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Generating Sales in the Business Market Sherry L. Flint, CLU ® Regional Vice President – Business Owner and Executive Solutions.

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Presentation on theme: "Generating Sales in the Business Market Sherry L. Flint, CLU ® Regional Vice President – Business Owner and Executive Solutions."— Presentation transcript:

1 Generating Sales in the Business Market Sherry L. Flint, CLU ® Regional Vice President – Business Owner and Executive Solutions

2 For financial professional information only. Not for distribution to the public. General Business Market Facts The Business Market: –5.7 million business owners with employees in the U.S. 1 –25% are affluent of which 12% are super affluent 2 The U.S. Small Business Administration estimates that at any given time, 40% of businesses are facing the issue of transfer of ownership and control. Family-controlled companies account for 78% of the nation’s job creation, 60% of its employment and over 50% of its gross domestic product. 1 U.S. Census Bureau, 2007 Survey of Business Owners. Conducted every 5 years. 2 LIMRA Small Business Owner: 2009 Study

3 For financial professional information only. Not for distribution to the public. Need for Business Planning Create a market for the business when an owner exits Ensure retirement income is in place Minimize discord among owners Prevent unwanted transfers Fix the value of the business interest for estate tax purposes Provide the family with liquidity to maintain their standard of living Knowing the value of the business, along with a properly structured buy-sell plan, and proper funding/protection can help:

4 For financial professional information only. Not for distribution to the public. Business Owner & Executive Solutions

5 For financial professional information only. Not for distribution to the public. The Principal Difference BOES BOES platform offers complete package to give you an edge: Value-added tools Technical expertise Customized proposals with recommendations Business-focused products Underwriting Advanced sales expertise Administrative services Everything you need in one place.

6 For financial professional information only. Not for distribution to the public. Before, During and After the Sale Support BeforeDuringAfter Broker sales ideas Client marketing materials Business priorities checklist Complimentary informal business valuation Complimentary buy-sell review Access to Advanced Solutions for technical support Point-of-sale assistance More than 30 unique plan designs Customized proposals, showing multiple financing options Products and underwriting for the business market Including GI/SI on all permanent products BMA comprehensive plan-level services Annual employee and employer reporting Online access Economic benefit & 101(j) reporting Over 30 plan types, more than 10,000 plans on the books, serving 25,000+ participants

7 For financial professional information only. Not for distribution to the public. What is an Informal Business Valuation? The Principal creates customized reports based on a review of the documents you provide – three years of financials Provide a complimentary informal business valuation using five commonly used valuation methods –Meets financial underwriting requirements, in most cases Creates a starting point for discussions with tax and legal advisors to: –Identify issues –Confirm the buy-sell agreement meets current objectives Five business day turnaround

8 For financial professional information only. Not for distribution to the public. Business Planning Services Fact Finder

9 For financial professional information only. Not for distribution to the public. Valuation Proposal

10 For financial professional information only. Not for distribution to the public. Business Continuation Proposal

11 For financial professional information only. Not for distribution to the public. What is a Buy-Sell Review? The Principal creates customized reports based on a review of the documents and insurance ledgers you provide Report includes: –Highlights of your existing buy-sell agreement –Gives our recommendations based on your business needs –Review also includes a summary of your current funding and options to help meet your business needs We believe that adequate funding of the buy-sell agreement is the key to its success Fifteen business day turnaround

12 For financial professional information only. Not for distribution to the public. Buy-Sell Review Report

13 For financial professional information only. Not for distribution to the public. Identify Priorities

14 For financial professional information only. Not for distribution to the public. Prime Candidates Manufacturing companies Construction companies Professional service-related companies –Law Firms –Dental Firms –Accounting Firms IT companies Three years profitability S Corps, C Corps, LLC’s, PC’s, Partnerships Refer to “Generate Sales with Informal Business Valuations & Buy-Sell Reviews (BB10350)”

15 For financial professional information only. Not for distribution to the public. Why BOES? Experience: 300/800/1500 Customized proposal with outlining sales opportunities Experienced sales support Solid close rate –Average is 30% or greater More Life Policies per case –Average 2.1 per case Larger Life Premiums per case –Buy-Sell: $11,800 –Key Person: $12,000 –Executive Bonus: $17,000 –Select Rewards: $14,300

16 For financial professional information only. Not for distribution to the public. Buy-Sell –New/Existing buy-sell plans –Single owner businesses Business Protection –Key person –Loan protection Exit Planning –Selling the Business Additional family protection Sales Opportunities

17 For financial professional information only. Not for distribution to the public. Retirement –Bonus Plans –Investment of Sales Proceeds –IRAs –Qualified plans Estate Planning –Estate equalization –ILITs Sales Opportunities cont’d

18 For financial professional information only. Not for distribution to the public. Case Study #1 Profile Construction Company: Three related entities Two owners Details Broker requested an informal valuation and a buy-sell review Discovered buy-sell was at book value with deductions and not all entities had an executed buy-sell agreement Each owner had $1,000,000 of term that they owned on themselves

19 For financial professional information only. Not for distribution to the public. Case Study #1 Informal Business Valuation

20 For financial professional information only. Not for distribution to the public. Case Study #1 Business Continuation Proposal

21 For financial professional information only. Not for distribution to the public. Advanced Solutions case notes to Broker: –Confirm all agreements are executed and in force –Inadequate amount of life insurance. $1M vs. $3.250M. No DI. –Business sold at book value minus offsets – Consider FMV sales price –Owner should consider an S-Corp Bonus to compliment current 401(k) plan –Because of company value, consider Estate Tax Analysis Results: –Meeting with both partners, not all agreements executed. Attorney fixing. –Did not know book value sales price. Never wanted that. Attorney fixing. –Currently underwriting for more life insurance and new disability insurance based on informal valuation –Owner interested in S-Corp Bonus – currently proposing –Broker taking over $4M 401(k) plan that wasn’t even discussed in first meeting Case Study #1 Recommendations/Results

22 For financial professional information only. Not for distribution to the public. Business Planning Services Materials and resources on Advisor site: (www.principal.com/businessplanning) Marketing Guide –Includes approach script –Outlines sales process Informal Business Valuation Training Guide Marketing Kits – everything you need to approach business owners – offering complimentary services –Producer Kit –Consumer Kit

23 For financial professional information only. Not for distribution to the public. Getting Started

24 For financial professional information only. Not for distribution to the public. While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance products from the Principal Financial Group ® (The Principal ® ) are issued by Principal National Life Insurance Company (except in New York) and Principal Life Insurance Company. Principal National and Principal Life are members of the Principal Financial Group, Des Moines, IA No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system, without prior written permission from the Principal Financial Group. Copyright ©2013 Principal Financial Services, Inc. 09/2013 | #t e


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