One of the most fascinating planning areas in the spectrum of market niches is exit planning. Often times, in this area the advisor’s client will be the owner or owners of a closely held or family business. As he, she, or they look to exit the business, there are typically a tremendous number of issues to consider, and the dynamics of each business owner’s situation are almost always unique.
To look at the range of considerations when working in this market, I turned to two of the finest advisors in exit planning to talk about their businesses and how they operate. I spoke with Michael L. Weintraub, CLU, (pictured at right) of Walnut Creek, Calif., and James J. Tyrpak, MSFS, CLU, ChFC, AEP, (pictured next page) of Williamsville, N.Y., for their perspectives.
Last week, Part I of this article addressed how both experts got into exit planning, how they start the exit planning conversation with clients, and how to effectively work within a team of the client’s advisors on the process. In Part II, we’ll further explore the team dynamics, as well as best and most challenging aspects of this market before concluding with advice for those interested in breaking into this advanced market.
The agent’s place at the table
Along the lines of specialization, I asked about the strengths and value that the life insurance advisor brings to the table. In other words, why is it so crucial that the client include the life insurance advisor in the dialogue?
“Nothing is easy anymore,” Mr. Weintraub told me. “Attorneys know less about taxes, and accountants know less about legal matters, and fewer professionals know much about insurance, benefits, and investments than ever before. There is so much to know about one’s own specialty that it is no longer reasonable to expect others who are not in benefits, insurance, and investments to be able to give good, competent advice in areas in which they are not keeping up with all the changes. When an acquisition or sale of a business happens, someone needs to provide advice on liability tail coverage, merger or termination of retirement plans, what to do with key person life insurance, etc., so that the need for what we do is as important as what the others on the team provide.”
For Mr. Tyrpak, an important part of the life insurance advisor’s role is to get the client to move beyond evaluation and to move into action. “We feel that our training helps us take a role that will often help a client take action rather than contemplate the options. Our firm has generations of client experience, sometimes working with the third generation of ownership on their plans. We believe that these experiences and the fact that we can coordinate the transition of asset values into the owner’s personal holdings after the transition helps bring very important components to the plan.”
Best part about exit planning
It’s clear from their success and the enthusiastic way that these two advisors talk about their businesses that they truly enjoy their work in exit planning. So naturally, I asked about what they find to be the best parts of working in this market.
“This market presents opportunities to work with some very successful business owners and their talented advisory teams,” Mr. Tyrpak said. “There are no cookie-cutter solutions for implementing a plan. Utilizing ideas from experience with other companies and seeing the nuances of the current company that you are working with is both rewarding and fun.”
Mr. Weintraub told me, “It's the culmination of what we do for clients while they are building and growing their companies. Not only is this a happy time for our client, but we get great satisfaction in knowing that along the way we helped them get want they wanted and that they worked so hard to get for their lifetime of work and risk taking.”
Next page: hardest thing; advice for aspiring exit planners
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