Don’t Assume Anything – How Customer Priorities Have Shifted After the Pandemic

Business leaders across the country have reassessed their strategies countless times over the past two years as the pandemic has dramatically changed the way businesses operate and plan. Today, as we enter a new era, business owners are rethinking their financial planning and structures, with asset protection becoming a trending trend for business leaders who have reassessed their priorities.

As we explore the motivations behind owners’ moves to protect their assets, there is much to learn about how we as accountants can offer the best strategic advice to our clients in these new circumstances, while at the same time reminding that there is no room for assumptions about our customers’ attitudes towards the future.

Who explores asset protection?

All business owners of a certain size – regardless of industry – are looking to protect their assets to some degree and, where possible, capitalize more on the growth they see on their balance sheets. In all cases where the value of asset protection outweighs the investment in its implementation, the service will be of great benefit – but there are certain circumstances where asset protection will offer a particularly high return on investment. raised.

For clients who are accelerating their exit strategies, asset protection can help them do so effectively without losing the value of their exit agreement or causing harm to that business.

Others who have been forced to inject personal funds into their businesses during the pandemic have turned to asset protection to secure their own position – and ensure they won’t be forced to do the same if a another crisis arose.

Likewise, the clarity that accompanies a crisis like the pandemic has reminded many leaders that there can always be shock around the corner, and they are now taking steps to ensure the longevity of their business through it all. what they might face next. This can be achieved by diversifying into other sectors or by restructuring a Group business so that everything is not held by a single business entity.

Businesses that have grown during the pandemic could look to create family investment companies to help manage the reinvestment of new cash, as well as add protections to growing personal wealth by effectively planning for taxes. for future generations.

Typically, businesses that were started five or ten years ago may now have an outdated structure. However, given the magnitude of change we have experienced over the past two years, there is an even greater need to reassess structures to ensure they are fit not only for the present, but also for the future. .

What triggered this upward trend?

The motivations behind exploring asset protection can be broadly defined as a sea change in attitudes. Two years of introspective reflection has forced business owners to reflect on their mortality, lifestyle, and survival instincts, and now they’ve reassessed their priorities and are reflecting on their new goals and aspirations. For example: those with imminent exit plans may seek to spend more time with family or avoid going through another crisis in the later stages of their career.

There are many technical considerations accountants need to weigh when looking at asset protection, but where we as advisors can offer added value is by finding out what clients want in the short term, medium and long term, and designing the new structure in a way that specifically protects their priority cases. This may involve setting up a family investment vehicle in a way that eliminates as much personal risk as possible, for example: protecting parents from children who might seek to sell shares unexpectedly, or divorces who risk passing on wealth place it was not intended. This long-term thinking can also identify major financial opportunities, such as savings on capital gains and inheritance taxes, which are benefits that will be felt much later.

In addition to personal considerations, there are strong social and economic pressures stemming from the pandemic, and business owners are now relying on asset protection to regain the sense of control and security they have been lacking in recent months.

Knowing your customers well allows you to understand any potential risks they might not think to report – this is how you protect them, their business and their families, establishing yourself as an invaluable part of their network of support.

How can we learn from restructuring for asset protection?

While the technical aspects of asset protection are generally well known in the industry, what we can really learn from this spike in interest in the services is this: don’t assume anything and stay on top of your customers’ needs. .

As accountants, we can all be guilty of thinking we know what the client wants and what’s best for them, because we asked them all these questions years ago. But we must recognize that the world has changed dramatically. Many wealthy business owners are in their 50s, 60s, and 60s, and with new life stages come new priorities. For accountants, it’s time to do what we don’t do very often: tear up the rulebook and start over.

Mortality and ambition may seem like sensitive topics to discuss, but having strong, trusting relationships with your clients comes from having candid conversations that demonstrate that you have their priorities at heart.

For my team, getting out to see clients in person again as soon as restrictions allowed was key to detecting who needed to have asset protection conversations, or even discuss any other type of need they didn’t have. might not have had before the pandemic. As a starting point, you can ask yourself how their lives have changed since the pandemic – this will no doubt reveal the new challenges to be solved. Remote work and technology services are great, but the truly irreplaceable value of accountants lies in how we understand the people we work with and take action on their behalf to protect what matters most to them.

Accountants tend to be reactionary, but what clients really need is proactive thinking to chart a course that will get them where they need to be. As soon as you lose touch with your customers’ needs, you are on the verge of losing their business. If you don’t have reasonable conversations with your clients, other firms will. Accountants may find comfort in following standard practices, but investing your time in generating new ideas and having new conversations will pay dividends for you and your clients. Responding to needs before they’re even identified is how you demonstrate value to your customers and build relationships that last into the future – which is ultimately where we all want to be.

By Tim Pearce, Managing Director of Haines Watts Worcester

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