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
Philadelphia, PA (PRWEB) February 4, 2008
Wealthy business owners and entrepreneurs 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 entrepreneurs 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 entrepreneurs 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 and entrepreneurs 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.
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 in September and October 2007 among a nationwide cross section of 1,509 adults (age 18 or older), including 587 wealthy business owners and entrepreneurs, 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 PNC Financial Services Group, Inc. 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.
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