Mirror, Mirror on the Wall

Opiela, Nancy
July 2003
Journal of Financial Planning;Jul2003, Vol. 16 Issue 7, p32
Academic Journal
This article discusses the role of financial advisers in helping small business owners understand investments issues. As entrepreneurs themselves, planners understand the small-business owner's motivation to over-invest in themselves. However, having the business represent a huge portion of the total assets is a bad risk. Gene Baynes, CFP, of Gilbert, Arizona, presents a differing opinion, arguing that for some clients, investing in their own business might be the best option. Because they are dealing with entrepreneurs in pursuit of their dreams, planners say that how much business owners ultimately decide to invest in their business is not entirely a financial decision. Planners say the decision of how to invest in one's company must be based on an evaluation of the investment risk, as well as liability and liquidity issues. On the subject of liquidity, Suzzette B. Rutherford CFP, of Clarfeld Financial Advisors Inc., notes that the degree to which she is comfortable with small-business owners investing in their business depends on the stage of the business' life cycle. Determining the appropriate investment mix for a business owner requires thinking about the business and the rest of the portfolio in a consolidated fashion. In Rutherford's view, business owners take the first big step in acknowledging they need to make some changes in their investment portfolio when they contact a financial planner.


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