Small Business Owners

Much has been made of the fact that the first of the 76 million baby boomers turned 60 years old in 2006. And with good reason: over the next 50 years, an unprecedented amount of money - at least $41 trillion¹ - will change hands, generally being handed down to the next generation as the boomers age.

Before the next generation receives anything, however, the money must first pass through multiple layers of taxation. And, without proper prior planning, these assets often are subject to exorbitant costs, shrinkage and delays that could otherwise be avoided or minimized.

The unique combination of timing, demographics and tax law creates an opportunity for financial planning professionals and lends a level of importance to the financial planning field as never before.

Many people would agree that financial planning could be a natural career choice for someone with a background in law or accounting. But, because much of the money being transferred is actually related in some way to closely held or family-owned businesses, financial planning can also be a terrific career choice for a person with hands-on experience working in a small business.

Many of the talents developed through working in a small business can be applied to financial planning -- talents such as:

• Empathy and first-hand experience. Financial planners who already have experienced the devastating effects estate taxes or the lack of a properly executed business continuation plan can have on a business will have a compelling story to tell potential clients.

• Independence. Once a financial planner has gone through the beginning stages of training and career development, he or she will typically enjoy the same degree of freedom normally enjoyed when running a business. Most financial planners tailor their own marketing, administration and service functions to suit their own specific needs.

Because of these and other reasons, it is no wonder that our industry has seen an influx of entrants who were either former principals in a small business or in some way involved in the operation and management of a closely held enterprise.

If you're considering a switch to financial planning, there are several things to look for when deciding which firm to join and how to get started:

• Market focus. Does the firm in question target a specific clientele? If so, would you feel comfortable working in that market? The more natural affinity you have with your clients, the easier your job will be.

• Training and support. The amount and types of training may vary widely among firms, and can play a significant role in your ultimate success. Look for a company that is dedicated to helping you achieve your potential.

• Compensation. The sources and layout of compensation also can vary. Some financial planners work strictly on a fee basis, others work solely on commissions from the sale of insurance and investment products and some work for a combination of fee and commission. Most financial planners work almost entirely on some form of incentive compensation with no income ceiling. You'll need to decide which makes the most sense for you.

• Personality and track record. Before joining an organization, determine what kind of track record the current members have demonstrated. It may also be a good idea to meet as many of the current staff members as possible just to see if your personalities meld.

Financial planning can be a great career choice, especially for a person with a background of working in a closely held business. In many respects, being a financial planner is the equivalent of operating a small business -- with many of the risks and rewards associated with it.

It is important for anyone who wants to enter the financial planning field to talk to a number of firms to find the one that will provide the best fit in terms of training, compensation, market focus and track record.

¹Source: Business Week, November 29, 2004.

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