Small-Business Owners Are Starving For Advice


I know a small-business owner who started her business on a shoestring two recessions ago. She felt confident about taking this step because she had a rollover individual retirement account sitting in the background “if the worst should happen” and a house, husband and family too.

Her story is one of growth, despair and lack of insurance know-how.

The business did well until the last recession. Then, like most businesses, hers struggled through some mighty challenging times. But this businesswoman turned into a superwoman. She kept it all going, thanks in part to the help of husband and family — and the comfort of knowing she still had that IRA sitting in the background, “just in case.”

She was so busy keeping things afloat that she had no time to follow her IRA.

The assets had been invested in mutual funds with an allocation that was as close as her advisor could get to the allocation used in her former 401(k), which was the source of her rollover assets. Because of that allocation, she didn’t worry too much.

Then came the day of reckoning. “I’ve lost everything!” she shouted on the phone. “Everything!” Her panic was undergirded by the 24/7 news reports she kept hearing about the “billions that investors lost in the crash.”

She said she knew that her IRA account values moved up and down a bit, but she had no idea that they could plummet. Now, she believed her IRA money was gone forever. She planned to sell the “pittance” that was left in the IRA, close the shop and become a near-destitute.

Fast forward to the outcome. She did learn that her mutual fund shares could bounce back up in time, so she decided not to sell out of the IRA. She also decided not to close her business. Out of desperation, imagination and breathtaking resourcefulness, she decided to “make” the business grow, and it did.

Now, five and a half years later, the IRA account value is higher than it was before the crash and she has “money in the bank.” But she’s getting nervous about that IRA. “I don’t want my account value to go back down again,” she told me recently. “I just couldn’t take that.”

She mentioned that her broker did offer her some brokered certificates of deposit. “But those CDs are paying next to nothing,” she said. “I guess I’d take that over risking losing my money again, but isn’t there something else that earns more than a CD but won’t drop through the floor?”

If you have read this far, and if you are in the insurance business, you already know the answer to that question. The point is, this very talented businesswoman, now seasoned in the ways of small business ownership, did not know the answer.

She did not know about annuities. She did not know about index-linked growth. She did not know about the many uses of life insurance. She has an insurance agent, but only for property-casualty coverage. She does her own taxes, so she has no accountant. This means her only points of information on asset growth have been the bank and the stockbroker. If either of those two knew about insurance solutions, they did not tell her.

I suggested she start looking for an advisor who works with both insurance and securities, and who knows a bit about banking too. I’m pretty sure she will find her way. She will research on the Internet. She will ask around. She will use her considerable business savvy to achieve her goal.

Unfortunately, I hear a lot of stories like hers. A lot of small-business folks are starving for insurance and financial guidance. They need someone who is knowledgeable about multiple options. Small businesses are picking up steam this year; this is a good time for those “someones” to reach out.


Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Connect with Linda →

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