Owners and key executives of middle-market businesses know where to go for legal and tax advice, but too often, they aren’t getting the personal financial guidance they need.
Most money managers tend to disregard owners of middle-market businesses (private firms with annual sales of $5 million to $150 million). That’s because, in most cases, the company is by far the largest asset the owner has, and it is neither liquid nor diversified.
Typically, middle-market business owners rely on their attorneys and accountants for financial advice, turning to their commercial bankers as required for business banking needs. Unfortunately, those advisers may not have the complete spectrum of personal financial services business owners need to chart their courses for the future.
How, for example, should owners transfer their nonliquid companies to successors when they are ready to sell or retire? Should business owners consider corporate trustees if and when they are no longer able or willing to manage their own assets?
Even getting a mortgage can be problematic for self-employed business owners. Their tax returns show business income that may not accurately reflect what they really earned in a particular year.
Middle-market business owners’ personal and business finances are so closely interwoven that their financial advisers ideally should be able to address needs in both areas. But in today’s complex financial environment, it is virtually impossible for a single banker to be familiar with even the key elements of every area of banking, let alone the nuances of each.
The solution lies with banks using a team approach to serving their clients. Commercial bankers have not always been trained in personal finance; private bankers may not be sensitive to the needs of the business. Why can’t the commercial banker and private banker work together to meet all of a client’s needs?
A collaborative approach to managing customer relationships can benefit both business owners and their banks. This team approach can give business owners the expert assistance they need, regardless of what they need at any given time. Banks that use collaborative teams to provide financial services to middle-market business owners view those owners as clients for life, working to address the needs of clients as they progress through their financial life cycles.
Typically, the business owner accesses the bank through a key contact who may be a commercial banker or a private banker. That go-to person understands enough about general banking issues to ask the right questions, but doesn’t attempt to answer all the questions unassisted.
Instead, he or she acts as a quarterback, bringing in colleagues from other departments to collaborate on how to best meet the client’s needs, whether the needs are largely commercial, mostly personal or a combination. Private bankers, for instance, can call upon trust, investment and specialized banking services as well as their commercial banking colleagues to assemble a team whose members may change as the business owner’s needs change over time.
The service remains seamless to business owners, who continue to rely on their trusted key contacts to understand their needs, work with the people best suited to address those needs and then implement and communicate the strategies required to meet those needs.
For business owners, a banking team means having their financial questions answered promptly, professionally and personally — even though they may not see or even be fully aware of every member of the team. It means banks make decisions based on every owner’s true financial position, rather than simply on the condition of the business.
Bankers who think of their clients’ complete financial requirements are offering services that middle-market business owners will appreciate throughout their lives — and show their appreciation with a long-standing relationship to match.
Brian Wildman is senior vice president in the wealth management group of MB Financial Bank. Reach him at (847) 653-2150 or [email protected].
