- Lack of Succession Planning Can Undo a Lifetime of Building a Business,
PNC Expert says -
PHILADELPHIA, Feb. 4 /PRNewswire-FirstCall/ -- Wealthy business owners
enjoy their work so much that 43 percent, which is almost double that of
affluent Americans who do not own a business, want to work until age 70 or
later, according to a new survey by PNC Wealth Management, a member of The
PNC Financial Services Group, Inc. (NYSE: PNC).
But while the fire burns from within to keep working, only one-third of
these owners have written succession plans in place that would ease the
transition of their business to family or other business associates, PNC
found in the fourth annual Wealth and Values Survey and its latest in-depth
examination into a segment of America's wealthy.
"Business owners who have put a lifetime into their work often have a
mindset that 'no one can run this business better than I can,'" said
Jonathan Lander, J.D., L.L.M., a senior wealth planner and vice president
of PNC Wealth Management who advises clients in succession planning. Many
view their business as an extension of themselves and are unable to
envision any one else in charge, he added.
PNC's study of nearly 600 affluent business owners found more tend to
be younger, male and wealthier compared to the overall affluent
respondents. Results include: Median age of 54 versus 63; and 76 percent
male/24 percent female versus 68 percent male/32 percent female. The survey
also revealed the median investable assets for business owners are $1.34
million compared to $786,000 among non-business owners.
It's Good To Be The Boss
These owners are more than twice as likely to work no matter how much
money they have, according to the survey findings. Sixty-one percent
strongly or somewhat agree with the statement, "I will continue to work, no
matter how much money I have," while only 27 percent among non-business
owners responded in the same manner.
Of those who responded that they intend to work until at least age 70,
54 percent said their main reason to do so is because "I enjoy working and
don't want to stop." This was followed by: 20 percent - "My work is a big
part of who I am"; 10 percent - "To maintain my current standard of living
in my retirement"; and 8 percent - "I fear I will be bored in retirement."
Other survey highlights include:
- The Way to Wealth?: Asked if owning a business is the best way to amass
significant wealth, 57 percent of business owners agree with that
statement, compared to 23 percent of non-business owners. Asked "how
much money would you need to have to feel completely secure about your
future?," the median amount is $5 million for owners versus $2 million
for non-owners.
- All In The Family: Of those owners in partnerships, more than half (54
percent) are in business solely with family, while 39 percent have only
non-family members as partners. Seven percent are in partnership with
both family and non-family members. Among those owners with family
working in the business, 58 percent work with a spouse while 15 percent
involve their children.
- Planning For The Future: PNC's findings show 77 percent of owners have a
will but only 33 percent have a succession plan for their business.
"Whether the triggering event is a buyout, retirement, disability or
even death, owners should be prepared for the future and this is an area
where many fall short of the mark," Lander said.
A succession plan provides a mechanism for the disposition of an
owner's business interest following a major life event, according to
Lander. The goal is to transfer the business without damaging its
operations, hurting the owner's family, or paying too much tax. The owners
should put together a succession plan as soon as possible after the
business begins and review it periodically.
Survey Methodology
The Wealth and Values Survey is well established as a measurement of
the pulse of the attitudes and thoughts of America's affluent. Previous
surveys have focused on the children of the wealthy in the Growing up
Wealthy survey of 2007; relationships in the Love and Money survey in 2006
and handing down legacies to future generations in 2005.
The Wealth and Values Survey was commissioned by PNC to identify
attitudes about wealth among high-net-worth individuals, how it affects
their lives and their needs in managing wealth.
The survey was conducted online within the United States by Harris
Interactive(R) in September and October 2007 among a nationwide cross
section of 1,509 adults (age 18 or older), including 587 business owners,
with annual incomes of $150,000 or above (if employed), at least $500,000
of investable assets (unless retired) or at least $1 million of investable
assets (if retired).
The total sample contains four distinct groups: 610 with assets of
$500,000 to $999,999; 668 with assets of $1 million to $4.9 million; 120
with assets of $5 million to $9.9 million; and, 111 with assets of $10
million or more. Figures for age, sex, race, education, region, income,
asset level and propensity to be online were weighted where necessary to
reflect the composition of the wealthy adult American population. Findings
are significant at the 95 percent confidence level with a margin of error
of +/- 2.5 percent among the sample of national adults, and a margin of
error of +/- 4.0% among the sample of business owners.
The survey was designed and managed by HNW, Inc. (http://www.hnw.com), a
leading provider of wealth marketing software and solutions to financial
services companies and intermediaries seeking to capture and serve the high
net worth market.
An online media kit containing survey highlights and background
information is available on PNC's website at
http://www.pnc.com/go/presskits.
The PNC Financial Services Group, Inc. (http://www.pnc.com) is one of the
nation's largest diversified financial services organizations providing
consumer and business banking; specialized services for corporations and
government entities, including corporate banking, real estate finance and
asset-based lending; wealth management; asset management and global fund
services.
This report has been prepared for general informational purposes only
and is not intended as specific advice or recommendations. Information has
been gathered from third party sources and has not been independently
verified or accepted by The PNC Financial Services Group, Inc. PNC makes no
representations or warranties as to the accuracy or completeness of the
information, assumptions, analyses or conclusions presented in the report.
PNC cannot be held responsible for any errors or misrepresentations
contained in the report or in the information gathered from third party
sources. Any reliance upon the information provided in the report is solely
and exclusively at your own risk.
SOURCE PNC Wealth Management
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Related links:
http://www.pnc.com
http://www.hnw.com
http://www.prnewswire.com/comp/701257.html /
CONTACT:
Alan Aldinger, +1-412-768-3711,
alan.aldinger@pnc.com, for PNC Wealth Management
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