Small Business Owners More Likely to Phone a Friend, Not an Adviser

When asked whose counsel they would seek before setting up an employee retirement plan, small business owners prioritized family, friends and social media rather than financial professionals, according to Capital Group.


Only 15% of small business owners say they would seek advice from a financial adviser on how to set up a retirement plan for employees, despite state mandates and government incentives pushing them to offer plans, according to new research from Capital Group.

For information on setting up a plan, small business owners running firms with between $250,000 and $1 million in revenue were more likely to choose family (31%), friends (31%) and social media (24%) for guidance. Just 23% of business owners would seek advice from an accountant, which still trumped financial adviser, at 15% of respondents who do not yet have a plan.

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“Offering a retirement plan to one’s employees can be a critical asset for a business owner who wants to retain and attract new talent, but concerns about cost and a lack of sufficient guidance are holding many of them back,” said Renee Grimm, senior vice president of retirement plans at Capital Group, in a statement. “With the passing of the Secure 2.0 Act earlier this year, now may be a great time for small business owners to set up a retirement plan.”

According to Capital Group’s survey, which was taken at the end of 2022, only 39% of business owners without a plan said they had a financial adviser to explain the process, including potential benefits and the new tax credits available through the SECURE 2.0 Act of 2022. Advisory firms have historically focused on larger businesses when it comes to retirement plans, but the evolution of options such as pooled employer plans, SECURE 2.0 small plan incentives and state mandates all point toward opportunity for advisers to connect with smaller employers.

“A financial adviser can guide business owners on how to maximize the full benefits of offering a plan, including important tax credits for themselves,” Grimm said.

Among small business owners who do not currently offer a plan, 94% said they would be likely to open one if offered tax incentives or credits. While 73% said they were “highly likely” to offer a plan in the next two years, only 49% have taken action to do so. Plan expense was a key reason why small business owners did not offer a plan, a concern shared by 34% of respondents.

As for those small businesses already offering a plan, 73% emphasized helping their employees save for the future as motivation. About half of respondents, 49%, said a motivator was retaining current employees, and 23% said decreasing their company tax liability was important.

Not surprisingly, the most popular retirement plan, offered by 88% of small business owners, is a 401(k) plan. Only 30% of employers provided a SIMPLE IRA, an option that may not be known as a potentially cost-effective option, Capital Group suggests.

“While 12 states have enacted legislation requiring small businesses to offer retirement plans, there appears to still be low awareness of the range of affordable solutions available, including SEP and SIMPLE IRAs,” said Ralph Haberli, head of institutional retirement at Capital Group, in a statement. “A financial advisor can be a valuable partner to guide business owners through the steps and implications of setting up the plan that is right for them.”

The research from the Capital Group, was released to coincide with the U.S. Small Business Administration’s National Small Business Week.

Franklin Buys Managed Accounts Firm to Expand Adviser SMA Offerings

The investment manager’s purchase of volScout will add to its managed investment strategies for advisers working with institutional clients and high-net-worth investors.


Investment manager Franklin Templeton, owned by Franklin Resources Inc., announced Tuesday the acquisition of a startup firm focused on providing personalized investment portfolio management.

Franklin Templeton’s purchase of volScout LLC, a startup that provides separately managed accounts and manages investor portfolios, will add to San Mateo, California-based Franklin Templeton’s managed option solutions on offer to advisers serving institutional clients as well as high-net-worth investors, according the announcement.

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“SMAs are an important vehicle used by many advisers and clients, allowing for greater transparency, personalization and customization to specific client objectives,” Kristopher Smith, head of product solutions strategies and initiatives at Franklin Templeton, said in an emailed response. “In addition, with the ability to provide a tax management overlay, clients can garner additional benefit, especially during market volatility like we’ve recently experienced.”

SMAs have seen growth in recent years as advisers look to provide more personalized investment that allows for tax management, income production, state-specific needs and cash flow options. Assets in managed accounts grew 24% in 2021 to a high of $10.7 trillion, according to the latest data available from Cerulli Associates.

The founding partners of volScout, Brad Berggren, Jon Orseck and Roger Weber, will continue on after the acquisition, operating as the newly formed Franklin Managed Options Strategies LLC, or Franklin MOST, according to the announcement.

Product head Smith said the acquisition allows Franklin Templeton to expand and complement its suite of SMA options with call writing—a type of options trading—and hedged equity strategies that help advisers offer clients incremental returns while reducing downside volatility in their portfolios. The offering can be used in a separately managed account format or through other private fund structures, according to the announcement.

“We see this as a great extension of the solution set we’re able to bring to both institutions as well as advisers serving high-net-worth clientele,” Smith said.

Franklin Templeton currently has $110 billion in SMA assets under management, the firm noted.

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