As your successful business grows larger and matures, you should always be on the lookout for forces that can diminish its value. New companies and competitors constantly aim at the top dog by identifying and exploiting weaknesses. To mitigate this constant threat, you should do two things.

  1. Identify what makes your company valuable.
  2. Protect those assets as much as possible.

Today, we’ll look at two processes you can use to identify and protect your business’s most valuable assets.

Identifying Your Business’s Most Valuable Assets

It’s impossible to protect the things that make your company valuable if you don’t know what they are. When we talk about valuable assets in the context of planning for the future, we’re talking about things outside of your presence as the business owner.

The first step in identifying your company’s valuable assets is focusing on things outside of your presence that help the company run well. Remember: If your company’s success relies primarily on you, then it likely has lower transferable value. And transferable value is a key ingredient that can be leveraged to help you meet your business and personal goals.

What are some potential assets that give your company its value? While your company is unique, there are some general features and components that tend to contribute to a company’s value.

  • Trade secrets (e.g., pricing algorithms, sourcing methods, operating systems)
  • Intellectual property (e.g., copyrights, trademarks, patents)
  • Key employees (e.g., team members who impact strategy or product development)

You may have knowledge of what some of your company’s valuable assets are. But it can sometimes be challenging to identify which are the most important and which you need to improve. Working with objective, outside advisors can help provide a clearer assessment of which assets are most valuable to your company, and thus worthy of your investment in protecting them.

Protecting Your Business’s Most Valuable Assets

After you’ve identified your company’s valuable assets, it’s crucial for you to protect them. For example, you may consider drafting legal documents that describe the proper use and dissemination of trade secrets or intellectual property. This is a common strategy that successful businesses use, many times through the implementation of a company handbook that employees must acknowledge and abide by, coupled with regular internal training programs to emphasize the importance of intellectual property and trade secrets, and how they support company performance and growth.

Perhaps most important is protecting your key employees. Recall that key employees are those who tangibly affect company performance above and beyond expectations. Often, they have influence on other employees. In many cases, key employees are a company’s most valuable asset, which makes protecting them vital to future success.

To position your company to protect key employees, you may consider using two different tactics.

  1. Incentivizing performance and retention
  2. Discouraging post-employment harm to the company

Incentivizing performance and retention includes coming up with ways to keep key employees on board and engaged in the company, now and in the future. For instance, you may offer incentive plans that provide more money or ownership if the key employee exceeds certain goals. You may even apply a “vesting schedule” to those rewards, which can encourage this employee to stay with the company over a longer period to receive the full benefits of the incentive plan.

Discouraging post-employment harm to the company is the flip side of the coin. If a key employee decides to leave your company, it’s important to minimize any harm they can do to your company once they leave. Some examples include non-compete agreements and non-poaching agreements (i.e., a former employee may not recruit other workers away from your business). It’s important to keep in mind that these kinds of restrictions must be custom-tailored to your business/employees and state laws, and that there may be other requirements that go along with these types of protections. You’ll need individual legal guidance in order to avoid potential landmines.

This is why identifying your most valuable assets early is so important. If you know what it is that makes your company valuable, you can then work to protect those things, either before it’s too late or before those valuable assets have outsized leverage over your company’s success.

You Don’t Need to Do This Alone

Protecting your trade secrets and intellectual property, designing custom incentive plans, and discouraging former employees from harming your business can be challenging work. Indeed, it’s often too much for one business owner to tackle alone. Fortunately, you don’t need to do it alone. Working with the right experts can give you the comfort and confidence you need to continue growing your business and developing your most valuable assets.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

 

 

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

  

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

One of the most important skill sets that successful business owners have is the ability to be ready for just about anything. The key to doing this is being agile. Let’s look at what an agile framework looks like, why it matters, and the differences between waiting for perfection and being agile in your business planning.

The Agile Framework

You may have heard of the agile framework in the software space. It’s the concept of working collaboratively to break large projects down into smaller, more achievable goals and outcomes. Achieving these smaller targets allows you to deploy part of your plan, test its success, and then use what you learned to plan and release even more smartly for your next goal.

The agile framework is an excellent approach to planning for the future success of you and your business. It can help your company remain flexible in the face of unexpected disruptions in your marketplace, whether it’s an innovative competitor, increased government oversight, or something else altogether. It also positions your prospects and clients to receive a steady drip of improvements from your company, instead of waiting for one “silver bullet” improvement. In this way, following an agile framework moves you in confident steps toward the growth and success you want or need from your company.

Finally, the agile framework can protect you against the temptation to wait for perfection. Rather than waiting years and years for your plan to be entirely complete before releasing or implementing it, being agile allows you to hit checkpoints and learn as you go. This method is often preferable to trying to eat the planning apple in one bite, especially with how quickly technology brings about change.

An agile, flexible company may be able to build more value than a perfectionist, rigid company. Let’s examine an example of the difference between being agile and trying to be perfect in your planning.

Agility vs. Stiffness: When Perfection Doesn’t Drive Value

Percy Lux and Connie McGorkle had been friendly competitors for 25 years. Percy, a third-generation business owner, ran a tight, meticulous ship. Unless he approved of each project personally, projects rarely got off the ground. But over the last 25 years, Percy’s strategy made his company a leader in his distribution market.

Connie founded her company as a start up in response to some of what she called the “antiquated tactics” Percy’s company used. She invested heavily in her management team, who constantly presented new, often disruptive ideas into the industry. Her motto—one she constantly reminded her employees—was “Good is greater than perfect.”

As they planned for a successful future, Percy began planning for it like everything else. He was a stickler for detail and demanded that all suggestions or changes to the plan he created himself go through him first. His advisors constantly recommended that he replace his rigid management structure and outdated operations with something more flexible. Percy constantly refused because “It’s always worked for me.”

Connie, on the other hand, was open to outside ideas. When her management team discovered that her company could offer free shipping on bulk orders above a certain amount with minimal negative impacts on her bottom line, she was skeptical. No one else was doing this, and she worried about whether order fulfillment would falter. But Connie was committed to launching new ideas in smart ways to see if they would take off, and she believed in her management team. She did not interfere or slow things down.

After a few initial months of flat performance, Connie’s investment in agility paid off. As word got out, prospects flocked to her company. Larger orders brought larger customers. Connie scaled her business with the help of her management team. As her company grew, her management team made more decisions, which took the company in other unexpected directions. 

Her competitors couldn’t figure out how her company did it. Even Percy, whose company had the capability to compete with Connie on this front, was curious. 

But in the end, he chose to stick to his rigid ideas about growth and planning. All decisions went through him, and the company methodically worked for years toward each major goal. As the years passed, Connie’s company began to siphon market share away from Percy. His company finally implemented bulk discount shipping years after Connie’s company innovated it. By then, it had become industry standard. 

Buyers wondered why an industry leader took so long to change. They discovered that it was because Percy was so meticulous in following his plan (and his plan only). It cast a pall of doubt on the management team, which hurt his company’s value because it slowed innovation.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

Retaining your company’s key employees is one of the most important steps toward your business’ success. Key employees can reduce your workload, noticeably improve company performance and operations, and act as the backbone of a successful business sale in the future. So, how can you keep these employees on board and engaged as you work toward a successful future? Let’s look at some ways to keep key employees motivated to grow your business and stick with you for the long haul.

One Size Doesn’t Fit All

Though key employees all do the same thing—tangibly contribute to company success above and beyond expectations—their motivations can be as unique as they are. Each key employee has different goals, ideas, and motivations in everything that they do. This means that trying to motivate and retain all key employees exactly the same way is often a recipe for disappointment.

In short, as you consider how to identify and retain key employees, you should avoid implementing one-size-fits-all incentives. Doing so may imply that you don’t understand the very people driving your company’s success, which can prevent future success.

Fortunately, though key employees may have unique motivations, those motivations generally fall into a few categories, which makes approaching how you’ll address them a matter of good planning. As you consider these methods, remember that it’s important for your key employee planning to fit into your overall goals for the success of your business and yourself in the future.

Planning for Key Employees Motivated by Money

A common motivator for key employees is simply more money. If money is indeed the biggest motivator for your key employees, proper planning can allow you to fulfill their wants, keep them on board, and position your company for future success.

For these key employees, consider creating a compensation plan that rewards their efforts to grow your company both now and in the future by sharing some of that growth with them. You may decide to pay them a certain percentage for exceeding certain goals now, with the opportunity to earn even more if they stay on board and continue to produce in the future, potentially compounding their earning potential if they stick around and continue to hit targets.

Planning for Key Employees Motivated by Freedom or Creative Control

Though many key employees are enticed by more money, not all are. Some key employees have a greater desire for freedom or creative control in their work. Trying to motivate these employees with more money may ring hollow to them. Fortunately, there are ways to engage and motivate these kinds of key employees.

For example, you might consider forming a subsidiary company that this key employee has more control over. Of course, this strategy would require you to assure that this subsidiary wouldn’t introduce outsized risk to your existing company, which is something that planning for future success can help you overcome.

Another way to entice these kinds of employees is with plans that give them more autonomy in how they work. Whether that means setting their own schedule or empowering managers to have a say in the company’s performance goals, you have options. The goal is to give these kinds of key employees the autonomy they crave while still working toward your overall goals.

Planning for Key Employees Motivated by Recognition or Ownership

Finally, some key employees are motivated by recognition and ownership opportunities. While it may be uncomfortable to face this kind of ambition, there are ways to engage and retain these kinds of employees without handing the reins over to them (either all at once or in totality).

For instance, you may tie performance goals to ownership opportunities. So, the better they do, the more chances they have to obtain slices of ownership in the company. Alternatively, you may consider motivating these employees with improved job titles or more chances to represent the company publicly.

How Do I Know What Motivates My Key Employees?

Determining what motivates your key employees isn’t as challenging as it may seem. There are several ways you can figure out what they want in the context of your overall business goals.

1.    Just ask: If you have good everyday rapport with your key employees, simply asking them what motivates them is the most direct way to determine the best strategies to retain them.
2.    Work with an outside consultant: Not all key employees will be comfortable telling you what motivates them, and that’s OK. They may feel more comfortable sharing their desires with an outside consultant. This is a more indirect method of determination, but it can be just as effective.
3.    Give them options: You may consider giving key employees choices in your incentive and retention planning. For instance, you might present a deferred compensation plan, a stock bonus plan, and a chance to run a division or subsidiary, and let your key employees choose or self-nominate. However, it’s important not to overwhelm your key employees with too many or confusing choices.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

 

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

When you set your business up for future success, you can set yourself, your family, and your personal interests up for similar success. But a common problem owners overlook is how to address Deal Killers, which can prevent you and your company from achieving the success you want. Today, we’ll examine eight common Deal Killers and show you a five-step process that can help you address them.

Step 1: Address the Big Three Financial Deal Killers

The first three Deal Killers you may encounter concern your financial needs.

1.  Assuming that you can sell your business today and achieve financial independence.

2.  Assuming the market values your company as highly as you do.

3.  Focusing solely on getting the most money possible for your business.

Some business owners mistakenly believe that they can live on less money after they sell, which is rarely the case. And because your business is likely a part of your identity, you may end up overvaluing it, which can create impossible expectations and stunt proper planning. Finally, focusing only on getting the absolute most money for your business can clash with values-based goals, which can cause unbearable frustration.

Fortunately, you can address these financial Deal Killers through pre-sale planning. This includes some of the following action items:

1. Objectively determining how much money you need to achieve financial independence.

2. Getting an objective estimate of your company’s value from an investment banker or business broker.

3. Assembling a deal team before you’re ready to sell, which can prevent you from taking your company to market before you and your company are ready.

With pre-sale planning, you can strengthen your company and bolster its value, which is good whether you decide to sell or not.

Step 2: Keep Key Employees On Board and Engaged

Your key employees (i.e., management teams) are likely the backbone of your company’s future success. Without a strong management team, buyers may question whether your company has value outside of your presence. If it doesn’t, and you’re unwilling to work for someone else as a condition of sale, it may become exceedingly difficult to plan for a successful future on your terms.

Fortunately, you can keep key employees on board and engaged by “handcuffing” them using quality incentive plans with the help of professional planners. Non-qualified deferred compensation plans, stay-bonus plans, and stock bonus plans are just a few examples of how to keep key employees on board and engaged.

Step 3: Be Willing to Collaborate

Two common Deal Killers owners often face are trying to negotiate a deal by themselves and failing to hire a deal team. Serious buyers will come to the table with teams that will help them pay the least and get the most from your company. They know what to look for and will likely give no leeway, which can easily overwhelm you if you go it alone (especially if you’re still ingrained in running the business).

Instead of going it alone, hire and collaborate with a strong deal team. A deal team can help you find and fix flaws in your business before buyers see them. That can lead to a sale on your terms while preventing buyers from retrading (i.e., using flaws they find to lower their offer).

Step 4: Commit to Pre-Sale Due Diligence

Pre-sale due diligence can be costly, both financially and emotionally. However, you must identify your company’s weaknesses before a buyer, lest you want to negotiate from a position of weakness. Further, it’s crucial that your pre-sale due diligence is objective and clear-eyed. If you’re a major part of the business, it’s easy to deny or ignore critical business flaws.

Fortunately, you can tap your deal team to help you follow through on due diligence. It’s their job to strengthen your company so you can plan for a successful future on your terms.

Step 5: Plan for a Future Without Your Business

You can do everything right in your planning and still regret everything. This is especially true as you approach your sale date: After all, once you sell your company—something you’ve built, nurtured, and guided for years—it’s no longer yours. Seller’s remorse is fairly common, but it’s also something you can address.

An effective way to plan for a successful future without your business is to talk to your advisors, family, and other owners. Share your ideas about what success looks like, and ask for their thoughts. They may be able to help you find your purpose outside of owning a business. Preparing yourself for a future without your company is just as important as preparing your company for a future without you.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

 

  

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

Preparing your business for a successful future often goes hand in hand with preparing your business for a successful sale. No matter whom you sell to—and even if you believe you’ll never sell your business—you should focus on catching Deal Killers. Deal Killers are things that can affect your business’ value and future. Let’s look at an example of the difference between addressing Deal Killers early and ignoring them until it’s too late.

Bud and Bess Bush always had a sibling rivalry. Bud’s manufacturing business had grown and provided for his family for 35 years. Bess’s data analytics firm had done similarly well over the last 28 years. Though they never worked together, Bud and Bess both knew that they wanted to sell their businesses, use the money they received to retire in style, and continue providing for their families. But they each used different strategies with vastly different results.

When Bud decided he was ready to retire, he remembered that an advisor had once told him that selling to a third party might provide more cash to an owner than other exit paths. Ever the do-it-yourself man, he began approaching potential buyers who had contacted him in the past to see whether they were still interested. Three buyers were, so Bud began to set up meetings with them to discuss sale terms. He assumed he could bring his advisors in to provide guidance once the meetings were set.

Bess was a more collaborative owner. When she began getting ready to retire, she contacted her most trusted advisor to discuss her possibilities. Her advisor asked her many questions about what she wanted in retirement. They worked together to estimate how much in after-tax sale proceeds Bess would need to achieve her goals. Finally, the advisor recommended that Bess hire a business consultant to identify any operational or human resources issues that might prevent her from successfully completing a sale transaction.

The business consultant was impressed by Bess’s business. But she noticed that Bess didn’t provide any incentives to keep her management team engaged and on board during the sale process. She explained to Bess why it was so important to “handcuff” key employees. She then offered to help Bess design a comprehensive package, which could incentivize her management team to stay and support the company during and after a sale.

Over the next two years, Bud and Bess found themselves in very different situations.

The buyers Bud had wrangled found several worrying flaws in his business. He didn’t have a strong sales team outside of himself. When asked whether his key operations employees would stay on after he left, Bud asked, “Who cares? Don’t you all hire your own people?” After receiving offers he found insulting, Bud took his business off the market. Seven years later, Bud accepted the only offer he could find, which was a fraction of what he had wanted.

On the other hand, Bess had an incentive plan for her key employees, a strategy to take her business through a controlled auction, and a team of seasoned deal makers to guide her through the process. As multiple buyers performed due diligence, they found that her company was practically turnkey, thanks to her strong management team. Through the controlled auction, Bess found a buyer that would offer her enough money to achieve her goals without radically changing the makeup of her company. She sold her company, gained financial independence, and had enough to continue providing for her family, including her brother Bud.

Bess took steps to address Deal Killers, whereas Bud tried to do everything by himself. Though Bess had to put in extra work, it paid off in the end by helping her plan on her terms, rather than the buyer’s. Unfortunately, Bud didn’t achieve his goals, primarily because he ignored Deal Killers in an effort to do everything himself.

Strategizing to avoid Deal Killers may not guarantee a quicker or more lucrative sale, but it can increase the likelihood, or at least reduce headaches during the sale process. Just like you wear a seatbelt when you drive despite not getting into a crash every time, taking precautions against things that can go wrong typically makes the journey safer, more predictable, and often more fulfilling.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

 

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

Setting goals is a catalyst for success, especially if you’re planning for the future of your ownership and the success of your business. The strongest goals tend to have five aspects that help you guide the process for achieving them. In other words, when you set goals, you want to set SMART goals:

Specific

Measurable

Accurate

Realistic

Time-limited
Let’s look at how each of these aspects can help you create goals that let you plan for the future of your ownership more successfully.

Specific Goals Inspire Action

Though it can be challenging, setting specific goals allows you to act on them. Consider the difference between a vague goal and a specific goal.

Vague goal: I want to retire in about five years, around the time I turn 65.

Specific goal: I want to retire on my 65th birthday.

These goals may seem like they’re saying the same thing, but they aren’t. Vague goals are harder to achieve because they’re easier to push off. Vague goals are also like trying to hit a constantly moving target.

Specific goals give you something tangible to aim at. They can also motivate you to start acting sooner, rather than later. Sometimes, business owners hesitate to set specific goals because they aren’t sure how they’ll achieve them. However, you’re much more likely to make progress in achieving goals when you have a good idea for what you’re pursuing. When setting specific goals, it’s important to remember that you can (and should) revisit and adjust them as necessary. Specific goals aren’t necessarily written in stone. You can change them. Setting specific goals helps you focus on why you’re pursuing the goal, how you’ll act on it, and what happens as you act on it. Vague goals often get lost in the ether.

Measurable Goals Keep You on Track

When your goals are measurable, you give yourself a baseline to determine your success. Saying “I want enough money to retire comfortably,” isn’t a measurable goal because it doesn’t tell you how much you need and why or how you define comfortable. And if you don’t know how to measure your goal, it’s nearly impossible to determine how close or far you are from achieving it.

Instead, a goal such as, “I want to sell my business for $15 million on this date in five years” is measurable. It gives you a number you want to achieve, a time frame in which to do it, and encourages you and your advisors to focus on doing things that help you achieve it.

Accurate Goals Minimize Surprises

Many business owners underestimate how much money they’ll need to retire with financial security. Some business owners believe that they’ll actually need less money in retirement than they did while they owned their business, which is rarely the case. Instead of relying on gut feelings about what you’ll need, a stronger strategy is to accurately determine what you need. Some of the best ways to do so are by working with professionals who can analyze your financial and business needs objectively.

Consider this example. You think you need $3 million to retire comfortably, based on what you assume you’ll spend and how long you’ll live. So, you sell your business for enough money to get you $3 million after taxes. After a few years, you realize that you can’t do all the things you wanted because you don’t have enough money. You consider starting a new small business, but can’t. You want to continue to travel as you did before, but can’t. While it’s true that you achieved your goal, it turned out that your goal was inaccurate, which didn’t let you retire as comfortably as you wanted.

Accuracy applies beyond financial security. For instance, you may realize that protecting your employees and maintaining company culture are more important than getting the absolute most money possible. Unless you can accurately assess what you want and why you want it, it can be extremely difficult to pursue those goals effectively.

Realistic Goals Mitigate Disappointment

It’s important to strive for the best, but it’s just as important to be realistic with your goals. Unrealistic goals can stifle progress or make it impossible to even start pursuing your goals.

For example, picture a business owner who thinks he can sell his business at any time because he believes the business is worth $5 million. Annual revenues have only topped $1 million one time, and he makes all the big decisions himself. When he discovers that no one will give him even close to $5 million unless he continues working at the company (but not as the owner), he gives up, thinking that if it’s not worth $5 million now, it never will be.

When your goals are realistic, it can motivate you to pursue them and stick with them even when obstacles arise. Realistic goals can still be ambitious, but they should also be attainable. Otherwise, it’s too tempting to just give up.

Time-Limited Goals Keep You Moving

Goals with deadlines keep you moving forward because they require you to reach certain milestones by a set time. This is especially important for business owners. As an owner, everyday responsibilities can fill your schedule up quickly. That often leaves you little to no time to focus on long-term goals.

When your goals have a deadline, it forces you to focus on what you must do to achieve your longer-term goals. “I don’t have time for that” becomes an invalid excuse, which can motivate you to dedicate the necessary time to pursue your longer-term, bigger goals.

So, we encourage you to pair your SMART goals with some form of accountability – write them down, talk about them with your most trusted advisors, and give yourself rewards or consequences for goals that are achieved or missed. Bringing others into your SMART goals can increase your chances of success.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

 

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

Successful business owners often want more than just the maximum amount of money they can get. These owners have deeply ingrained values-based goals that guide why and how they do business. But many of those same owners don’t apply an appropriate amount of weight to values-based goals until it’s too late to achieve them.

Some owners neglect their values-based goals because they don’t come up on a balance sheet or income statement. Others don’t realize how important their values are until those values are threatened. Regardless, as a business owner, it’s important for you to understand what your values-based goals are so you can pursue them.

Let’s look at a typical example of how values-based goals can determine whether your plans for your ownership in the future are successful.

What’s Money Worth If There’s No One to Share With?

Arya Fiers had a reputation as a tough business owner who always focused on the bottom line. Over 25 years, she managed to not only guide her trucking business through three major recessions but also continue growing it. She was a master negotiator and expected her employees to work just as hard as she did. Despite her rigorous management style, people lined up to work for her because she paid her employees well above industry average.

As she approached 60, Arya began thinking about retirement. Because she had no family and none of her key employees were interested in ownership, she began to consider the many offers larger companies had made to buy her business. She contacted her longtime financial advisor, Patty, and determined how much she would need to retire with financial security.

As Arya began talking to potential buyers on her own, she realized that they were all willing to pay her well above the amount she’d need. But she also discovered that none of the buyers would commit to keeping her employees and paying them well above the average market rate. After a few informal talks, Arya decided to start playing hardball.

She went back to Patty, who was her most trusted advisor, and was blunt.

“All of these companies are offering me more money than I need, which is nice. But what I want more than money is for my employees to continue having lots of work and good wages. No one I’ve talked to can promise me that. And if a buyer lays off my workers, then everything I’ve built will be worthless to me.”

This was surprising to Patty. She had known Arya for 20 years, and this was the first time Arya had ever talked about a goal that wasn’t focused on profit.

“The good news is you realized that this is important to you early,” Patty said. “I’m confident that we can create a plan that helps you achieve that goal.”

Patty and her Advisor Team began formalizing Arya’s processes and hiring professional managers to run the company. As the team vetted buyers, Arya insisted that any buyer must commit to paying employees no less than what she had paid them. She also demanded that the buyer would not lay off any employees without cause for one year after the sale. Written employment agreements, wage continuation plans, and bonus plans were introduced for various groups of employees.

Arya received several bids to buy her company that refused those conditions but tried to offset them with more money for the business. Arya flatly refused these offers, to the surprise of many buyers. Only one buyer was willing to abide by the conditions and also pay her enough for financial security. Though it wasn’t the highest offer, it was the offer that made Arya happiest.

She accepted the offer, retired, and committed to mentoring young women in her community in her free time. Two years after the sale, the buyer of her company partnered with her non-profit mentoring group and helped her expand it throughout the state.

What Are Your Values-Based Goals?

There are countless kinds of values-based goals, including the following:

• Protecting employees and company culture
• Bettering the community
• Assuring a comfortable lifestyle for your family
• Leaving a legacy to be proud of
• Developing a reputation for highest quality products

Arya wanted to protect her employees and mentor young women. It wasn’t until she articulated these goals that she could find a way to achieve those goals while still obtaining financial security.

As you plan for the future of your ownership and your business, it’s important for you to identify which values matter to you. Just because something doesn’t show up in the business financials doesn’t mean it’s not important. In many cases, values-based goals determine whether you consider your ownership successful at all.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

 KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400 

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

COBRA Premium Assistance under the American Rescue Plan Act

 

Last month Congress passed the American Rescue Plan Act, which provides 100% COBRA subsidies from April 1 to September 30 of 2021. Today the Department of Labor released guidance and model notices that determine how the COBRA subsidies will be administered.

 

The DOL’s Employee Benefits Security Administration posted the following:

 

·     COBRA Premium Subsidy dedicated page

·     FAQs

·     Five Model Notices: General Notice and Election Notice, Notice in Connection with Extended Election Period, Alternative Notice, Notice of Expiration of Premium Assistance and Summary of the COBRA Premium Assistance Provisions

 

NAHU will provide a review of the COBRA guidance in this Friday’s Washington Update along with a Compliance Corner webinar on April 29.

CyberSecurity Certification

The deadline for NYS resident insurance licensed professionals to file your cybersecurity certification is DUE April 15th!

https://www.dfs.ny.gov/industry_guidance/cybersecurity

 

Helpful How To’s

 

FAQs

Q:  I’ve qualified for an exemption in previous years, do I need to do anything?

A: Yes, even if you fall into one of the exempt categories, you must go on to the website listed to the right and file a notice of exemption.

Q: Great, what are the steps for filing?

A: Go to https://www.dfs.ny.gov/industry_guidance/cybersecurity

  • Go to “Industry Guidance” and in that section go to “Cybersecurity Resource Center”
  • In the middle of the page you will see “Instructions on How to File”
  • Enter your account information and sign in
  • To file an exemption click “Begin” under the Exemption heading
  • Enter your NYS Insurance license number
  • This should bring up your name (or corporate name) and click “Next”
  • Select “This is the first exemption filed for this entity or individual”
  • This will bring up a list of exemptions and select those that you qualify for (You can select more than one, if applicable). Click submit and then done.  You will receive a receipt number which will also be emailed to you

Q: What are the exemptions?

500.19(a)(1) – You are entitled to this exemption when a Covered Entity has fewer than 10 employees, inclduing independent contractors. THis is a limited exemption and you must still design and implement a cybersecurity program that meets some but not all the regulatory requirements

500.19(a)(2) – You are entitled to this exemption when a Covered Entity has less than $5,000,000 in gross annual revenue in each of the last 3 fiscal years from NY business. This is a limited exemption and you must still design and implement a cybersecurity program that meets some but not all the regulatory requirements.

500.19(a)(3) – You are entitled to this exemption when a Covered Entity has less than $10,000,000 in year-end total assets. This is a limited exemption and you must still design and implement a cybersecurity program that meets some but not all the regulatory requirements

500.19(b) – You are entitled to this exemption when you are an employee, agent, representative, or designee of another Covered Entity and you are following that entity’s cybersecurity program. Under this exemption persons do not need to create their own program, but will be required to idenitfy the Covered Entity’s whose program you ae following to claim this exemption.

500.19(c) – You are entitled to this exemption when a Covered Entity does not operate, maintain, utilize, or control any IT systems and does not,and is not required to control. own, access, generate, recieve or possess Nonpublic Information. This is a limited exemption and you must still design and implement a cybersecurity program that meets some but not all the regulatory requirements

500.19(d) – You are entitled to this exemption if you are a Covered Entity that is a captive insurance company that does not, and is not required to control, own, access, generate, recieve, or possess Nonpublic information

Q: If I’m exempt, are there any requirements for me?

A: Yes, if you filed for an exemption under subsection (a) of 23 NYCRR 500.19, you still must: maintain a Cybersecurity Program as required in section 500.02; maintain a Cybersecurity Policy as required in section 500.03; limit Access Privileges as required in section 500.07; conduct a Risk Assessment as required by section 500.09; implement a Third Party Service Provider policy as required by section 500.11; limit your Data Retention as required in section 500.13; and provide Notices to the Superintendent as required by section 500.17, which includes filing an annual Certification of Compliance. If you filed for an exemption under subsections (c) or (d) of 23 NYCRR 500.19, you still must: conduct a Risk Assessment as required by section 500.09; implement a Third Party Service Provider Policy as required by section 500.11; limit your Data Retention as required in section 500.13; and provide Notices to the Superintendent as required by section 500.17, which includes filing an annual Certification of Compliance.

Q: Is there a template for a privacy policy I can use to create my own policy?

A: Yes, see above to access the sample policy template link.
This is an annual certificate filing requirement. If you have any issues, please contact our office.

Still not sure? Call your Broker Manager or KAFL Team Member at 1 (800)-272-6488

 

 

For Immediate Release: 3/23/2021 GOVERNOR ANDREW M. CUOMO

 

 

ON 11TH ANNIVERSARY OF THE AFFORDABLE CARE ACT’S SIGNING, GOVERNOR CUOMO ANNOUNCES EXPANDED ELIGIBILITY FOR FINANCIAL ASSISTANCE IN NEW YORK

 

Extends Open Enrollment Period to the End of 2021

 

NY State of Health’s Implementation of the American Rescue Plan Will Lower Premiums for Most Consumers

 

Higher Tax Credits Also Available to Current Enrollees in Early April and to Higher-Income New Yorkers For the First Time Starting in June

 

Governor Andrew M. Cuomo today announced expanded tax credits available through NY State of Health, New York’s health plan marketplace. The expansion will result in more New Yorkers being eligible for financial assistance and the further reduction in health insurance premiums in New York State. Through the American Rescue Plan, which President Biden recently signed into law, increased tax credits are available to more than 150,000 consumers who are already enrolled in coverage, further lowering health care costs. In addition, in June 2021, NY State of Health will for the first time expand tax credits to tens of thousands of additional New Yorkers with higher incomes who, before the American Rescue Plan, did not qualify for financial assistance to lower the cost of premiums. Governor Cuomo also announced that the 2021 Open Enrollment Period will be extended through the end of this year. The announcements come on the 11th anniversary of President Obama signing the Affordable Care Act into law.

 

“Access to high-quality affordable health insurance is crucial at any time, but the COVID-19 pandemic has made it even more important to make sure New Yorkers are insured in case they face the virus or other health issues,” Governor Cuomo said. “With the availability of increased tax credits and the extended Open Enrollment Period, health insurance premiums will be reduced for more New Yorkers than ever before. I encourage anyone who needs health insurance to sign up through NY State of Health.”

 

Beginning in early April, enhanced federal tax credits will be available for low- and moderate-income consumers (income up to $51,040 for individuals and $104,800 for a family of four) to lower the cost of Qualified Health Plans. Individuals already enrolled through NY State of Health at these income levels will be notified to visit NY State of Health, call the NY State of Health Customer Service Center, or contact a certified NY State of Health assistor to update their information. Consumers who complete their updated enrollment in April will receive a premium invoice from their health plan that reflects the lowered premium amount beginning in May.

 

NY State of Health Executive Director Donna Frescatore said, “As we continue to respond to a global pandemic that has impacted our lives for more than a year, the American Rescue Plan has provided some very good news for New Yorkers. We are working to make enhanced tax credits available to New Yorkers as quickly and as seamlessly as possible.”

 

By June 2021, NY State of Health will update its system to automatically apply the enhanced tax credits without the consumer needing to take any action to receive them. Also in June, NY State of Health will update its system so that higher income consumers (income above $51,040 for individuals and $104,800 for a family of four) can access the federal tax credits. Consumers at these income levels were not previously eligible for tax credits.

 

To allow as many consumers as possible to access these enhanced tax credits, and in light of the ongoing public health emergency, NY State of Health is also announcing an extension of the Open Enrollment Period to December 31, 2021. On February 17, Governor Cuomo announced that New York’s health insurance Open Enrollment Period was extended to May 15, 2021, aligning with states across the country. Ensuring access to affordable health coverage and care is more important than ever, so that individuals do not avoid seeking testing or medical care for fear of cost during the ongoing public health emergency. This deadline extension allows consumers additional time to enroll for 2021 coverage.

 

Over the past eleven years, New York has led the nation in its implementation of the ACA and made more than $4.4 billion in federal tax credits available to New Yorkers to lower the cost of Qualified Health Plans purchased through the NY State of Health Marketplace. More than 5.8 million people, nearly 1 in 3 New Yorkers, now access health coverage through NY State of Health, New York’s official health plan marketplace. The state has seen an unprecedented reduction in uninsured – from 10 percent to 5 percent between 2013 and 2019.

 

Now, with the passage of the American Rescue Plan, NY State of Health will build on these gains to further extend affordable coverage to hundreds of thousands of New Yorkers. Depending on enrollment levels, New Yorkers could receive more than $700 million in additional tax credits in 2021 because of the American Rescue Plan.

 

Individuals who are eligible for other NY State of Health programs—Medicaid, Essential Plan and Child Health Plus—can enroll year-round. As always, consumers can apply for coverage through NY State of Health online at nystateofhealth.ny.gov, by phone at 1-855-355-5777, or by connecting with a free enrollment assistor.

 

For nearly 5,500 years, human beings have written things down. From Hammurabi’s Code and the U.S. Constitution to your personal business plans, writing things down helps people follow rules and best practices, and pursue goals and action items. However, many successful business owners don’t have any written plans they can follow to help them achieve the future for their ownership that they most desire.

“I’ll start when I’m ready,” “This business can’t ever run without me,” and “I’d like to exit but I don’t know what I’d do” are just a few of the most common reasons that business owners don’t create written plans for the future of their businesses and their ownership. Ironically, written plans can offer solutions to these arguments. Let’s look at how.

Written Plans Help You and Your Business Get Ready

One of the most common refrains among business owners when talking about future business transitions is “I’ll start planning when I’m ready to go.” However, by the time many owners are ready, it’s often too late for them to exit on their terms.

One of the most important aspects of a successful business transfer or transition is achieving financial security (i.e., exiting the business and never having to work again unless you choose to). In fact, if you don’t achieve financial security as you transition out of the business, that business exit is a failure. But how can you know how much you’ll need to achieve this lofty goal?

The answer lies in writing things down. Accounting for what you have and comparing it to what you’ll need is much easier when you can see it on paper (or on a screen). When owners start writing things down (with help from their professionals on their advisor team), many discover a gap between what they have and what they need for financial security.

When owners can see that gap, it’s no longer a problem that exists in a distant, theoretical future. Even the most successful business owners can face this gap, despite all of their business success. Since you’re likely to rely on your business to fill in any gaps, seeing the gap in written form can shatter illusions about what you must do to achieve financial security, and how long it might take.

In short, written plans can show you that even if you’re ready to exit, the business may not be ready. That can give you time to start planning for how your business and personal situations will interact as you try to reach your goals.

Written Plans Support Accountability

When you write things down, you and your advisor team or management team can review your plans more regularly and see where things are dragging or going off track. For example, writing down who is responsible for which action items to position the company for a successful future ownership transition gives detail and timeline expectations to those involved.

Written Plans Can Uncover Values-Based Goals

Written plans are rarely static. As you meet milestones and free up your time, you might find that certain values-based goals become important to you. For example, as your company becomes less reliant on you, you may find that providing your family more chances to travel the world is more of a priority than it had been in the past.

Written Plans May Help Your Family

Finally, a written plan may reduce the likelihood of arguments after you die. Putting your wants and wishes in writing provides your family, employees, and advisors guidance on what to do with everything you have after you die. For many owners, strong legacies and minimal infighting are important. Without a written plan, it can be much harder for the people you care about to carry out your wishes.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

 

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

 

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

Planning for a successful future without your business is a smart strategy. One of the traps that business owners commonly fall into as they begin planning for their successful future without the business is seeing what they need to do and trying to do everything all at once. However, much like your business didn’t spring into success overnight all those years ago, future-oriented planning doesn’t need to be a one-and-done proposition.

Let’s look at how a phased approach to planning can help you get the most out of your efforts and make the process more manageable.

You Can’t Catch the Fish Without Throwing in a Line

Bill Burns was ready to go fishing. Over 40 years, he grew what was originally a one-man logistics consulting agency into a mid-sized inventory management services business with 15 offices. His daughter Katie and longtime employee Lester Clay played big roles in the company’s growth through a proprietary software they’d created in the early years. Bill knew exactly how much he needed to retire with financial security. But he didn’t know how to go about getting it. He originally wanted to sell the business to Katie and Lester, but he knew they didn’t have the kind of people skills he had to attract new clients. He worried that if he sold to an outsider, they’d just buy for the proprietary software and lay his employees off. Plus, he wasn’t even sure what he’d do in retirement other than fish, and he was afraid he’d get bored.

Bill felt overwhelmed with how much he had to figure out. He shared these thoughts with Glen, his most trusted business advisor.

“I think the most important area to focus on is making you inconsequential to the business,” Glen said. “You’re the rainmaker now, and to get the money you need, you’ll need to replace yourself.”

After reconfirming that Bill’s financial security target was accurate, Glen told Bill something that took much of the weight off his shoulders.

“Since Katie and Lester are comfortable sticking on the operations side, we can bring in a professional management team to help develop skills on the sales side. That’ll open up a lot of different paths for you to reach your personal and financial goals. It may also give you some leverage when you decide to sell.”

Bill was tentative at first. No one had ever outsold him at his company. But after seeing the professional management team that Glen and a new recruiting firm helped put together, he felt more confident, and for good reason.

The management team formalized his company’s sales process. Profits began to increase year over year because Bill wasn’t the only one capable of making big sales anymore. The management team used the additional profits to attract strong managers and operations people, which led to even more increases.

With more people helping to grow the company, Bill had more free time. He found hobbies he liked in addition to fishing and found himself spending more time away from the office doing them because of the strength of his sales team. He built a new plan for the future based on his new interests and goals.

Best of all, the expanded advisor team that Glen helped assemble had the expertise to negotiate with potential third-party buyers. Sales performance had finally caught up to the cutting-edge developments in operations, making his new team, including Katie, Lester, and new managers, just as valuable as the software.

With a strong management team and encouragement from Katie and Lester, Bill sold the company to a large international buyer, achieved financial security, and protected his employees.

Phased Planning Can Make the Process More Manageable

Like many business owners, Bill saw how much work he had to do and felt overwhelmed. When you’re responsible for your business’ success, it’s not uncommon to feel this way. Fortunately, with advice from a planning-oriented advisor and his new advisor team, Bill learned that he could do his planning in phases and didn’t have to be everything to everyone.

Phased planning allowed him to focus on the most important actions he could take and work through the initial challenges in a more limited area. His success in one portion of planning led to success in other areas over time, which also allowed Bill to move forward with planning for his personal future once the business future was clear. By committing to phased planning, Bill reaped the benefits, proving to himself that he didn’t have to tackle everything all at once.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

“All those years of work are thrown away. To ease your mind is that all you can say? But what about that grandson on your knee? Them railroad songs, Tom would sing to me.” –Robert Plant

Many business owners dedicate decades to making their businesses successful. Far fewer owners plan for how they and their businesses will maintain success once they leave them (by choice, death, or otherwise). Without a complete, robust plan, you may not get the outcomes you want or deserve once you inevitably exit your business. Consider the example of Tom Poor, a fictional but representative business owner whose failure to plan led to poor consequences.

The Tale of Tom Poor

Tom Poor always vowed to never live up to his namesake. The seventh son of an ironworker, Tom spent years building his successful steel manufacturing company. His success allowed him to provide a lifestyle for his wife and two children that no one in the Poor family had ever had. His company employed 135 people, and his two children were taking on more responsibilities at the company as Tom got older.

Just before Tom’s 70th birthday, he made a startling announcement to his family and company. A large steel conglomerate had offered him $15 million for his company, and he verbally accepted the offer. He assured his employees and children that their jobs were safe based on a handshake agreement he’d made with the buyer. He assumed that $15 million was more than enough to allow him a comfortable lifestyle since his $500,000 salary and benefits package had provided so much for his family to that point.

Before the deal went through, Tom’s children told him that they had expected to run the company once he left. They’d been training hard to prepare, and so the sale to an outside party shocked and upset them.

“I built this business into what it is today,” Tom told them. “I’ve earned the right to make this decision because my decision-making got us here. Besides, I want to see the grandkids more.” As the sale date approached, both of Tom’s children quit to start their own venture together in a related business. When the buyer learned that two key employees were leaving, they told Tom that he would either have to replace them or accept a lower offer. Tom refused to accept a lower offer, but the employees he promoted to fill his children’s roles were incapable of running the business.

As Tom tried to renegotiate, his employees began leaving the company one by one, citing low morale and a lack of commitment from Tom.

The original buyer pulled the offer. Though Tom managed to keep some employees from leaving, the exodus caused company production and value to plummet. His children refused to talk to him or let him see his grandchildren. His wife—heartbroken by what had happened—took their side.

Tom ended up selling the business at age 75 for $3 million. After taxes, he took home just over $1 million. With his family refusing to talk to him and barely enough to survive on his own after a year of poor health, Tom was forced to re-enter the workforce at the company he had sold just a year earlier.

Despite his promises to himself, Tom Poor ended his life living up to his namesake.

Strong Exit Planning Can Help Owners Avoid This Fate

Planning a successful business exit requires different skills than running a successful business. While Tom was a great business owner, he failed to think about what drove business value and what he needed to pursue a successful post-exit life. Consider some of the things Tom neglected to think about:

What he needed for financial security:

Tom simply assumed that $15 million would be enough for him and his family once he left. He was so committed to this assumption that he neglected to see what a big role his children played in achieving financial success and security. Proper planning could have shone light on what the business was worth, the factors that made the business more valuable, and the amount he actually needed to continue being comfortable and protect what he had built.

The fallout of his family’s reaction:

Tom completely disregarded his children’s commitment and desire to run the company. That not only led to the company’s downfall but also prevented Tom from his goal of seeing his grandchildren more often. Comprehensive planning could have helped Tom understand his children’s contributions and how to leverage them, which could have prevented the fallout caused by his lack of consideration.

What kind of legacy he’d leave:

Tom assumed that everyone would welcome his decision to sell the company. Obviously, that wasn’t true. By working through his planning, starting with setting specific and objective goals, Tom could have better considered his legacy and involved his family and employees in the plan differently.

The consequences of a failed sale:

Adding salt to the wound, Tom’s failure to sell the first time was a black mark on the company. When he finally found another buyer, they were only willing to pay a fraction of the original offer price. Because Tom wasn’t prepared for a third-party sale, he suffered financially.

Conclusion

Without a clear, comprehensive, written plan, business owners have little control over their future. Had Tom properly prioritized his goals and planned for all aspects of his company’s future, it’s less likely he would have lost everything that mattered to him. We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notificaiton.

 

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

 

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

As a business owner, you manage all sorts of complexity in your work. Goals, expectations, and the people who help you meet them may change. But even though things constantly change, you can still adapt, thanks to smart and focused business planning. After all, if your company couldn’t adapt to change, it likely wouldn’t be as successful as it is today.

The same ideas apply when you’re planning for your business’ future and the evolution of your relationship to it. Change is often more than just OK—it may be necessary to position yourself to reach your future ownership goals and give your business the best chance to thrive long term. One key to your ability to adapt is a well-formed, written plan.

Comprehensive planning can help you stay focused and flexible as you prepare for your business’ future (and your future with or without the business) by providing you, your family, and the key employees in your company with a road map. While providing this focus, it also gives you the flexibility to change your plan, whether you need to or just want to. Let’s look at some examples of how planning can make change more predictable.

Reasons Why You Might Change Your Plans
Many business owners begin their plan for the future with strong, emotionally driven ideas about their eventual departures. Here are just a few of the more common goals owners focus on as they start their planning journey:

1. I want my children to run the business once I’m gone.
2. I want to get top dollar for my business, but I also want to do right by my employees.
3. I need to exit my business by a certain date so I can start pursuing outside interests.

Each of these goals can be a good place to start the planning process. But consider some of the more common obstacles you’ll likely confront with goals like these.

1. My children haven’t proven they can handle the responsibility of running my business well.
2. The buyer that’s offering top dollar wants to shut down local operations.
3. If I leave on my chosen date, I might have to go back to work in the future to make ends meet.

Without a complete and written plan, these issues might force you to stay in your business far longer than you want to (or can). However, thoughtful planning can help you anticipate and adapt to unexpected roadblocks.

How Good Planning Gives You Flexibility to Change Your Mind
Good planning gives you options for when things don’t go as intended. First and foremost, good planning helps you establish the amount of money you need to become financially secure. Sometimes, owners take for granted how many perks and income streams their business provides them. Once you leave the business, those perks and streams will likely end. Good planning anticipates that and positions you to improve your chances of leaving your business with enough money to pursue what you want in the future without having to go back to work.

A strong and well-rounded plan can also help you develop the people and systems necessary to exit the business on your terms. For example, if you want your children to run the company but they haven’t proven they’re capable, a written development and incentive plan can plot out the timeline and training necessary to get your children ready to run the business by your expected departure date.

Similarly, good planning gives you the flexibility to pivot if your original plans go awry. For instance, your plan may provide time and training to get your children ready to run the business, but your children may still not get the hang of it in ways that allow you to change gears with financial security. A written plan connecting business achievements and financial targets can help you take the next-best course of action by finding the people who can run the business well, while still giving business-active children a role in the future and positioning you to transition on your terms.

Good Planning Provides Options When Initial Plans Go Awry

Just because things don’t go as planned initially doesn’t mean you’ve failed. Instead, good planning can give you more options to succeed on your terms. Typically, change is the only constant in a successful business. Disciplined planning can let you focus on what you want and how to get it, and give you the flexibility to adapt when your initial route isn’t feasible.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

 

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

When planning for the future, you have a wealth of options related to who should continue to run your business. Many business owners’ plans fall short because they are unaware of the many options they have available to them and the pros and cons of each path.

One common exit path is a family business transfer. This allows you to keep the business in the family and still have an attachment to the business. You may not get as much money for this type of transfer and it could take longer to complete, but there may be real benefits as well.

Benefits of a Family Business Transfer

There are many benefits that come along with transferring the ownership of your business to your children or someone else in your family.

Financial Security: If you properly structure the business transfer, you may be able to receive the amount of income you need and want by the end of the transition process. Further, you can design the transfer so that you retain control of your business during the transfer period and until you receive all of the money you want. You might achieve this benefit through ongoing involvement with the company, participation in profits as an owner, and/or sale of ownership.

Time: If you are not ready to leave the business today, you can structure the transfer to the next generation to take 5–10 years, depending on your goals and objectives. You can create a custom transition that addresses the abilities of the successor owners and the readiness of the business.

The timeline for this path gives you time to slow down, develop new interests, and prepare yourself and your business for life after the transfer. It also gives you time to collect income from salary, perks, and distributions while maintaining control.

Taxes: Using a strategy customized to family transfers, you may be able to minimize certain taxes. You might create a balance among income tax, capital gains tax, and gift and estate tax that fully leverages multiple tax planning techniques. You may be able to achieve a better outcome with a thoughtful combination of planning strategies.

Values-Based Goals: Owners often choose to transfer their businesses to children because, if done correctly, it achieves so many of their values-based goals. From the role of the business in the community to taking care of future generations, family business transfers can help to achieve these types of goals in ways that a traditional sale might not.

Challenges of a Family Business Transfer

Although there are some obvious perks to keeping the business in the family, there can be some challenges you need to be aware of before you make your decision.

Financial Security: Basing a business transfer on your family ties, especially ties to someone who can’t or won’t run the business properly, is a huge threat to your financial security and the very existence of your business.

Time: If you want to leave your business within a year, remember that getting paid full value for the company from children generally takes several more years than a sale to a third party or Employee Stock Ownership Plan (ESOP).

Taxes: Without careful tax planning, you could pay far more in taxes than necessary when transferring ownership to your family.

Values-Based Goals: Sometimes family transfers run amok if your goals are not in line with those of your family.

None of these challenges are insurmountable unless you fail to recognize the existence and significance of each and create a written and comprehensive road map to address them.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

 

  

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2021 Business Enterprise Institute, Inc. All rights reserved.

 

It is safe to say that this year was full of surprises. Some businesses thrived, while in other areas jobs were lost, companies were forced to go under, and we even lost loved ones along the way. Many businesses were affected by the pandemic in some way or another. According to a survey conducted by the PNAS (Proceedings of the National Academy of Sciences of the United States of America), 43% of businesses temporarily closed, and nearly all of these closures were due to COVID-191.[1]

We also learned that many small businesses are financially or structurally fragile. Companies were often strapped for cash, even when they had access to temporary government stimulus funds.

Although we may not have been able to foresee and properly plan for this year’s business and family disruptions, there are a few lessons to be learned about planning for the future so that your business can be more flexible and tolerant to change. We saw that responding to tough situations can be a good way to showcase your creativity and motivation to stay on track.

Flexibility is Key

Major changes in the economy, your industry, or your health can happen quickly. Companies that have the ability to turn aspects of their business model and operations on and off more quickly can minimize negative impacts (or maximize positive impacts) of unexpected changes. Remember that it may not be enough to be prepared to change direction in your own mind.  Communication with your employees can keep everyone moving together and smooth out rough spots if you have to change gears.

Having a strong and adaptable team and team leaders will also help with transitions. Industry changes happen often, and sometimes randomly, so having a team in place that is able to think on their feet and come up with creative improvements to the business can help your business thrive even in trying times.

Also, by leasing your equipment, vehicles, office space, and even employees, you can make your business more agile. Hiring contract labor or utilizing outsourced vendors can give you more freedom to make changes quickly. Think of it as adjusting dials in your business rather than locking yourself into fixed or inflexible investments.

Fire Drills Improve Outcomes

It can take valuable time to work through emergency or disaster scenarios, and it can be awkward to “practice” what you’ll do if faced with a major threat or disruption in your business. As awkward as it may seem, fire drills do work. When your team knows what the process is during an emergency or major change of events, they tend to act more calmly and make better decisions when an actual emergency does arise. Work through and document what you will do if:

·     You lose your largest customer or contract.

·     You lose your top executive or manager unexpectedly.

·     Your distribution channels are disrupted.

·     One or more components of your technology stack fails.

The more prepared you are for the unexpected, the better off your company and your employees will be. Don’t let them get thrown off by surprises. Have open communication about what they can expect if a major change happens.

A Belt and Suspenders Work Better

Planning for multiple solutions to a single problem is a good way to manage the impact of a disruption in your business (or in your life). Owners of closely-held businesses often have a lot of their wealth, and their family’s security, tied up in their business. However, the business is often illiquid, or its value may not be enough to support your family for an extended period of time. Owners who prepare for unwelcome changes might be able to use either a “belt” or some “suspenders” to hold up their family, such as:

·     Investing in income-producing assets outside of the business.

·     Reducing company debt (or at least removing yourself from personal guarantees for company debt).

·     Maximizing opportunities for funding retirement through qualified retirement plans.

·     Developing a “sinking fund” in the business.

Having some type of variation of solutions to any given problem can also ease the tension you or your family might have about the unknown future ahead of you. Preparation for the worst will only benefit the business down the road. You can truly never be too prepared.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

[1] https://www.pnas.org/content/117/30/17656

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

  

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Starting the preparations to sell your business is never easy. Selling or buying a business comes with mixed emotions and hard decisions. There are a lot of variables to consider. One action item to discuss early is the process of due diligence. In order for you to attract a buyer to your company, you must engage in the pre-sale due diligence process well before your anticipated departure date.

No experienced buyer purchases a company without first learning everything there is to know about it. This investigation process is known as “due diligence.”

What is Due Diligence

Due diligence is the process in which a buyer scrutinizes every detail about your company, from financial reporting to earnings confirmation, to human resources practices, looking for risks, flaws, opportunities, and ways to justify a reduction in the purchase price they pay. Simply put, this is the buyer’s thorough investigation of every aspect of your business.

Due diligence is like an audit, or review, performed to confirm the facts of a matter under consideration. In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party.

So, when we talk about pre-sale due diligence, we mean the detailed investigation of your own company, performed by your own team, done well before you take your company to market.

What to Expect

Time rarely favors the seller, so it is in your best interest to start the pre-sale due diligence process early. The actual internal investigation itself typically takes between 30 and 60 days. But, as a seller, if you uncover information about your company that will influence the purchase price, you want to have time to fix those issues before the company goes on the market. You might want months, or even years, to make changes and set up new trends.

By discovering not only the strengths, but also the weaknesses of your company before undertaking the sale process, your advisors can focus on making the company more valuable. In some cases, pre-sale due diligence uncovers significant “repairs” that must be made to increase value or decrease risk. Maintenance and repair activities designed to make the company more valuable may include hiring key management, eliminating overhead, delaying (or accelerating) the purchase of significant capital equipment, resolving shareholder disputes, cleaning up employee records and policies, clearing bad debt, and so on.

There may be several parties involved in pre-sale due diligence: your lawyers, accountants, financial advisors, transaction representative (broker or investment banker), and administrative staff. Eventually your buyer’s team will have the same types of players, or even more of them. With so many people involved, it may be best to get organized to avoid any confusion throughout the process.

You and your advisors may need to clean up current and historical financial statements, contracts, customer accounts, ownership records, governing documents, leases, or threatened claims or lawsuit before you take your company to market. Buyers are looking for each and every skeleton, big or small, and they will find them. The buyer is looking for anything they can use to lower the price they pay for your business. Don’t let them find anything. Lay everything out and work on improving any weaknesses before potential buyers get the opportunity to use this information against you.

Perks of Planning Ahead

Planning and starting the due diligence process well in advance can have several perks for your business. Starting the pre-sale due diligence process may save you time and money in the long run. Uncovering your skeletons and working to fix them early can protect and could even potentially increase the purchase price of your business. This process can also protect your goals and your team: your co-owners, key employees, and family.

Through the process, members of your advisor team can come to know and understand your company as well as you do—and far better than a potential buyer. This understanding can enable your transaction advisor to prepare and share information with potential buyers in a way that highlights the strengths of your business.

If you plan to sell your business, you will have to go through this process one way or another. So, you might as well start early and figure out areas of the business you can improve now before you put the business on the market.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notificaiton.

 

  

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2020 Business Enterprise Institute, Inc. All rights reserved.

It can be difficult to consider what will happen to your business and your family if you die unexpectedly.  Without proper planning, you could be leaving your family and/or key stakeholders in a huge mess. Proper planning allows you to keep your business on the right path even after an unexpected tragedy leaves you unable to continue running your business.

Estate plans focus on transferring assets upon an owner’s death. A successful estate plan achieves three important personal goals:

  1. Financial Security: For the decedent’s heirs.
  2. The Right Person: The decedent (rather than the state) chooses who receives his or her estate assets, including ownership of the business.
  3. Estate Tax Minimization: Reduces the government’s bite, leaving more funds for the decedent’s heirs, when estate taxes are a factor.

Estate planning can also be a tender topic for business owners because they will occasionally need to decide which family member is the most appropriate candidate to continue running the business after their death. Families have been torn apart over poorly executed estate plans. Consider the hypothetical example below.

Jonah Kaczmin sat nervously in his office. Until the day before, he had been president of Kaczmin’s Electronics, one of the region’s largest electronic component distributors. Now he was on his way out of a job and felt he was a victim. Naturally, his first thought was to sue those responsible for his misfortune. The targets of his wrath were his younger sister and his mother. They had forced him out of the business, out of a job, and felt he was a victim.

After his father’s death, Jonah had received 49 percent of the stock in the family business. Another 49 percent share went to his sister. The remaining two percent—the swing vote—was held by their mother.

Jonah’s father had brought him into the business early and taught him well. After the founder’s death, Jonah assumed all responsibilities for sales and became the key man in the business. His sister, Stella, handled the bookkeeping and other administrative matters. Her husband managed the customer service department. 

Despite the economic slump that hit the region, the business persevered under Jonah’s stewardship. It had a long-standing tradition of service and good name identity because the elder Kaczmin had pioneered new packaging and distribution methods.

Because of his dedication to the business, Jonah had not spent much time nurturing family relationships. He was less a devoted son to his mother than was his sister a devoted daughter. As their mother aged, she became increasingly susceptible to the influences of her daughter. Family friction continued. A confrontation was inevitable.

Jonah had always assumed that his superior abilities and position as president and board chairman would enable him to win any family showdown. He was wrong. At a special meeting of the board of directors, Jonah was removed from his posts, fired as an employee, and given three months of severance pay—after 25 years in the business.

Johah naturally felt victimized…but not so much by his sister and mother as by his deceased father. By failing in the most important remaining task in his life—to plan his estate and the future of the business—the elder Kaczmin made his son an unintended victim.

Jonah’s unfavorable business transition experiences may have been avoided had Jonah’s father asked and answered six critical questions.

  1. How can I provide for an equitable distribution of my estate among my children?
  2. Who should control and eventually own the family business?
  3. How can I use my business to fuel the growth of my estate outside of my business interests?
  4. How do I provide for my family’s income needs, especially those of my spouse and dependent children, after my death?
  5. How can I help preserve my assets from the claims of creditors during my lifetime and at my death?
  6. How can I minimize estate taxes?

An owner’s thoughtful answers to these questions, followed by appropriate implementation of a plan, may well prevent a similar experience in your family and support a smoother business transition for all parties involved.

Keep in mind that a well-crafted estate plan is only one key element of a successful plan for you, your family, and your business. Don’t let an unattended estate plan be the weak link in your overall plan.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

Keep Your Family Intact with Proper Estate Planning

It can be difficult to consider what will happen to your business and your family if you die unexpectedly.  Without proper planning, you could be leaving your family and/or key stakeholders in a huge mess. Proper planning allows you to keep your business on the right path even after an unexpected tragedy leaves you unable to continue running your business.

Estate plans focus on transferring assets upon an owner’s death. A successful estate plan achieves three important personal goals:

1. Financial Security: For the decedent’s heirs.

2. The Right Person: The decedent (rather than the state) chooses who receives his or her estate assets, including ownership of the business.

3. Estate Tax Minimization: Reduces the government’s bite, leaving more funds for the decedent’s heirs, when estate taxes are a factor.

Estate planning can also be a tender topic for business owners because they will occasionally need to decide which family member is the most appropriate candidate to continue running the business after their death. Families have been torn apart over poorly executed estate plans. Consider the hypothetical example below.

Jonah Kaczmin sat nervously in his office. Until the day before, he had been president of Kaczmin’s Electronics, one of the region’s largest electronic component distributors. Now he was on his way out of a job and felt he was a victim. Naturally, his first thought was to sue those responsible for his misfortune. The targets of his wrath were his younger sister and his mother. They had forced him out of the business, out of a job, and felt he was a victim.

After his father’s death, Jonah had received 49 percent of the stock in the family business. Another 49 percent share went to his sister. The remaining two percent—the swing vote—was held by their mother.

Jonah’s father had brought him into the business early and taught him well. After the founder’s death, Jonah assumed all responsibilities for sales and became the key man in the business. His sister, Stella, handled the bookkeeping and other administrative matters. Her husband managed the customer service department. 

Despite the economic slump that hit the region, the business persevered under Jonah’s stewardship. It had a long-standing tradition of service and good name identity because the elder Kaczmin had pioneered new packaging and distribution methods.

Because of his dedication to the business, Jonah had not spent much time nurturing family relationships. He was less a devoted son to his mother than was his sister a devoted daughter. As their mother aged, she became increasingly susceptible to the influences of her daughter. Family friction continued. A confrontation was inevitable.

Jonah had always assumed that his superior abilities and position as president and board chairman would enable him to win any family showdown. He was wrong. At a special meeting of the board of directors, Jonah was removed from his posts, fired as an employee, and given three months of severance pay—after 25 years in the business.

Johah naturally felt victimized…but not so much by his sister and mother as by his deceased father. By failing in the most important remaining task in his life—to plan his estate and the future of the business—the elder Kaczmin made his son an unintended victim.

Jonah’s unfavorable business transition experiences may have been avoided had Jonah’s father asked and answered six critical questions.

1.  How can I provide for an equitable distribution of my estate among my children?

2. Who should control and eventually own the family business?

3. How can I use my business to fuel the growth of my estate outside of my business interests?

4. How do I provide for my family’s income needs, especially those of my spouse and dependent children, after my death?

5. How can I help preserve my assets from the claims of creditors during my lifetime and at my death?

6. How can I minimize estate taxes?

An owner’s thoughtful answers to these questions, followed by appropriate implementation of a plan, may well prevent a similar experience in your family and support a smoother business transition for all parties involved.

Keep in mind that a well-crafted estate plan is only one key element of a successful plan for you, your family, and your business. Don’t let an unattended estate plan be the weak link in your overall plan.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

 

  

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

 

Copyright © 2020 Business Enterprise Institute, Inc. All rights reserved.

Next-level management teams are the drivers behind building business value. But how can you and your advisors attract and keep next-level management teams? The answer lies within incentive plans.

When incentive plans are properly designed and implemented, your business has the potential to grow well after you sell. Well-executed incentive plans can motivate each member of your management team to measurably increase the value of your company.

It is recommended that incentive plans only reward key employees if the business value and/or cash flow increases by a predetermined amount each year. Each incentive plan should be customized to each key employees’ role and responsibilities and incorporate these four basic elements:

1. Set performance standards that are tied to increasing the value/cash flow of the business necessary to meet your goals.

2. Create specific, attainable standards.

3. Implement substantial incentives and rewards if targets are met.

4. “Handcuff” your key employees, so to speak, to make the incentives so appealing that they are encouraged to stay with the company until goals are achieved.

Many owners create incentive plans or bonuses for their key employees so that key employees cannot obtain the bonus unless they stick around for a certain amount of time. This way, you can increase the chances that once the business is sold your key employees stay and continue to grow your business. This strategy “handcuffs” employees to the business by giving them greater access to compensation benefits the longer they stay. Having these types of plans in place may also increase the likelihood of a sale because potential buyers love to see trusted employees motivated to stay on and continue to grow the business.

Understand what motivates your employees. It might not only be a bonus of some kind. Think about promotions or other rewards. Are they interested in equity or cash? If your employees are not motivated to achieve their rewards, the incentive plan may become ineffective. The plan also becomes obsolete if the standards don’t increase the value of the business.

Consider these various forms of incentive plan alternatives:

·     Non-Qualified Deferred Compensation plans with incentive-based benefit formulas

·     Stock Appreciation Rights plans

·     Phantom Stock plans

·     Cash bonuses (current and deferred)

·     Stock bonus plans

·     Stock option plans

·     Stock purchase plans with or without minority discounts

Each of these types of plans has its own strengths and weaknesses. The lesson here is that there are a variety of types of incentive plans to choose from.

Building a Plan

There are a few basic steps to follow when developing the right incentive plan. First and foremost, back up a step and identify your asset gap. By determining where you are today and where you want to be, in terms of business value, you can start establishing some goals, and then you’ll design an incentive plan that is intended to help you meet those goals on your desired timeline.

Create personal and professional goals. Obviously, you will want to plan for the success of your business but making plans for your personal life after you leave the business will also help provide clarity to you and your team.

Build and train your management team to be trusted enough to grow the business after you leave. Ensure they have the ability, expertise, and most importantly, willingness, to grow the business at the rate necessary for you to achieve your goals and objectives.

Finally, uncover how you can utilize your management team to help you achieve these goals. Create effective incentive plans to increase business value and motivate your employees. Incentive plans not only benefit the key employees, but if designed correctly, they can benefit you as well as the new owner and the business well into the future.

No matter whom you choose as your successor, capable management that stays with the company after an owner’s departure is an important element for a successful future.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notificaiton.

 

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

Copyright © 2020 Business Enterprise Institute, Inc. All rights reserved.

Dear Pennsylvania Insurance Department Licensee,

You are receiving this notice because your Pennsylvania Insurance license is scheduled to expire within the next 60 days.  Please refer to your license for your specific expiration date.  In response to the COVID-19 spread in the Commonwealth and pursuant to 40 P.S. 310.8(e), the Pennsylvania Insurance Department is extending the licensing renewal deadline until further notice.

We encourage you to take advantage of our online resources to renew your license. You can renew your license electronically at www.sircon.com/pennsylvania or www.nipr.com.

Please note: If you are unable to renew your license by the license expiration date, any and all renewal requirements, including CE, are still applicable and the Department will work with licensees once COVID-19 has been contained to meet these requirements.

While the Department strongly encourages licensees to take advantage of online continuing education (CE) courses, we understand that at this time, the circumstances related to COVID-19 may prevent some licensees from being able to complete CE requirements in time for their license renewal. Therefore, until further notice, the Commissioner of the Commonwealth, pursuant to 40 P.S. 310.8(e), will temporarily waive CE requirements for licensees who cannot meet requirements due to extenuating circumstances related to COVID-19.   For licenses requiring CE, visit www.sircon.com/pennsylvania for information about approved online CE courses.

If you have already submitted a renewal application, please visit www.insurance.pa.gov/licensees/onlineservices to use our online licensee search to verify that your license has been renewed or print a copy of your license.  Please allow up to 24 hours for the website to update after renewing your license online.   The Department no longer mails licenses.

This email serves as your official license renewal notice, and you will not receive a paper invoice. The Department encourages all licensees to update your contact information including email addresses through Sircon or NIPR to ensure that you continue to receive future correspondence from the Department.

For additional updates and information visit the Pennsylvania Insurance Department’s website at www.insurance.pa.gov.

 

Office of Market Regulation | Bureau of Licensing & Enforcement | Licensing Services Division

1209 Strawberry Square | Harrisburg, Pennsylvania 17120

Phone: 717.787.3840 | Fax: 717.787.8553 | www.insurance.pa.gov

Taking on any large project can be manageable when you have a reliable process in place. When deciding to exit your business, for example, you will need a proven process in place to ensure you have covered all the bases.

Just like baking, without following the specific process or recipe, you could end up setting off the fire alarms. There is a “recipe” for creating a successful business transfer. The “recipe” below has worked, time and time again, for business owners who are looking toward the future. However, different ingredients in your recipe can change the outcome. Each business is unique and requires slightly different “ingredients” to plan for a successful future ownership transition. You can add these ingredients in any order that you want based on your top priorities, but if you leave out any of the following ingredients you could end up with a vastly different outcome.

First Ingredient – Establish Your Objectives

This first planning step is similar to the eggs in the recipe for the “planning cake” you are baking. This keeps the whole plan together. Without goals and objectives to strive for, your plan will fall apart.

Make a list of your goals and objectives (personal and professional). You may have several business objectives, including some of the following:

·     How you (and your spouse, if active in the business) define financial independence.

·     How you and your spouse define “fairness” regarding distribution of family wealth (including the business) among children if you are considering an inside transfer.

·     When you (and your spouse, if active in the business) want to leave the business and transfer control according to a timeframe you set.

Second Ingredient – Determine the Company’s Value and Cash Flow

This could be considered the flour of the cake you are baking. This is the foundation of how your business will be run. It may fluctuate over time, but you want to gradually keep adding this ingredient throughout the lifecycle of the business.

In addition to knowing what you want (ingredient 1), you must know what you have (the value of your company) before you can plan for the future. You must determine the gap between what you have today and what you need to have by the time you are ready to part with your ownership interest. Determine a baseline value. Get an accurate representation of your business and personal resources. This measurement, along with a professionally reviewed estimate of future cash flow, will give you a more accurate timeline.

Third Ingredient – Build Business Value

The third step in this process could be considered the milk, butter, and spices of your baked treat. This is what really gives your cake flavor.

Once you know what you want (ingredient 1) and what you have (ingredient 2) you must think about how you can motivate key employees to maintain or increase the value of the company before, during, and after a transition. A well-designed incentive plan is a great tool to encourage key employees to continue to grow your business. You want to be sure your business is worth something and can run efficiently after the transition of ownership.

Fourth Ingredient – Ownership Transfers

This ingredient is like deciding if you want chocolate or vanilla frosting on your cake. The succession path that you choose for your business and your family is ultimately your decision. There are a lot of variables to consider when deciding between an inside sale or a sale to a third party.

When considering a sale to a third party, you must thoroughly evaluate your risk profile, business value, and the management team you have in place to help the buyer continue to grow the business. The key to this ingredient is making sure that both you and your business are prepared for the sale process well in advance of the day you go to market.

In contrast, when the plan is to transition ownership to an insider (co-owner, family member, or employees), your attention is more focused on planning the method and the timing of the transfer of ownership. This can include gifting, incremental sales, or even a plan to hold onto ownership for some period of time

Fifth Ingredient – Business Continuity Planning

The fifth ingredient can be compared to making sure you have back-up ingredients, or even a back-up bakery, in case anything goes wrong. This is the step most owners take to plan for the unexpected. Many people fail to create a back-up plan because they assume their baking skills are flawless and everything will just work out.

It is critical to make contingency plans for what will happen if you die suddenly or become severely ill before the transfer can be completed. You may need to make arrangements for the financial well-being of your family. You may need to talk to those you’ve planned to run the company if you are not able to do so.

Sixth Ingredient – Personal Wealth and Estate Planning

This ingredient can be compared to all of the planning you’ll do to make sure everyone involved enjoys the cake. Where will you get together? Do you have plates and forks? How will the cake get from your kitchen to the party?

A key goal of estate planning is to make sure that, whether you own your business at your death or not, the ownership of your business or the value you received for it, along with all of your other assets, are transferred when and to whom you see fit. You may need to plan for your family’s standard of living to be maintained. You may need to address fairness and/or equality among your heirs. You may wish to do something for charities you care about.

Process is Everything

Process is everything when it comes to long-term planning. Following a process to complete any large task can help any project flow smoother, especially when a process is proven to work. Implementing elements of each of these ingredients to your plan can significantly impact your planning process.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notificaiton.

 

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

 

When you started your business, it was probably obvious that you needed a plan. It may be less obvious, though, that when you leave your business, no matter how you do it, you’ll also need a plan. The reality is that every action you take during the life of your business has an impact on your departure down the road.

Getting Full Value

No matter who you decide will be your successor in the business, you will most likely want to build value in your company. Third-party buyers or investors will tend to look at objective, quantifiable facts when deciding how much to offer for your business. Employees, family members, and co-owners will want to feel confident that they are taking over a healthy and stable enterprise.

Buyers compare the relative strength of your company’s value drivers to those of your competitors. They commonly look at all of the characteristics to ensure your business is a well-managed operation.

Businesses that plan ahead to build their value drivers early may carry less risk. Being deficient in just one or two value drivers can impact business value or deter potential buyers. This realization may come as a shock to many business owners. Even if the business is profitable, they may have overlooked some important value drivers.

This Process Takes Time

Implementing strong value drivers is one thing. Having the ability to sustain and grow each area over time can demonstrate the strength of your business and the potential growth it represents. Buyers may also want to confirm that a company’s value drivers are not temporary or short-term. By demonstrating the strength and stability of the value of your company, you may be able to boost your sale price, streamline your exit process, and find the right successor on your timeline.

We know change takes time and results can fluctuate over the years. Buyers keep this in mind and can appreciate steady growth. It’s a good idea to keep your value drivers in check and constantly review your progress years before you think about selling. The idea behind a value driver is that it can improve cash flow, expand your competitive advantage, and/or grow your business.

Bonus Perks

Not only can enhancing the value of your business greatly assist your exit strategy, but it may also help you in other ways. When unforeseen circumstances arise, you won’t need to worry as much of the health of your business with strong drivers in place. Unexpected changes may not shake your company’s performance. Value drivers that cause the business to run more efficiently can also give owners more time in their days.  Finally, when you concentrate on improving your company’s value drivers, you may find yourself exploring strategies that you may have otherwise ignored, such as growth through acquisition.

Common Value Drivers

Consider the following important value drivers common to many industries and some ways you might leverage them.

A Stable and Motivated Management Team

You may benefit from an incentive compensation system that is either cash or stock-based, and rewards key employees based on how the company performs (usually measured by increases in pre-tax income).

Operating Systems That Improve Cash Flow Sustainability

Investigate technology stacking options that streamline and connect different systems and processes, with integration that can allow you to demonstrate to a buyer that the business can continue (and grow) profitably after the sale.

A Solid, Diversified Customer Base

It may be possible for you to expand geographically or purchase the customer list of a competitor that is closing its doors.

A Realistic Growth Strategy

Develop a written plan describing future growth and how that growth will be achieved based on industry dynamics, increased demand for the company’s products, new product lines, and other expansion plans. Then share the plan with a trusted advisor or investor who can help you identify weaknesses in the plan so that it can be improved.

Effective Financial Controls

Upgrade to audited financial statements to get the scrutiny of trained professionals. Alternatively, engage an independent firm to conduct a quality of earnings report, verifying the sources and consistency of your income.

Stable and Improving Cash Flow

Ultimately, all value drivers contribute to a stable and predictable cash flow. It is important that your company’s cash flow remains substantial and continues to grow, especially in the two or three years preceding the sale of the business. You can begin working to increase cash flow today by identifying ways to operate your business more efficiently by increasing productivity and decreasing costs. Many business owners find that eliminating their least profitable products or services can free up attention and capacity for more profitable areas.

Installing value drivers in your company might be one of the best things you can do to increase the salability of your company but doing so takes time. The clock is already ticking!

We strive to help business owners identify and prioritize their objectives concerning their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notificaiton.

 

KAFL Insurance Resources
800 Linden Ave
Rochester, NY 14625
www.kafl.com
585-271-6400

 

Succession planning, Exit Planning, and business planning may seem interchangeable in most people’s eyes. However, each type of planning plays a very different role in the process of designing, and then implementing, a strategy for leaving your business and planning for the future. You can’t use one strategy without the others when it comes to running, growing, operating, and eventually leaving a business.

These planning approaches go hand in hand. Although they have their similarities and overlap in some ways, there are some major differences you may want to think about in order to plan effectively for your future and the future of your business.

Succession Planning

Succession planning has become a common term to most business owners. This type of planning strategy is primarily focused on the transfer of leadership, management, and/or ownership of a business from one person to another. This strategy usually encompasses the identification of potential successors and the training of the chosen successor to build the skills and expertise to successfully run the business once the original owner decides to back away or move on.

Succession planning also emphasizes the timeline for when an owner is planning to part with their business. The succession planning process could take years, depending on the availability of successor candidates, business valuation, profitability, current management team in place, incentive plans, etc.

The main difference between succession planning and Exit Planning is succession planning primarily focuses on the smooth transition (succession) of the operation of the business. A primary goal of succession planning is to find the right person to take over your business and make sure the process of leadership transfer go smoothly. Succession planning may primarily focus on the goals and objectives of the business and may not be as focused on the owner’s personal goals for the future.

Exit Planning

Exit Planning can be considered a broader approach to planning for the future. Although one of the main goals of Exit Planning is to ensure a seamless transition from one leader to the next in the business, this approach also considers the future plans of the  owners for themselves and their families. Exit Planning considers a business’s financial status, the valuation of the business, the position in the market, employee benefits, and the owner’s family as well as the community in which the business is operated. It tries to identify the gap between what a business owner has today, and what they want for the future. It really is a full picture of all factors that affect a future change in your relationship to your business. This process encourages planning for everything so that when you are ready to leave your business, you’ve worked through as many factors as possible.

Although each owner’s exit strategy is going to be unique, typically each plan consists of some or all of the following 7 steps.

  • Step 1: Identify Owner Objectives
  • Step 2: Quantify Business and Personal Resources
  • Step 3: Maximize and Protect Business Value
  • Step 4: Prepare for Ownership Transfers to Third Parties
  • Step 5: Prepare for Ownership Transfers to Insiders
  • Step 6: Manage Business Continuity
  • Step 7: Support Personal Wealth and Estate Planning

Business Planning

Business planning can refer to the overall plan of how you run and operate your business. This is commonly a strategy most business owners use throughout the lifecycle of their business, from the very start to the day they consider selling the company. Your business plan is a living and growing document. It is often going to be focused on how your business will approach and succeed in its chosen market. It probably looks at how you’ll be profitable in your chosen lines of products and services. It may be reviewed regularly to be sure you are meeting your company goals. Having a solid business plan can play a role in your succession and your exit. The more detailed the business plan you have in place, the easier it may be to advance a succession and exit.

Conclusion

A well-run company always has a plan in place. The planning processes never ends. Your business plan can help ensure the success of the business in its entirety and can eventually provide support for your future plans, including succession and Exit Plans.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

While there are many uncertainties when planning for the future, one factor that is almost always essential to the success of your future plans is cash flow. Measuring your company’s cash flow and knowing what aspects of your business can be affected by the health of your cash flow are even more crucial in today’s economy. Having an accurate representation of your cash flow can also make or break your plans for the future, including any ideas you might have about backing away, transitioning ownership, delegating management responsibility, or an outright sale of your business. Since you can’t escape the impact of cash flow, you might as well take it head on, right?

What is Cash Flow

While there are many ways to think about cash flow, the concept that might work for business planning purposes is free cash flow. Free cash flow is the portion of the annual net cash flow from operating activities that remains available for discretionary purposes after the business has met its basic financial obligations. In this discussion, the “discretionary purpose” could be any anticipated use of cash flow to support the business or personal goals and objectives of the owners of a closely-held business. So, free cash flow might be supporting new initiatives, return on investment for current or new owners, cash-based incentive compensation plans, or the buy-out of one or more owners. In other words, cash flow can be described as the engine that powers your plans for the future.

Importance of Cash Flow

Cash flow is so essential because it impacts just about every aspect of your current and future business operations and planning. Cash flow can affect the value of your business, the magnitude of risk associated with the business, and the business’ ability to manage debt or fund growth.

As much as we don’t want to admit it, cash flow is the lifeblood of a company. Owners must understand —and be able to measure —where cash comes from and where it goes. It is an accurate indicator of the financial health of your business. Unlike more subjective measures, it makes no assumptions and entertains no preconceptions.

3 Ways to Reboot Your Cash Flow Strategy

  1. Assess Billing and Collections Practices – It may be time to do a complete review and overhaul of your customer relationships, invoicing practices, collections policies, discount policies, and credit policies for your customers. You may find that your cash flow pipeline has many small leaks that, once plugged, can impact the stability and predictability of your cash flow.
  2. Rethink Spending and Financing – Right now businesses are revisiting business priorities and expenses in ways that they did not anticipate as recently as last year. Changing from owning to leasing equipment and facilities, renegotiating pricing or terms with suppliers, and taking advantage of widespread changes in the way businesses operate and interact can lead to big savings. You may have leverage or bargaining power that you haven’t had in the past.
  3. Put It in Writing – Ultimately, we are talking about free cash flow because good business planning requires a constant eye toward the future and what you want it to look like. Thinking through your priorities for the future, and how they may have changed, can allow you to rebalance your use of free cash flow to best suit your goals as they stand today. Business planning shouldn’t be a static process in which you set your course and then just assume you’ll arrive at your destination. Frequent course corrections are often necessary to finally reach your targets. A short, written, prioritized list of your priorities and how you’ll use your current and future cash flow to support them, is a tangible way to visualize your plans for the future.

Keeping Your Eye on the Ball

You may be putting out fires and managing unexpected crises more frequently now than in the past. But you also know how important it is to look to the future and make decisions that you believe will help achieve your long-term goals. It’s possible to do both.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

KAFL is committed to helping our partners navigate these challenging times. Whether it be new legislation or executive mandates, we are dedicated to ensuring your clients have the long-term protection they need, now and in the future. Here’s a great resource from one of our carrier partners, Bernie Portal, on how to safely re-open your business. Click here for information.

 

Guidance to Insurance Producers Regarding Required Notifications to Policyholders

Pursuant to Governor Andrew Cuomo’s Executive Order 202.14, on April 7, 2020 the Department of Financial Services issued Emergency Regulation 62, which states in part that insurers “…shall extend the period for the payment of premiums to the later of the expiration of the applicable contractual grace period and 11:59 p.m. on June 1, 2020 for any individual, small group, or student blanket comprehensive health insurance policy, for any policyholder or contract holder who can demonstrate financial hardship as a result of the COVID-19 pandemic”.

Insurance producers are required to provide notification to policyholders by April 21, 2020, which represents 10 business days from the regulation was issued.  You may access a sample notification here.

Article information provided by NYSAHU. Disclaimer: The content of this message is for informational purposes only, and is not intended to provide legal advice.  You should contact your legal counsel for legal guidance.

All business partnerships eventually come to an end when one or more partners leave the business, whether by choice or otherwise. Being prepared for the end of the partnership decreases the possibility of unwanted challenges between co-owners down the road.

Common Reasons Why Partnerships End

Co-owners share a unique relationship. They have built a company together, sometimes out of nothing. They have been through the good times and the bad, working diligently to keep their company thriving.

Partnerships between co-owners, like any relationship, change over time. Partners can grow apart; goals and visions can change. Co-owners may have different financial situations or targets. The ways in which they intend to take care of their families in the future may differ. Partners may be on different timelines due to age, health concerns, or personal interests. And of course, one owner may become disabled or die unexpectedly. The reasons for a partnership to end vary widely. Being prepared for any of these scenarios is crucial.

Ways to Limit Co-Owner Friction

Being prepared for the worst can significantly ease tensions between all parties involved, both today and at the end of the partnership. There are several things to keep in mind when attempting to limit friction between co-owners.

Retirement Needs Analysis

Consider how much each co-owner will want (or need) on the day he/she leaves the business. Each owner should understand what the value of the company is today, where the company will need to be when each owner decides to leave, and how much an owner will need or want to sustain their life after their departure. This is a combination of each owner separately reviewing their personal financial situation, as well as a cooperative effort to understand the current and expected future value of the business. Once these are known, owners can work together to plan now for the various possible ways each may leave the business in the future.

Risk/Liability Assessment

Each co-owner cares about the potential risk or liability associated with the business after a co-owner departs. The departure could impact the company. There may be a risk that employees loyal to that owner may also leave. Customers may feel anxious when an important partner departs. Sales may lag. The risks following the departure of an owner are different for every business. Identifying them now and putting measures in place to minimize these risks can make all the difference.

Ownership Agreements

Owners are sometimes caught off guard by an unexpected need to buy out a co-owner. Whether that co-owner has decided to retire or has recently passed away, conflict may arise about who will buy the ownership interest, how it will be valued, and what rights it includes. If the business is likely to experience a disruption at or after the departure, concerns may be magnified. Insurance to buy out a co-owner may not be available, or if it’s available it may not be enough. Disagreements and financial challenges can distract owners and cause the business to suffer. A carefully constructed and regularly reviewed ownership agreement (also called a buy-sell agreement) can address most of these issues in advance in a way that all owners (those who later leave and those who stay behind) believe is fair.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial advisor. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial advisor. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notificaiton.

Please note that the Department of Financial Services (DFS) has posted guidance to insurance producers to accommodate electronic delivery of notices (and relieve them of the requirement to mail or deliver such notices) pursuant to DFS’s March 30, 2020 Emergency Regulations that created new 11 NYCRR § 229.5(b) and 3 NYCRR § 405.6(b)(4).  The guidance is available on DFS’s website at https://www.dfs.ny.gov/industry_guidance/electronic_notice_obligations.

Additionally, to facilitate such notifications, DFS has posted model notices linked at the bottom of the guidance described above that the producers who have not yet sent notices may use.  The text of the model notice for holders of life insurance policies or annuity contracts can also be found at the bottom of this email.

PRODUCERS MUST SEND THE APPROPRIATE NOTICE TO THE APPROPRIATE CONSUMERS TO AVOID CONFUSION 
PRIOR TO 4/10/2020

Template for Policyholders

 

As a result of the COVID-19 outbreak, DFS understands that it may be challenging for certain producers to obtain the requisite number of continuing education credits in advance of their license expiration dates.  As a temporary accommodation, DFS will suspend the expiration of licenses for all individual producers for the next 60 days and waive any late fees resulting from, and accruing during, this suspension period.  At the end of this 60-day period, all licenses that would have expired but for this circular letter will automatically expire unless the producer has submitted a license renewal application, including completion of all necessary continuing education credits, before that date.  Furthermore, DFS will suspend the requirement that a monitor be present to complete producer continuing education and pre-licensing course exams online during this 60-day period.  Except as provided in this circular letter, all licensing requirements, including those relating to continuing education, will continue to apply.

Please direct any questions regarding this circular letter to insurance.covid19@dfs.ny.gov.  Producers are also encouraged to visit www.dfs.ny.gov for periodic updates related to licensing requirements.


March License Renewal and
Insurance License Reinstatements

 

The Commerce Department is providing temporary, emergency relief in regard to March license renewal and insurance license reinstatements.

Renewals. The March 31, 2020, deadline for insurance producers and adjusters to comply with renewal requirements is delayed to April 30, 2020.

Individuals who are due to renew a Minnesota insurance producer or insurance adjuster license by the end of March now have until April 30, 2020 to complete all renewal requirements, including continuing education hours and the required application and fee. These renewal applications can be submitted anytime between now and 11:59 PM Central time on April 30.

Reinstatements. The deadline for producers and adjusters to reinstate a lapsed license without having to retake and pass the written examination by paying twice the unpaid renewal fee is also delayed. Individuals seeking to reinstate will be able to reinstate but are still responsible for paying double fees in order to do so.

Individual questions are best directed to licensing.commerce@state.mn.us. Commerce staff are responding as soon as possible to written inquiries from all regulated license types.


Amended Special Notice to Oklahoma Insurance Professionals|
March 20, 2020 (updated April 3, 2020)

To: All licensed Insurance Professionals

From: Oklahoma Insurance Department- Licensing Division

The Oklahoma Insurance Department, led by Commissioner Glen Mulready, has closed both the Tulsa and Oklahoma City office locations to the Public​.  The Licensing Division is currently utilizing our telecommute policy and maintaining daily operations regarding the review and processing of license requests and changes.  Our availability by phone may be limited at times while we prioritize applications, incoming emails and other requests, but we do have Division staff working every day to minimize the effects of the current public health situation.

At this time, the Governor has issued Amended Executive Order 2020-07 which orders:

“All occupational licenses issued by any agency, board, or commission of the State of Oklahoma that expire during this emergency shall be extended so long as this Order is in effect. All occupational licenses extended during this Order will expire fourteen (14) days following the withdrawal or termination of this Order.” 

You can view that order by clicking here: https://www.sos.ok.gov/documents/executive/1916.pdf

The Oklahoma Insurance Department is temporarily extending the deadline for continuing education requirements to the fourteenth (14th) day following the withdrawal or termination of Governor Stitt’s Amended Executive Order 2020-07.

With advancements in technology and a move by the Department to all paperless procedures several years ago, this current situation will cause minimal internal setbacks to the renewal process of current licensees.  Licensees can take CE classes online, view their transcripts online and renew electronically through the NIPR.

In order to assist Oklahoma licensees with completing their continuing education requirements, the Oklahoma Insurance Department is temporarily allowing Oklahoma Continuing Education Providers the ability to offer courses that are approved for the classroom course method as webinars until May 1, 2020.  In order to qualify for this allowance, the CE Provider can e-mail Education@oid.ok.gov  to request the form required for approval of this special allowance.  If you are a licensee, please contact your Provider directly to discuss changes to any courses you may have scheduled in advance.   You can view the current course catalog by clicking the following link:

https://www.oid.ok.gov/licensing-and-education/course-or-provider-lookup/

​Prometric, Oklahoma’s Examination Provider, has advised they have suspended operations at all national testing centers, including all locations here in Oklahoma.

You can view their statement here:  PROMETRIC  or by reviewing our website www.licensing.oid.ok.gov

We understand the delays this will potentially create with employers. At this time alternate examination options are being considered.  This situation is very fluid and alternate avenues are being discussed to determine the best approach to keep business moving during this time of wide-spread uncertainty.   We are actively working with the NAIC, NIPR and other state regulatory departments to monitor this situation and implement changes to normal processes and procedures when deemed necessary.

The mission of the Oklahoma Insurance Department is to protect and enhance the financial security of Oklahoma and Oklahomans. Additional notification will be provided to all licensee’s as the situation evolves.  Thank you in advance for your patience and understanding as we all work together to minimize delays and hardships to our licensees and the industry while still providing the protections needed to Oklahoma Consumers.

Oklahoma Insurance Department
Licensing Division
400 NE 50th Street
Oklahoma City, Oklahoma 73105
405.521.3916 phone
www.licensing.oid.ok.gov

To Our Advisors, Clients and Partners,

Your health and well-being and that of our employees is of the utmost importance to us.

Like you, we are continuously monitoring the latest reports from the Monroe County Health Department, NYS Department of Health and the CDC.  We have taken a number of precautionary measures to protect your health and well-being and that of our employees.

In our efforts to continue to provide you with excellent service, we are currently maintaining normal business hours of operation from 8:30am to 5:00pm.  Our team is however prepared to work remotely if required to by the state authorities and CDC.  We are taking the necessary precautions to protect our team, including extra cleaning and preventive measures, travel restrictions and the utilization of phone/virtual meeting options rather than face to face meetings.  We’re asking that you do not visit our Rochester office location unless you need something urgently or if you have a scheduled appointment.

We’ve also opened up our telengage program, waiving the current minimum premium amounts and adding additional staff to assist in the processing of these requests.  This process allows us to take applications for you over the phone at a time that is convenient for your client, allowing us all to assist them with their needs while limiting direct face to face contact.  We strongly encourage you to use this program so you can keep your business going and support the needs of your clients when they need it the most.  Because of the downturns in the markets, our products are more important now than ever.

We will continue to closely monitor the situation and evaluate additional measures to support you and our employees as needs arise.  If you have any questions on how to best utilize our electronic and phone options for applications please reach out to Barrie Priyanto at extension 149. Please stay safe and healthy.  ~Lorrie

Lorrie L. Gibbons, MS, ACS, FLMI
President & Principal ~ Proudly Employee Owned
D: 585.271.6400 x125 / 800.272.6488 / Fax: 585.271.5050
800 Linden Avenue, Rochester, NY 14625

KAFL Inc – Safety and Wellbeing Actions

The end of the calendar year also means the end of the plan year for many members. Please have your groups keep in mind these important deadlines about HealthyRewards if this is the end of their plan year.

For members renewing their HealthyRewards plan (subscriber ID not changing):

HealthyRewards credits/dollars should be redeemed online on or before December 30, 2019. December 31, 2019 is a blackout date and members will not be able to access the program.
If credits are not redeemed before December 30, 2019, members will have 90 days, beginning on January 1, 2020, to login to their account and redeem their credits online. At this time, a countdown clock will appear within their account indicating the 90-day countdown has begun. After 90 days, members will have 30 additional days to redeem their credits through our customer service department by calling the phone number on the back of their Member ID card.
Any credits/dollars not redeemed 90 days after January 1, 2020, will be forfeited.

For members who are terming their medical plan:
Members who are not renewing with Rally are highly encouraged to cash out their rewards prior to termination or they will require manual cash out. Manual cash out requires the member to call the customer service number on the back of their Member ID card and provide the following information:

Email Address
Contact Number
Mailing Address
Dollar Amount

This information will be sent to Rally who will then send a Visa gift card to the member within 30 days. Members will not have the option of selecting another retail gift card.

 

 

https://broker.excellusbcbs.com/resources/news/article?articleId=174049858&classPK=174049860

What is Form 1095-B?

The Form 1095-B is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage.

Taxpayers are not required to include a Form 1095-B when filing their taxes; in fact, you should not attach a Form 1095-B with your tax return.

What’s New?

Health insurers are no longer required to mail Form 1095-B to their members. If you do want a copy of your Form 1095-B for your records, however, Excellus BlueCross BlueShield is providing four different methods for you to do so. https://www.excellusbcbs.com/form-1095-b

John Hancock’s Aspire is designed for people living with type 1 or type 2 diabetes, and combines the long-term financial protection you want, with a personalized diabetes support program that meets your client’s unique health and lifestyle needs, and rewards them for taking steps to manage their condition and live a longer, healthier life.

 

How Does it Work?

  • Step 1: Select the John Hancock life insurance product that best meets your client’s long-term needs and elect Aspire
  • Step 2: Register for John Hancock Vitality and complete a brief health questionnaire
  • Step 3: For qualified members with type 2 diabetes, sign up for Onduo’s diabetes management program
  • Step 4: Use the tools and resources from Onduo and Vitality to help stay healthy, record progress, and manage diabetes

 

For more details click here and contact your brokerage manager.

Life insurance with the John Hancock Vitality Program rewards you for the healthy activities you do every day. And now, you can earn Apple Watch Series 5 when you become a John Hancock Vitality PLUS member.

By walking, running, biking, swimming, or any other number of exercises you earn Vitality Points that go toward your monthly payments. The Vitality Points you earn towards your Apple Watch can also lead to additional rewards and discounts, as well as savings on your life insurance premiums, with the John Hancock Vitality Program.

Individual & Small Group plans and rates for 2020 and stand alone small group dental plans are now available on Blue on Demand. Updated Open Enrollment tools, including At-A-Glance Brochures and Product Guides are also available. Learn more and order open enrollment materials now.

Now available:

  • SimplyBlue Plus Small Group Medical Plans
  • NEW SimplyBlue Plus Dental Plans and Dental Blue Options Small Group Dental Plans
  • Individual Metal Plans

New Small Group Dental Plan!
Introducing a new stand alone dental plan designed specifically for Small Groups – SimplyBlue Plus Dental*! This new dental plan has a range of package options, including full family coverage and deductibles as low as $0. Visit to Blue on Demand to see the range of package options to meet budget needs.
*Name pending BCBS approval

Order Small Group Open Enrollment Materials Online

You can order your 2020 open enrollment materials now. You will need to indicate the quantity you want, as well as your shipping address for the following pieces:

 

Click Here for more information

Overview
Beginning January 1, 2020, any new life products issued must use the 2017 Commissioners Standard Ordinary (CSO) Table. To recognize changes in population, life expectancy, life insurance regulation requires an update of the standard mortality table used to calculate minimum cash values and death benefit requirements. This requirement applies to all life insurance carriers. Overall, the 2017 CSO products will have lower guideline premiums and/or lower 7-pay premiums, resulting in higher minimum death benefits and lower distributions.

Plan Ahead
As we approach the end of the year, you may want to offer your clients a 2001 CSO-based product, depending on their life insurance objectives. Please plan ahead – 2001 CSO products are unavailable after December 31, 2019, per regulatory requirements.

What to expect through the end of the year?
Carriers that are currently issuing life insurance products using the 2001 CSO mortality table, you can expect to see new product introductions throughout 2019 and into 2020 that meet the new regulatory requirements. Keep your eyes open for future notifications on carrier product retirements and new product introductions.

For many people, life insurance doesn’t cross their radar until they’ve reached their 30s. But I bought my life insurance policy four years ago — at the ripe old age of 25.

And I’ve never regretted the decision.

In fact, if I had it to do over again I would have taken out my policy sooner. Here are the factors that led me to take out a life insurance policy at age 25 and why I’m glad I did.

1. I had just become a dad

When my wife gave birth to our first son in March of 2015, everything changed. I suddenly had this great sense of responsibility. And I wanted to make sure that this bundle of joy I was holding in my arms would always be taken care of.

Additionally, my wife wanted to stay home with our son for his first few years of life, so I knew that my job would be our only household income for the foreseeable future. This made the need to take out a life insurance policy even more urgent in case anything happened to me.

My life insurance policy went into effect in July of 2015. That meant my wife and son were unprotected for three months after he was born, and my stress level was pretty intense during that period. Looking back, I wish I would have taken care of my life insurance before my son’s birth.

2. My wife and I had recently bought a home.

In May of 2014, my wife and I bought our first home.

Up until that point, we hadn’t taken on any debt in our marriage. Both of our cars were paid for and neither of us had student loans. But now that we had a joint debt, I began thinking a lot more about the need for life insurance.

If I die before my wife, I don’t want her to struggle to make our mortgage payment. She’ll have enough stress without having to worry about losing our home.

Having life insurance gives me peace of mind that housing won’t be a concern for my wife and two boys. And that helps me sleep better at night.

3. I wanted to lock in a low rate.

Once I knew that I needed to buy life insurance, my mentality was, “Why wait?”

I knew that term life insurance can be incredibly cheap when you’re in your early twenties. And I also knew that procrastinating would only cause my monthly premiums to rise.

So I chose to bite the bullet and try to get coverage as soon as possible. I wanted to lock in that 25-year-old rate while I still could.

How I chose my life insurance policy

My first step in picking out my life insurance policy was deciding how much I needed.

A good rule of thumb is to take out a policy that’s 10-12 times your annual income. Based on my income at that time, a $500,000 policy was the right fit.

Using a comparison shopping site

To shop for my life insurance policy, I used a comparison site calledQuotacy. Like Policygenius, Quotacy is a comparison site that will show you quotes from multiple insurance companies at once.

Once I filled out my personal information, Quotacy connected me with my own personal agent named Jason. Every step of the way, from my initial quote, to my health exam, to the signing of the policy, Jason was available and helpful.

With Jason’s help, I was able to lock in a $500,000 policy withAmerican General Life Insurance for a monthly premium of $20.91. Yes, that’s a killer rate. And it shows how much you could potentially save by buying life insurance when you’re young.

Making adjustments

Life insurance needs can change over time. For instance, while $500,000 was the right size policy for me at age 25, it looks a little lean now.

So this year, I plan to either increase the benefit on my current policy or shop for a new policy altogether.

My situation isn’t all that unusual. For most of us, our lives are changing on a constant basis. After a few years, your life insurance may no longer fit your current financial situation. That’s why it’s a good idea to reevaluate your life insurance policy every few years to make sure that you’re still adequately covered.

The bottom line

Not everyone needs life insurance. You could be well into your 30s or 40s and have no need for life insurance if you’re single and have no debt.

But if you have joint debts with your spouse or you have a child who depends on your income, you probably need life insurance … no matter how young or old you may be.

 

 

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

https://www.businessinsider.com/i-bought-a-500000-life-insurance-policy-at-age-25-2019-8

The New York State Department of Financial Services released the approved 2020 rates for the individual and small group market. The requested weighted average increase for the individual market reflected an increase of 9.2%. The Department approved a weighted average increase of 6.8%. The requested weighted avberatge increase for the small group market reflected an increase of 12.2%. The Department approved a weighed average increase of 7.9%.

For the complete announcement on the DFS Website click here.

Key person DI is corporate income protection insurance designated to pump much-needed capital back into a business after the loss of key personnel.  Assigned at the policy owner’s discretion, the benefits are commonly used for recruiter costs to find replacement employees, to reimburse losses due to decreased productivity, to fund travel expenses for new account managers meeting with clients to reinforce existing customer relations as well as to supplement overtime payments for existing staff covering the inevitable additional workload when a firm loses an integral employee. Explore problems faced by companies without this and what solutions are available.

OK, you’ve been to more seminars on growing your business through referrals than you can count. Sometimes, we take something that should be simple and make it complicated.

Let’s look at four ways you can get referrals for potential insurance or investment business.

1. Introductions

It’s a small world. You know who you want to meet, the people who would be ideal clients. This small world concept works both ways. People in a specific profession or industry often know the local players quite well.

It’s as simple as: “Boris, do you Natasha at Goldstar Media?? No? “Then do you know someone who knows Natasha? Maybe they could provide an introduction.”

You will immediately notice LinkedIn maps this out for you. You know who knows who. You also know who knows an intermediary with the right connections.

 

2. Introductions to organizations

When we think of potential clients, we primarily think about people. We forget organizations like non-profits also have insurance and investment needs. Your client might be a longtime volunteer at the historical society of the art museum. They have needs you might be able to meet. Because they are an organization, they likely have an annual review process when they decide to change carriers or stick with their current providers.

Your client makes the introduction. You learn how the review process works. You ask to be allowed to present and compete during the review process.

 

3. Requesting specific referrals

Ever ask, “Do you know anyone I might be able to help?”?

Often your friend or client says, “Can’t think of anyone, but I’ll let you know.”

The more specific the request, the greater the likelihood they will think of someone. “Who do you know that is retiring in the next six months?” “Who do you know that has recently changed jobs and firms within your industry?”

You explain these people often have certain issues that need attention, like rollovers of 401(k) plan assets from their former firm. You’ve helped other is similar situations. You might be able to help them too.

 

4. Entertaining to advantage

In many cultures, cultivation is part of the process for getting new business. You might think this means business lunches. Broaden your horizons. Your prospect, who you know from the Chamber, is an opera fan, just like you. You invite them out to dinner, rounding the group out to six with another couple. The additional couple are friends of you and the prospect. Ideally they are current clients. Everyone gets on well.

When your prospect asks the other couple, “How do you know Bryce and Jane?” they tell your story without any prompting or prep from you.

There are many ways to ask for referrals. Hopefully one or more of these approaches will be a good fit for your practice.

 

 

By Bryce Sanders | June 28, 2019 at 09:20 PM
https://www.thinkadvisor.com/2019/06/28/4-ways-to-ask-for-referrals/?slreturn=20190618091858

Individuals will be able to contribute $3,550 to HSA next year, and families will be able to contribute $7,100. Here are three ways brokers can help employers improve HSA implementation and increase use.

Continue Reading

After a federal district court struck down the Trump administration’s 2018 AHP expansion, the Department of Labor has appealed the decision and announced in April it will not pursue penalties from employers for “good faith” violations.

Continue Reading

Lock in May Rates by 5/31 before they change.

American National Rate Sheet

New York Rate Sheet

Highlights:
(See Rate Sheets for Details)

Annuity Rates
(including NY)

  • Rates decrease for all products.
  • See rate sheets for details.

Signature IUL  &  Signature Plus IUL

  • Various cap and rate changes
  • See rate sheets for details.

Minimum Guaranteed Interest Rate (MGIR)

  • No changes!

Deadlines
App, Exchanges, Cash with App, & Wire Transfer Deadlines

  • Signed & Dated: 5/31
  • Received: 6/4 by 3:00pm in the KAFL Office
  • Exchanges: Monies must be received within 60 days

General Rate Lock Overview
New York Rate Lock Overview

Top
In 6 months I'm at over 25 cases sold with 6 more in the pipeline... See how he did it. View video. -
-
Asset Protector – the new generation of life insurance – provides a unique set of living benefits not currently available anywhere else. Watch video
»

At 1:00 what optionality can mean to clients

»

At 1:16 3 unique presentation features you can use

»

At 2:53 how clients can access more than they paid in premiums

Access consumer approved versions of the videos for lead generation
(less than 1 min) and for use during client meetings (3 min).
Now is a great time to start selling Asset Protector.
logo Contact your KAFL Brokerage Manage today!
(800) 272-6488
www.kafl.com
or visit RetireStronger.com.
Policies issued by American General Life Insurance Company (AGL). Form Numbers 13972, 13600, ICC13-13600, 13460, ICC13-13460. Issuing company AGL is responsible for financial obligations of insurance products and is a member of American International Group, Inc. (AIG). AGL does not solicit business in the state of New York. Products may not be available in all states and product features may vary by state. Guarantees are backed by the claims-paying ability of the issuing insurance company.

IMPORTANT NOTICE: Keep in mind that, as with all contests, any recommendation for the purchase, sale or exchange of any product must be suitable to the client. Financial professionals must make a reasonable effort to obtain information concerning the client’s financial status, tax status, investment objectives and such other information considered to be reasonable in making recommendations to the client.

AGLC108227-BGA ©2017 AIG. All rights reserved.

For Financial Professional Use Only – Not For Public Distribution

bottom bar

Jump start more life ins conversations with the right message.
Show clients an innovative way to use life insurance to protect their retirement assets with a
training program on RetireStronger.com called “Making the Sale”. With this program, you can
make the sale by accessing a step-by-step guide to:
View videos, infographics and customizable emails on fresh topics
1) Learn more about your clients’ needs
2) Discover innovative solutions to fill
those needs
3) Leverage tools to reach clients
and prospects
Check out videos, infographics and
customizable emails on hot topics. Turn this
knowledge into lead generation activities
that result in valuable meetings with clients.
RetireStronger.com/MakingTheSale
Hear insider tips from a successful producer. View videos
brand name Contact your KAFL Brokerage Manager today!
(800) 272-6488
www.kafl.com
or visit RetireStronger.com.
Policies issued by: American General Life Insurance Company (AGL), Policy Form Numbers 13460, ICC13-13460,
Rider Form Number 13600. Issuing company AGL is responsible for financial obligations of insurance products and is
a member of American International Group, Inc. (AIG). AGL does not solicit business in the state of New York. Products
may not be available in all states and product features may vary by state. Guarantees are backed by the claims-paying
ability of the issuing insurance company.
For Financial Professional Use Only – Not For Public Distribution

AGLC108182-BGA ©2017. All rights reserved.

50% of Households Risk Their Standard
of Living Declining During Retirement
Will your clients have enough money for retirement?
photo

Did you know?

More Americans are spending 20+ years in retirement.¹
61% of Americans surveyed said they are more scared
of outliving their retirement than they are of death.²
Asset Protector makes it possible for consumers to use their life insurance
benefits while they are still living to help them meet life’s challenges. That’s life
insurance you don’t have to die to use.
We’ve prepared an entire suite of producer and consumer materials, plus a website to help you identify who could benefit from this innovative life insurance, how to address clients’ needs, and
how to position this product line. Your clients are living longer, American General can
help them retire stronger. Find out more:
web RetireStronger.com paper Producer Materials
Let's talk. Contact your KAFL Brokerage Manager today!
800-272-6488
www.kafl.com
or visit RetireStronger.com.
Policies issued by: American General Life Insurance Company (AGL). Issuing company AGL is responsible
for financial obligations of insurance products and is a member of American International Group, Inc. (AIG).
AGL does not solicit business in the state of New York. Products may not be available in all states and product
features may vary by state. Guarantees are backed by the claims-paying ability of the issuing insurance company.

1. Social Security Administration Data
2. The 2Q11 SunAmerica Retirement Reset(SM) Study conducted by Harris Interactive surveyed a national
sample of people age 55+.

For Financial Professional Use Only – Not For Public Distribution

AGLC107628-BGA ©2017. All rights reserved.

Principal

 

Protect the asset you rely on most

 

 

Your income provides for so much –  your home, car, activities and much more. With something that provides so much, it just makes sense to protect it.

Individual Disability Income (DI) insurance is there for you so you can continue to pay everyday expenses – even if you’re too sick or hurt to work.

How much does it cost?

It may sound expensive, but it doesn’t have to be. Together we can review your needs and budget to find what works best for you.

 

 

Using DI is typically just   1-3% of what you earn.

 

 

That means DI is just as affordable as lunch every day or a monthly smartphone bill.

 

Let’s connect. I’ll contact you to discuss.

KAFL Insurance Resources
(800) 272 -6488
www.kafl.com

 


 

Terms of Use  |  Disclosures  |  Privacy  |  Security  |  Report Fraud

Disability insurance has limitations and exclusions. For costs and coverage details, contact your Principal financial representative. Not approved for use in New Mexico.

Disability insurance from Principal® is issued by Principal Life Insurance Company, Des Moines, Iowa 50392, www.principal.com.

© 2018 Principal Financial Services, Inc., Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc, a member of the Principal Financial Group.

If you do not want to receive any further marketing emails, let us know by replying and we’ll remove you from our marketing email list.

DI8526-04 | 10/2018

 


Your income provides for so much –  your home, car, activities and much more. With something that provides so much, it just makes sense to protect it.

Individual Disability Income (DI) insurance is there for you so you can continue to pay everyday expenses – even if you’re too sick or hurt to work.

How much does it cost?

It may sound expensive, but it doesn’t have to be. Together we can review your needs and budget to find what works best for you.
Using DI is typically just   1-3% of what you earn. That means DI is just as affordable as lunch every day or a monthly smartphone bill.

Contact your KAFL Brokerage Manager today to learn more!

Blog for Retirement Protection – Offer Life Insurance You Don’t Have to Die to Use:  An “Asset Protector” Package Enhances Flexibility

by Mark Peterson
Executive Vice President and Chief Distribution Officer
Life and A&H, AIG Financial Distributors

For the first time in the life insurance industry, you’re able to tell clients something they’ve never heard before: “If you don’t die prematurely, you may be able to spend your entire death benefit on virtually anything you want.”

 Because of this sea change in the way life insurance death benefits can be accessed, clients have the opportunity to view their life insurance policy more like an asset than an expense. That’s the concept that’s revolutionizing the life insurance industry. An innovative asset protector package has the potential to help increase clients’ financial security during retirement.

 Chronic Illness Protection

Keep in mind that for many people, the biggest risk to their assets during retirement is a significant illness that would require expensive care. This could result from a physical problem, such as a debilitating stroke, or from a cognitive impairment, such as Alzheimer’s Disease.

 To help protect assets from the devastating financial impact of these types of conditions, clients may be able to leverage a chronic illness rider that’s included or available with many permanent life insurance policies. If clients meet the rider’s criteria, they can access their life insurance policy’s death benefit – while they’re still alive – to pay for their health care or other expenses and help preserve their retirement assets for their surviving spouse. The access to cash value in the policy is available through an acceleration of the death benefit, although with a corresponding reduction in the benefit.

If clients live to age 85 or beyond and don’t suffer a chronic illness or a cognitive impairment, their financial concerns may change again. They may be more concerned about having sufficient income for the rest of their retirement. The solution is longevity insurance.

Longevity Protection

A longevity rider on a life insurance policy provides that when a client reaches the age specified in the contract (for example, age 85), he or she can begin receiving a percentage of the death benefit (for example, 10 percent) each year for a specified number of years, such as 10.

 With a $250,000 policy, that could mean access to an additional $25,000 per year. With a $1 million death benefit, the available sum may be $100,000 per year for 10 years. As with a chronic illness rider, the access to cash value in the policy is through an acceleration of the death benefit that reduces the death benefit accordingly. But imagine what having “life insurance you don’t have to die to use” could do for clients’ financial security when their retirement portfolio may be straining to generate the retirement income they need.

 This hypothetical example is for illustrative purposes only. Not an actual case and intended solely to depict how the product features might work. It does not reflect the value of any specific Policy. Restrictions and limitations apply.

 A Multipurpose Solution

Ultimately, whether clients are most concerned about dying too soon, living too long or getting sick along the way, an asset protector package – comprised of a life insurance policy, a chronic illness rider and a longevity rider – is designed to offer the flexibility to help clients achieve their financial goals.

For more information about asset protector packages, contact your KAFL Brokerage Manager today!

(800) 272-6488
KAFL Brokerage Manager Team Information
www.kafl.com

 

Policies issued by American General Life Insurance Company (AGL) except in New York, where issued by The United States Life Insurance Company in the City of New York (US Life). Issuing companies AGL and US Life are responsible for financial obligations of insurance products and are members of American International Group, Inc. (AIG). Guarantees are backed by the claims-paying ability of the issuing insurance company. Products may not be available in all states and product features may vary by state. Please refer to your contract.

 

What do you need to start the right conversation?

The right information can help you start the conversation.
Use the carrier resources below to get you started for those conversations around: Long-Term Care, Retirement, Business Planning, Life Insurance, and MORE.

Networking through the use of a simple
invitation to “meet for a cup of coffee”
is a great way to prospect for new clients.

Here’s how you can use social media,
and an invitation to “talk over coffee”
as a way to build your client base.

Click here to learn more!

New Wealth + Health Microsite!

What can you find in here?

  • Ways To Work With Different Generations
  • Talking Points About Wealth + Health
  • Social Security
    • Need for Life Insurance
    • Strategies
    • Quick Reference Guide
    • Social Security at Every Age
  • Prospecting Tools
  • Conversation Starters
  • And many other resources

Save www.aimcorgroup.com/wealthhealth/ to your favorites for easy access!!!

Effective immediately all William Penn and Banner policies will be eDelivered. Please see below for exceptions.

Advantages of Going Green

  • FAST → Cycle time is reduced by more than 2 weeks.
  • MONEY → EFT commissions are processed within 24 hours of the policy activation.
  • COMPLETE → Collect all documents necessary to place the case (including payment) in good order.

Impressive Stats

  • 22% of eDelivered policies are signed within one day of receipt
  • More than 125,000 policies have been signed electronically
  • About 47% of new policies are eDelivered
  • Go Green! eDelivery has saved over 6.6 million sheets of paper

Exceptions for eDelivery

  • If the policy has a different owner or payor than the insured
  • If it is a Reg 60 case
  • If there is a check on the file so there is money in suspense, their system will not be able to generate an E-Policy.
  • eDelivery authorizations may be requested for paper applications
  • Are renewal commissions yours?  KAFL does not keep any of your commissions, first year or renewal.
  • Who is your contract with?  We contract our agents directly with the carrier for the fastest commission turnaround time possible.
  • Does your brokerage personally produce?  No one at KAFL personally produces.  We are here strictly to assist you in building your Medicare business in whatever way you want.
  • Will you receive full compensation if you participate in lead programs?  Yes, KAFL participates in lead programs and your commissions would never be held to cover the cost.

Any questions, you can reach out to Jeanine Polito at jeanine@kafl.com or ext. 101.

 

Penn Mutual New York State Life Insurance Product Portfolio Changes Effective April 1, 2018

Acting in the long-term best interests of all of its policyholders, Penn Mutual has made the business decision to no longer accept applications for the following life insurance products from New York state effective

April 1, 2018:

• Accumulation Builder Advantage Indexed
• Universal Life
• Guaranteed Protection Universal Life
• Survivorship Plus Indexed Universal Life
• Protection Guard Universal Life

This decision is aligned with our 2017 CSO product portfolio strategy in New York state.

Formal applications In Good Order for these products must be received in the Home Office no later than Friday, March 30, 2018. The policies that result from these applications must be issued and paid for by Thursday, May 31, 2018.

All applications will need to be at KAFL by March 29, 2018 to ensure we have enough time to meet their deadline of March 30, 2018.

In accordance with existing policy terms, advisors may continue to service all inforce policies in New York.

Products Still Available in New York

The following life insurance products will continue to be available in New York state:

· Guaranteed Choice Whole Life
· Diversified Growth Variable Universal Life
· Guaranteed Term 10-15-20
· One Year Term

Please note, there will be no change in the annuity products available in New York state.

Questions? Please contact your KAFL Brokerage Manager

LTC AND LIVING BENEFITS

Because more are living longer, many life insurance companies have found traditional long-term care (LTC) policies are not for everyone. Life insurance can now be used as “living benefits” that help pay expenses when a LTC or chronic illness occurs. There’s a number of different types of products, and by using our updated Living Benefits microsite, you can ensure you have the proper tools you need to address your clients.

PROSPECTING – APPROVED CLIENT APPROACH LETTERS AND EMAILS

ADVISOR TRAINING & EDUCATION

 

STARTING THE CONVERSATION WITH YOUR CLIENTS

PLANNING STRATEGIES & CONCEPTS

RESOURCES, TOOLS & FACT FINDERS

INSURANCE COMPANY RESOURCES

A Critical Illness Rider is NOT a Chronic Illness Rider

At John Hancock, we recently introduced a new, innovative Critical Illness Benefit rider. As you discuss critical illness coverage with your clients, make sure you understand the key differences between Critical Illness and Chronic Illness riders.

 

Critical Illness Riders

  • Triggered by a catastrophic health event (e.g., heart attack, cancer, stroke, etc.)
  • Protects clients during working years

Used to pay for whatever clients chooses, e.g., health-care costs, day-to-day expenses, and continued financial planning

 

Chronic Illness (or Long-Term Care) Riders

  • Triggered by the loss of cognitive function or inability to perform two of six ADLs (activities of daily living)
  • Protects clients during retirement years

Helps to pay for care costs associated with living a long life, e.g., home health care, assisted-living facility, or nursing home care

 

Learn more about our new Critical Illness Benefit rider

KAFL, Inc. is excited to announce our latest product offering for your Individual and Medicare clients.

Introducing Bright Idea Dental and Vision. Give your clients access to one of the largest dental and vision networks in the country. Dental implant & denture coverage is included. There are no age limits for participants, and acceptance is guaranteed!

Products are sold exclusively through KAFL. To get started, please contact the Employee Benefits Department at KAFL today!

Bright Idea Dental Brochure

Bright Idea Dental/Vision Flyer

New Microsite Release – COMING SOON

The new and improved AIMCOR LIVING BENEFITS microsite release is just around the corner. Here’s a sneak peek of some of the resources you’ll be able to access in one centralized location.

Think Differently w/ These Sales Ideas

Prospecting – Approved Client Material

Resources, Tools & Fact Finders

 

 

 

 

 

 

 

 

 

Research shows that oral health and overall health are closely related. So, when you keep your teeth healthy,
you are also keeping your body healthy. Our dental plans offer coverage options for preventive, diagnostic,
basic, and major restorative services through FCL Dental’s Network of over 600,000 locations.

Dental At A Glance
• 100% coverage on plans for many preventive services like cleanings, X-rays, and oral exams.1
• Over 261,000 locations Nationwide2. Visit www.fcldental.com
• No age restrictions, guaranteed issue ages 18 and up.
• Guaranteed Acceptance

Contact our Employee Benefits department for more information.

 

BrightIdea Plans Catalog

BrightIdea BiFold Brochure

For January 1st, 2018 effective dates, all new business group and individual health applications must be received by KAFL by the following dates:

Carrier

Due Date

Aetna December 10th
BlueCross BlueShield WNY December 15th
Excellus December 15th
Independent Health December 15th
MVP December 15th
Univera December 15th
United/Oxford December 31st

New York State has extended the open enrollment season for individuals until March 1st, 2018.  Application deadlines are as follows:*

Effective Date Due Date
February 1, 2018 January 15th
March 1, 2018 January 31st

*Individuals who do not enroll by January 31st are considered late entrants and will require a qualifying event in order to receive a special enrollment period.  Examples of qualifying events are: marriage/domestic partnership, newborn child, newborn adoption/proposed newborn adoption, non-newborn adoption/proposed adoption/legal guardianship, subscriber deceased, involuntary loss of coverage, involuntary loss of coverage for a dependent child, permanent relocation.

American National’s new Expert electronic tools will replace iPipeline’s IGO applications and the LPES illustration system.
ExpertApp, will replace iPipeline’s iGO applications and ExpertIllustrator will replace LPES. The process of phasing out iGO and LPES for all products has begun.
Important dates:
9/28/2017: Last day for new cases to be started through iGO
12/28/2017: Last day to submit pending cases through iGO and last day to transfer any LPES illustrations to ExpertIllustrator.

SmartAction was founded as an artificial intelligence (AI) research company and has since evolved into the leading provider of AI-powered customer self-service solutions. It’s come to Legal & General America.

Customers should never miss a bill. 
Pay by phone and text reminders are here!
We’re elated to provide easy to use, conversational help for customers who call Legal & General America for payment service on their policies. This new AI service will bring great experiences to customers, saving them time and energy in completing tasks and keeping Legal & General America at the forefront of innovation and service quality. The service is powered by SmartAction’s advanced voice recognition system, like Siri or Alexa, but for the call center.  ​

So what does that mean for our customers?

We’ve implemented a speech-driven payment system, powered by SmartAction, through which customers can pay premiums using our existing 800.638.8428 toll-free number for Banner and 800.346.4773 for William Penn.  

How does it work?

  • It doesn’t matter whether the customer has an online account with us or not. If he or she wants to pay by phone, it just takes a call to provide bank routing, bank account, and policy numbers. Only policy owners and authorized payors are allowed to make payments.
  • For added convenience, if the customer has provided this information by completing our online Profile, he or she is given the option to use the existing information when paying by phone.
  • At present, the service is for term and whole life only. Universal life will be added at a later date.

Phone prompts on the Legal & General America toll-free lines have changed and now include a “pay by phone” option.

There are more bells and whistles.

Customers can ask us to text them reminders to pay their bills! And they can pay by text!

  • The customer opts in for text messaging online and sets up a payment account if necessary.
  • If the bill hasn’t been paid, the text will be sent 5 days prior to the due date.
  • The customer has the option to pay the bill via text or simply use it as a reminder.

If the bill hasn’t been paid 15 days after the due date, another text is generated. The 30-day late payment offer is still sent by regular mail. All other paper correspondence remains in place.

SmartAction is at work now.

The pay-by-phone and text reminder services are available today. These services are available 24/7 in all states for both Banner and William Penn policy owners.

Reminder: For all 1/1/2017 policies, KAFL will no longer be paying out commissions on individual health insurance policies (any business submitted after 12/1/16 for a 1/1/17 effective date or later).  Any business you currently have in-force (dated prior to 12/1/16) will remain at the original compensation level until such time as that client decides to move to a different policy and it needs to be rewritten.

Transamerica remains committed to you and to the long term care insurance market. As such, it’s important that we modify our premium rates for new TransCare® III business to remain competitive within the marketplace. These rate changes will also maintain consistency in our pricing across our product portfolio.
Revised rates for new sales of TransCare III will become effective July 3, 2017. To receive old rates, applications must be received in good order by close of business June 30, 2017. Previously saved quotes on TransQuote® will no longer be available starting July 3, 2017.
This change applies to the following states: Alabama, Alaska, Arkansas, Colorado, Georgia, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. We will inform you as approvals are received for the remaining states.
New application and disclosure packages will be required. To access the new packages, please visit www.taltc.com. Old versions of the application and disclosure packages will no longer be accepted after June 30, 2017.
Thank you for your business and your trust in Transamerica.
 
Brighthouse Premier Accumulator Universal Life New York Update
Effective May 22, 2017, Brighthouse Premier Accumulator Universal Life (PAUL) will be issued in New York by Brighthouse Life Insurance Company of NY. PAUL issued by Brighthouse Life Insurance Company of NY features: no surrender charges and a 4.00% current interest crediting rate.
Transition Rules
  • Applications for PAUL issued by Brighthouse Life Insurance Company of NY will be accepted beginning on May 22, 2017.
  • In good order applications for PAUL issued by Metropolitan Life Insurance Company must be received in the Home Office on or before May 22, 2017.
    • These cases must be issued and paid by the earlier of June 30, 2017 or actual legal separation. Cases that do not meet the issue and payment deadline will be closed.
  • Metropolitan Life Insurance Company policy owners will not be eligible to exchange to PAUL issued by Brighthouse Life Insurance Company of NY.
Term Conversion Update
  • Brighthouse Financial term policies issued in New York may be converted to PAUL issued by Brighthouse Life Insurance Company of NY. Conversions to Whole Life 2008 issued by Metropolitan Life Insurance Company will not be accepted after May 22, 2017.
  • Please note that term conversion product availability, as described here, will also apply when other contractual provisions, including group conversions, are exercised that require issuance of a new policy.
Illustrations and Forms Availability
  • Illustrations for PAUL issued by Brighthouse Life Insurance Company of NY will be available on May 22, 2017.
    • Illustrations for PAUL issued by Metropolitan Life Insurance Company can be run in the Home Office for pending cases that have satisfied the in good order application deadline.
  • Forms for PAUL issued by Brighthouse Life Insurance Company of NY are available at eforms.metlife.com/BrighthouseFinancial.

For more information, please contact your KAFL Broker Manager.

All Trendsetter® LB (Living Benefit) Term Life Insurance applications signed AFTER 5/5/2017 will be underwritten with the new living benefit underwriting rules.
Transition rules related to the receipt of the application relative to the product and rates still apply.
Trendsetter LB benefits are inherent to the product, therefore if we identify a condition or consideration that would warrant the removal of either the Chronic or Critical illness rider we will pivot to Trendsetter Super and offer that to the customer. In this scenario, the policy will be issued with an amendment for the change in plan.
Conditions or consideration for Living Benefits are as follows:
Any case rated over table 4 rates
Any case with a flat extra over $2.50 per thousand
Underwriter’s evaluation of medical history, which includes combinations of medical conditions may conclude a decline of the living benefits; some examples of conditions that are not eligible for living benefits coverage would be Parkinson’s, Multiple Sclerosis, some cancers, cancers treated with radiation and/or chemo therapy
For more information about the underwriting changes for the Trendsetter Series please contact your KAFL Broker Manager.

DOL Releases Final Rule Delaying Fiduciary Implementation.

The Department of Labor released a final rule Tuesday delaying the implementation of its fiduciary duty regulation.  Under the delay measure, which was posted on the Federal Register website, the fiduciary rule’s April 10 applicability date is pushed back to June 9.  The delay is scheduled to be published in the Federal Register on Friday, April 7, and will take effect immediately.  Click here for the full article.

INFORCE BUSINESS

Limited Illustrations on Certain Inforce Policies Beginning March 15, 2017, Transamerica will illustrate only the guaranteed future interest rate and monthly deductions for the following products of inforce policies.

This decision was made following significant review of NAIC regulations inforce current assumption illustrations and our interpretation of those NAIC regulations.

TransACE® (2012)
TransACE Survivor® 2000
TransACE® (2007)
TransACE Survivor® XL
TransACE® GL
TransACE® CV 2008
TransACE® LP (2006)
Inheritance Builder UL
TransACE® SP (2005)
Assured Life 1
TransACE® XL
Lifetime Protector II
TransACE® 1999 (2000)
TransValue (1998)
TransACE Survivor® EX
TransValue (2002)
TransACE® EX
TransValue GCO
TransACE Survivor® GL
TransUltra Plus® (2005)
TransACE Survivor® 2008 (2008)
TransSurvivorSM Life 115 (1998)
TransACE Survivor® 2008 (2010)
TransSurvivorSM Life 115 (1999)
TransACE Survivor® 2000
TransUltra® 115 (1999 Version)
Preferred Protector 100 (Issued Pre-July 2003)

Process Changes
Beginning March 15, Transamerica will only run illustrations based on the guaranteed maximum charges and the guaranteed minimum interest rate. Illustrations based on current charges and interest rates will not be produced.

Transamerica’s customer service will provide a policy’s current accumulation value and monthly deduction amount, which agents can compare to planned premiums to determine whether the current premium will sustain the policy until the next anniversary.

New Pricing Effective March 6

We continuously strive to offer a relevant suite of product solutions that align with the needs of your customers, at a competitive price. With that in mind, we have introduced new pricing on PruLife UL Protector, effective March 6, 2017, pending state approvals.

The price increase is necessary to maintain the sustainability of UL Protector during this ongoing period of historically low interest rates. We will continue to monitor pricing on our entire suite of products and exercise the financial discipline that has helped Prudential provide enduring value to its clients for over 140 years.

REPRICE DETAILS

Level pay increases will range from 4 – 10% varying by cell. Average increase of 6% for ages 55 – 75.
Single pay increases will range from 9 – 19%. Average increase of 12% for ages 55 – 75.
CTPs will be increased. Generally, CTPs will be higher than level pay premiums.
Face amount limits will be removed on applied for policies using the new rates.

Please note: Different rules and dates apply to this transition. Please refer to the transition rules for further detail.

TRANSITION RULES

STATE APPROVALS

POLICY REVIEW

Looking to grow your sales, deliver a higher level of service to your clients, and stand out amongst your competitors this year? Our updated Policy Review microsite gives you a complete, A-Z, turn-key marketing program that will deliver results.

From prospect to paid, you’ll find everything you need to implement a complete policy review program across your practice.

Get started today. Visit www.aimcorgroup.com/policyreview

 

The Department of Labor
Fiduciary Rule has NOT been Delayed
Late Friday afternoon people began to report that President Trump had signed an Executive Order that delayed the DOL Fiduciary Rule. This news was provided by reliable sources, including industry advocacy groups and circulated quickly. While President Trump put his signature on a document Friday, it was not the Executive Order that many speculated and later reports indicated that the President signed a Presidential Memorandum “directing the Labor secretary to undertake a new “economic and legal analysis” to evaluate whether the looming applicability date of the fiduciary rule has harmed investors through to a reduction of Americans’ access to retirement products and advice, whether it has resulted in dislocations of the retirement services industry (that may adversely affect investors), or whether the rule is likely to cause an increase in litigation and the prices that investors must pay to gain access to retirement services.”
In short, and as it stands today, the DOL Fiduciary Rule is still scheduled to go into affect as planned beginning on April 10, 2017. CLICK HERE for more details and an article released yesterday
Although the future of the DOL rule is still uncertain, we can be certain that change is occurring in our industry and insurance will become more important to financial advisors going forward.
For more information about the DOL Fiduciary Rule visit www.aimcorgroup.com/dol

 

Don’t let misconceptions
stop the sale before it starts

 

Disability insurance is a new concept for most. So starting with the basics can help guide the conversation and lead to more sales. Help clients realize:

  • Disability insurance covers more than just accidents. It’s usually an illness like cancer, heart conditions and strokes.
  • Benefit payments can be used for anything, not just bills related to the disability.
  • Coverage can be tailored to the client’s budget or specific expenses, like housing.
  • Income protection is a great safety net when things don’t go as planned. So they may not need to dip into their savings.
Get started today! Share this calculator with clients using this email (DI9302).

The microsite is comprised of 5 sections as outlined below:

 

  1. Whitepapers – DOL Conflicts of Interest Ruling – This section provides an in-depth overview of the various sections of the DOL rulings including the BIC Exemption, PTE 84-24, Impartial Conduct Standards and information on the prudent process a financial advisor should act under with regard to serving their clients in a post-DOL world.
  2. The Definition of a Fiduciary – Comprised of marketing pieces and more “infographic” type material, this section is meant to illustrate the “Who”, “What” and “When” the expanded fiduciary definition expects advisors to act as a fiduciary as well as the “How” advisors can ensure they are acting in the “best interest” of their clients in accordance with the DOL’s position.
  3. What Institutions and Advisors Should Consider – A section designed to illustrate the “Why” institutions and advisors should consider working with you; an AimcoR member firm.
  4. Information About AimcoR Group, LLC – This section further drills down into the value of what an AimcoR member can bring to the table for financial institutions and their advisors and “Where” we can help ensure compliance with the new regulations.
  5. Important Supporting Documents – The final section provides three individual waivers (Life, LTC and DI) that advisors should consider having their clients who say “I’m not interested” in purchasing a protection based product that is recommended by their financial advisor. These documents are meant to help protect advisors from the potential of future litigation brought on by those clients’ families when the client has a liquidating event like death or increased health-care expenses as a result of the client’s decision to not purchase a recommended insurance product.

 

The microsite web address is: http://www.aimcorgroup.com/dol/

 

 

metlife_logo

 


 
 

March 3, 2017
 
Applications for term conversions that do NOT require underwriting must be received in good order at the Home Office by this date. The February 3, 2017 application deadline applies to term conversions that do require underwriting.

Effective February 3, 2017, MetLife will sunset the following products:

Promise Whole Life
Promise Whole Life 120
Promise Whole Life Select 10
Promise Whole Life Select 20
Promise Whole Life Select 65
Guaranteed Level Term (face amounts less than $1M only)
Secure Flex Universal Life
Provider Universal Life
Legacy Advantage Survivorship Universal Life
Equity Advantage Variable Universal Life

Click here for product key dates.

After a recent analysis of the macro-economic trends facing the long-term care (LTC) insurance industry, we have made the difficult decision to discontinue sales of our individual LTC insurance policies in all states.  As many of you well know, the distribution landscape for LTC insurance has shrunk significantly since the peak of the industry in 2002.  Today, there are far fewer outlets through which individual LTC insurance is sold, impacting the growth potential of the product.  In addition, consumer demand for individual LTC insurance has fallen and remains stagnant. These trends, combined with the significant capital requirements of the LTC insurance business, are the primary reasons for this decision, which was not taken lightly.

Please refer to the following schedule of important dates relating to the wind-down of current cases.

IMPORTANT DATES:

  • December 2nd, 2016 – last day to submit ‘in good order’ applications.
    (11:59 ET for applications submitted electronically and/or must be received by December 2nd if mailed).
    Please note LTC Quick Quotes will be discontinued effective immediately.
  • December 16th, 2016 – last day to complete paramedical exams.
  • February 10th, 2017 – all policies must be issued and paid for.

Please note that the decision to discontinue new sales does not impact our inforce LTC insurance business.  We will continue to honor our commitments and provide high quality service and support to our existing LTC insurance policyholders and their families for many years to come.

Your clients may have doubts about their income in retirement. And they should since almost half of Americans aged 56-62 would run out of funds needed for basic retirement expenses if they retire at age 65.  For clients who need death benefit protection, life insurance with cash value growth potential can also give your clients options in retirement that they may not otherwise have. This Retirement Derailer eKit can help introduce life insurance as part of your clients’ retirement strategy.

Discover the Retirement Derailers

IMG-AddMoreLife

Prudential

 

Earlier this afternoon Prudential released an announcement regarding their decision to limit the death benefit effective October 28, 2016 on the UL and SUL Protector products.

 

UL Protector (Single Life) – Maximum death benefit will be capped at $5,000,000

SUL Protector (survivorship) – Maximum death benefit will be capped at $10,000,000

 

I have attached the announcement that was sent in the Prudential release and also highlighted important dates below.

 

October 23, 2016 – Illustrations must be signed and dated on or before 10/23/16

October 28, 2016 – Applications must be received in the home office no later than 10/28/16

 

There will be no exceptions granted on new cases with illustrations signed after 10/23 or submitted to the carrier no later than 10/28.

FAQ Prudential Limits

You know the drill: People definitely need income protection. Yet, they rarely ask you about disability income (DI) insurance. It’s up to you to start that conversation.

Here’s the good news – Principal® has a great tool to help you do just that.

You got this!

Our flipchart includes page after page of reasons why people should protect their income. And when you tell a strong story, you get more receptive clients. Bottom line: more DI sales for you!

Contact your KAFL brokerage manager for any questions.
Principal Financial

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