners across a variety of industries in order for financial professionals to bring new strategies to the table to generate new opportunities.

In this year’s interview, you’ll hear about key findings of the survey and how you can apply them in your financial practice.

INN: Dave, can you share what inspired the small-business owner survey?

DF: To help business owner clients achieve their goals, you have to understand their world. What are their biggest concerns? What are they currently doing to address those concerns? What are their financial and nonfinancial goals?

This survey was developed to gather this information about small-business owners and then pass it on to financial professionals.

INN: What were some of the top concerns expressed?

DF: Top concerns fell into two categories — economic and market conditions or concerns related to the business itself. Of small-business owners surveyed, 85% were concerned about recession and 81% were concerned about both supply chain delays and increasing interest rates.

Related to the business itself, 77% were concerned about recruiting and losing key employees. And 76% were concerned about successfully transferring their business to the next generation. Based on those findings, key employee compensation and business succession planning strategies are relevant areas of planning they’re seeking assistance with in 2022.

INN: What else did you find regarding attracting and retaining key employees?

DF: A particularly interesting finding was 39% of small-to-midsize businesses said they were utilizing grants of stock or nonqualified stock options or a similar plan to help retain key employees, which is high for small businesses. When a small-business owner gives away stock, they’re giving away ownership rights. That brings a host of additional legal responsibilities, and it provides minority shareholders with many additional rights — something not all business owners understand. It has the potential to cause more problems than benefits.

INN: What did the survey reveal regarding succession planning for small-business owners?

DF: One interesting finding was that 93% of business owners who plan to sell their business were concerned about finding a buyer for the business upon retirement, which means they own an asset they can’t liquidate for the amount they need or when they need it. That presents a huge problem for retirement. In fact, another statistic we found was that over three-quarters of all small-business owners, not just the ones expecting to sell to a third party, expressed concern that most of their wealth was tied up in the business.

Also, 75% of small-business owners said their business succession strategies were impacted by the pandemic. Of those impacted, whether they delayed or accelerated their plan to transfer ownership varied by industry. Financial professionals working with small-business owners need to check in to see how plans have changed and what impact that may have on a client’s overall financial strategy.

INN: In this survey, participants were also asked about estate planning. What did responses on that topic reveal?

DF: The majority (58%) of small-business owners expect to pass on their business to family members. In my experience, the larger the business gets in size, the less likely that is. Of those planning to pass their business on to a family member, 77% expressed concern about doing so while retaining family harmony.

Whenever you pass a business on to a spouse or children, there’s the potential for family discord. What’s encouraging is that this is a top-of-mind concern and something business owners want assistance with. It also reinforces that estate planning strategies are more than saving on taxes, it’s about the emotional and relational aspects of passing on a business to family.

Surprisingly, 79% of the respondents had a concern about federal or state taxes levied at death.

This is surprising because with a little planning, a married couple can pass on just over $24 million free of any federal and state taxes in 2022. It’s possible these concerns stem from federal and state exemptions scheduled to be cut in half in 2026. This is clearly something financial professionals need to be addressing with their business owner clients.

INN: What are the solutions Allianz offers that uniquely meet business owner client needs?

DF: With this survey, we wanted to know business owner concerns, trends, and goals so we could come up with not just products but also strategies — that’s our focus in advanced markets.
For example, on the succession planning side, that could include grantor retained annuity trusts, Intentionally Defective Grantor Trusts, buy-sell agreements, etc.

When transferring ownership of a business, family conflict goes up substantially if all children receive equal ownership in the family business, especially when some are active in the business and others aren’t. To prevent clashes over business decisions, one potential solution is to pass the business on to active family members and equalize the others with life insurance.

As for the expressed desire to recruit key employees, business owners may want to consider strategies such as key employee bonus plans or split dollar plans, nonqualified deferred compensation plans, or phantom stock and stock appreciation rights plans, all funded with an employer-owed fixed indexed universal life (FIUL) policy.

These are a few ways the product and plan combined can accomplish some of their goals.

INN: From a carrier’s perspective, what were some of your key takeaways? Did what you find change Allianz’s approach at all?

DF: In a lot of ways, we’re on the right path, but there’s always room to grow. When you look at the combination of concerns around wealth being concentrated in one asset (their business) as well as concerns about a downturn in the economy, indexed annuity and life insurance products meet the needs revealed.

Also important to note is that 41% of small-business owners plan to transfer their business within the next nine years. From a carrier perspective, we understand that a successful transition of a business requires planning. Therefore, we need to be prepared to assist financial professionals in this area. That preparation could come in the form of product development or advanced markets solutions.

Finally, the pandemic changed what key employees expect from their employer. We can help address that need by building appropriate products and providing key employee compensation strategies to the employer community.

INN: How would financial professionals approach their business owner clients based on the survey findings?

DF: Business owner clients are unique, so the same tried-and-true solutions may not be the answer. Instead, listen twice as much as you talk when working with a business owner. They are passionate about their businesses. They also appreciate working with teams. Find a local network and build a team rather than trying to do it all yourself.

Financial professionals also need to be aware of the variances between industries in order to serve the small-business owner community well. Our survey found substantial differences in terms of what they’re concerned about and what their goals are. Financial professionals who understand the unique trends, issues and goals in the various industries (e.g., construction, technology, manufacturing, agriculture, etc.) will have a competitive advantage over those that do not.

INN: What’s the next step for financial professionals who work with business owner clients?

DF: The survey has a tremendous amount of data points we didn’t cover here. So it’s important to get the fact sheet we created, so they are armed with more insights.

Over the coming months, we plan to communicate even more specific data points through articles, etc., that will be available on our site. And stay tuned for future surveys.

Beyond available tools, like the survey, financial professionals can get access to marketing pieces related to the topics we’ve discussed. Plus, we have a team prepared to walk through cases. The first place to start is collecting data and listening for goals. From there, if someone is new to the business owner world, we can guide them through strategies that work but also let them know what might have been missed.

INN: This has all been very enlightening. Thank you for sharing these findings, Dave. What else would you like to tell our readers about working with small-business owner clients?

DF: Small-business owners, and their families, rely heavily on their businesses to provide financial security both before and after retirement. Prudent financial professionals realize the importance in helping them plan accordingly. But they must also be aware of the variances between industries, so they can provide the right solutions to meet the specific needs of their clients. By understanding the challenges revealed in the survey, financial professionals can better equip themselves to serve this community well.

To get access to the key findings from the 2022 Business Owners Survey, visit AllianzAdvancedMarkets.com or call the Advanced Sales and Practice Platform Team at 888.900.1530.

*Allianz Life conducted an online survey, the 2022 Business Owners Survey April 20-May 9, 2022, with 516 small-to-midsize business owners. Respondents must have owned a business where they were actively engaged in day-to-day operations, employed at least five people, and had revenue of $500K+ over the prior 12 months.

For financial professional use only — not for use with the public.

Product and feature availability may vary by state and broker/dealer.

Fixed index universal life insurance requires qualification through health and financial underwriting.

Allianz Life Insurance Company of North America does not provide financial planning services.

Producers should encourage their clients to work with qualified tax advisors or attorneys when considering the various planning strategies.

This content is for general educational purposes only. It is not intended to provide fiduciary, tax or legal advice and cannot be used to avoid tax penalties; nor is it intended to market, promote or recommend any tax plan or arrangement. Allianz Life Insurance Company of North America, its affiliates and their employees and representatives do not give fiduciary, tax or legal advice.

Customers are encouraged to consult with their own legal, tax and financial professionals for specific advice or product recommendations.

Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America.

Products are issued by Allianz Life Insurance Company of North America, PO Box 59060, Minneapolis, MN 55459-0060.

Older

Evaluating Whole Life Products in Uncertain Times

Newer

Introducing Prestige Indexed 10 Pay, a whole life policy 
 that’s indexed

Advisor News

  • Fed slows rate hikes even as Powell says there's more work to do
  • Mortgage rates in U.S. fall again, hit 6.09%
  • 1 in 3 Americans struggling financially but goal-setting is a game-changer
  • Advisors bet on US stocks to outperform in 2023 amid tech rebound
  • Investors want more ESG information from companies
More Advisor News

Annuity News

  • Study: Does pessimism really suppress annuity sales?
  • Sweet streams of income: ChatGPT, the bard of annuities
  • F&G Annuities & Life announces equity investment in life IMO SYNCIS
  • Investors scrambling to lock in rates propel annuity sales to record highs
  • North American and Annexus launch new fixed index annuity
Sponsor
More Annuity News

Health/Employee Benefits News

  • State: all insurers failed to comply with Oregon Reproductive Health Equity Act
  • Will plan fix California health care?
  • Insurance giant Elevance to move into 15th state
  • Medicare card scam targets seniors for personal info
  • Yes, states are re-checking Medicaid and CHIP eligibility starting in April
More Health/Employee Benefits News

Life Insurance News

  • Chris Wilson tells court former friend Murdaugh confessed he was ‘stealing money’
  • State's motive testimony could prolong Alex Murdaugh murder trial
  • Equitable expands portfolio in VUL market
  • New date set for billionaire suspect accused of bribing state cabinet member
  • House approves bill protecting life insurance payouts from bankruptcy
More Life Insurance News

- Presented By -

Top Read Stories

  • Chicago news roundup: PPP fraud uncovered in Chicago, informant reveals $100K bounty on FBG Duck and more
  • Gov. Carney: Enrollment on Delaware's Health Insurance Marketplace for 2023 Reaches All-Time High
  • 25 people charged in fake nursing diploma operation
  • Missouri Department of Insurance: Over $24 Million Returned To Missouri Insurance Consumers In 2022
  • Connecticut addressing broker shortage amid The Great Unwinding
More Top Read Stories >

FEATURED OFFERS

Meet Encova Life
We know agents matter. You can count on our life team to be high tech, high touch and responsive.

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.