Katlyn Graham: Hello, I’m Katlyn Graham, here with Rick McDonald, the president of US Advisory Group. Welcome, Rick.
Rick McDonald: Hello, Katlyn.
Katlyn: Thanks for joining us here today.
Rick: My pleasure.
What does US Advisory do?
Katlyn: Rick, would you mind starting off just explaining a little bit about what US Advisory Group does?
Rick: Sure. US Advisory Group was a New Englandâ€‘based wealth management company. We work primarily with family business owners and individuals who have collected a fair amount of assets and are looking to put the money to work in a way that supports what’s important to them.
How do people get to be successful business owners?
Katlyn: Let’s talk about family business owners here. How do people get to be successful business owners?
Rick: Most family business owners ended up where they are today by one of a couple of different ways. Either they inherited the company and they’re in the second, third, maybe fourth generation in running a family business. Or they basically, once upon a time, realized that they wanted more freedom and flexibility. They thought starting a business would be a good way to do that, to be their own boss. Lo and behold, they were successful.
Obviously, some weren’t, some are. But through trial and error, you find yourself years later running a company that’s been successful. It’s working for you. You’re at a position now where you’re trying to figure out, what are we doing with this business? Where’s it going and what’s its role in the family?
What is important about succession planning for family businesses?
Katlyn: I see. Now, about succession planning. What is important about succession planning for family businesses?
Rick: Well, that’s a good question. A lot of people are looking back at as they get older and trying to figure out, where’s the exit plan? Is there any exit plan? For many people, there isn’t one.
But the point is, most folks will find that 80, 90 percent of their net worth is tied up in the bricks and mortar of the business. The question is, how do you transition that from illiquid net worth into something that’s investable or something that’s able to be repositioned in the areas and places that will better support what’s important to you as you get older, as you retire.
The issue then becomes, where are you going with the business and what role is the business’ net worth to you? Particularly, it might be giving you a fine earning or a fine lifestyle. But if you’re going to slow down, if you’re going to retire, if you’re not going to be showing up at work on Monday morning and putting 60 and 70 and 80 hours of work a week in. How are you going to recreate your income?
Is the business capable of paying you the kind of lifestyle you want by having interim or nonâ€‘family member, someone else manage the company other than you? What risks are associated with you not being there if you’re the most important person in the company? Alternatively, is it time to start looking at an exit plan, a succession plan?
Katlyn: Some deep questions for owners of family businesses for sure. I could see why they would need some advisers during that critical period. Thank you so much Rick for explaining all this. I really appreciate it.
Rick: You’re very, very welcome.
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