Poll Reveals Business Owners Overlook How Their Decisions Impact Wealth In Retirement

CLEVELAND, Sept. 28, 2016 /PRNewswire/ -- Key Private Bank, the wealth management arm of KeyCorp (NYSE: KEY), today released the results of its latest advisor poll, which examines how the decisions business owners make can impact their wealth in retirement. The poll surveyed 137 Key Private Bank client-facing advisors who specialize in working with business owners to navigate exit strategies, manage succession planning and prepare for retirement.

"Whether navigating family dynamics, finding it difficult to let go or making unrealistic assumptions about a company's valuation, business is often very personal," said Francis Brown, Wealth Specialist at Key Private Bank. "For business owners, the most common wealth management pitfalls result from emotional ties to their company. That's why it's extremely important for business owners to be candid with their financial advisors early on about all aspects of their lives."

The findings reveal that business owners, particularly lifestyle business owners, can have competing interests when it comes to planning for the future of their company and ensuring their personal long-term financial well-being. Three-quarters (75%) of advisors report business owner clients treat their companies as lifestyle businesses to help them maintain a certain level of income over the course of their lifetime. In fact, nearly half (44%) of the advisors indicate that clients most often sell their business to monetize their investment or fund retirement.  Despite this reality, four in 10 advisors say very few or none of their new business owner clients have thought through the wealth implications of their business succession strategies.

Tying up a majority of personal wealth in the business is the most common wealth management challenge business owners face, according to more than one-third of advisors. Other common pitfalls for business owners include lacking a management succession plan and having insufficient savings—both of which can create a need for business owners to work longer to guarantee a certain level of retirement income.

If not addressed, these challenges can result in a financial shortfall for business owners when it comes time to exit the business. For example, nearly half of advisors (47%) say business owners can be predisposed to leaving money on the table at exit by failing to develop a business transition plan several years in advance.

"More often than not, business owners emphasize the journey to success, but fail to consider the work it takes to wind down. It could take years to prepare a business for exit," Brown continued. "Furthermore, a recent Treasury Department proposal to limit valuation discounts when transferring businesses to family members could cause business owners to further stall succession planning. It's becoming exceedingly important that business owners work with their financial advisor early in their career to chart the best path at every stage of a business' lifecycle." 

When considering business owners who are looking to transition out of their company, 78% of Key Private Bank's advisors say most pass the torch to a successor within the family or sell the business to another company or competitor. Nearly half of advisors say they expect to see family transfers within the next year, although one in five warn that business owners are not using proper intra-family transfer strategies to minimize tax implications, such as gifting and trusts.

"Tapping into the mindshare of our advisors in the field provides us with a clear understanding of the challenges our business owner clients face," said Terry Jenkins, President of Key Private Bank. "Their insights give us the clues we need to proactively help our clients to develop and execute on their financial plan, so they can afford to continue leading the lifestyle they've enjoyed throughout retirement."

For additional information, please visit Key Private Bank's Wealth Insights for Business Owners.

About Key Private Bank

Key Private Bank is a leading provider of wealth management solutions and advice to more than 24,000 high-net worth and ultra-high-net worth clients, including wealth advisory, investment management, trust administration, customized credit, family office and private banking services. Key's wealth management platform combines the market insights of advisors located in each local market with a national team of wealth and investment strategists to deliver proactive and personalized expertise and advice to clients. Advisors also leverage partnerships with Key's business banking and capital markets teams to build wealth plans tailored to meet each client's specific need. Key Private Bank's wealth management platform is delivered by more than 350 wealth advisors, located in 44 offices in 13 states across the United States. Key currently has $44.9 billion in AUM and $36.6 billion in AUA.

About KeyCorp

KeyCorp's (NYSE: KEY) roots trace back 190 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation's largest bank-based financial services companies with assets of approximately $101 billion as of June 30, 2016. The acquisition of First Niagara Financial Group, which became effective on August 1, 2016, added assets of approximately $40 billion, based on June 30, 2016 balances. Key provides deposit, lending, cash management, insurance and investment services to individuals and small and mid-sized businesses in 15 states under the name KeyBank National Association and First Niagara Bank, National Association, through a network of more than 1,200 branches and more than 1,500 ATMs.  Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit www.key.com. KeyBank and First Niagara Bank, National Association are Member FDIC Institutions.

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