Small Business Owners Look to Financial Planning Firms for Retirement Solutions that Benefit Both Employer and Employee

Small employers with less than 100 employees often feel poorly served by the large financial institutions when attempting to setup and manage qualified retirement plans. Some of these firms are finding that financial planning firms which specialize in entrepreneurial and small business planning are more sensitive to their needs while also being better positioned to provide crucial advice and support to their employees.

(PRWEB) June 19, 2005 -- Employers often find that their needs for sheltering income and planning for retirement are quite different than the needs of their employees. Employers often find their greatest frustration with retirement plans involves compliance with ERISA non-discrimination regulations. The ERISA rules impose an administrative burden on owners, while at the same time limiting the tax benefits available to owners and "highly compensated employees".

Employees are often confused by retirement plans and the many options they are given for investments. The big financial houses provide little in the way of personal guidance and advice for the employees. When markets go down and accounts lose value, employees are often unsure what they should do. Many make poor decisions on their own, selling when markets are down and buying when markets are up. The resulting poor account performance leads many employees to opt out of the retirement plans altogether, which is further bad news for employers already stung by non-discrimination rules.

Financial planning firms that specialize in entrepreneurial and small business planning are well suited to address both of these issues. Not beholden to any single retirement vehicle, planners can consider the owners personal financial needs as well as those of the business itself. For instance, many small employers with less than 100 employees are better off utilizing SIMPLE IRA or SEP IRA accounts rather than the traditional 401k.

The financial planning firm has a vested interest in serving the needs of its client's employees. This is because each employee represents a potential source of personal financial planning business or referrals. Therefore, despite the small size of employees' individual retirement accounts, the financial planning firm is more likely to provide personal service and attention to each participant. Better understanding of the program combined with wiser investment decisions result in greater participation and increased satisfaction among the employees.

Financial planning firms can offer additional services to owners as well, including review and analysis of group life, health, and disability insurance programs, entrepreneurial strategic planning services, personal and business tax planning, business transition and estate planning advice, and of course, assistance with the owner's personal finances and investments. It is important for owners to choose planners for a business related engagement carefully. Many planners specialize in personal planning issues, but firms such as Frontier Financial Planning that have expertise and experience serving the unique needs of the entrepreneurial class are harder to find. If you can find them, these firms can be a valuable one stop shop for the entrepreneur's personal and business financial and strategic planning needs.

James Kinney is President of Financial Pathways, LLC, a financial planning firm located in Bridgewater, New Jersey. James provides small business retirement accounts and strategic planning services to small business owners in Somerset, Middlesex, and Hunterdon Counties in central NJ. Financial Pathways also provides personal financial planning services to the employees of its client firms.

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