If Only I Had Told Him Sooner!

I met John by appointment in his office just before the Christmas holiday some years ago while I was still an Independent Financial advisor. The appointment had been made for me by my staff so I had no prior contact with him. The meeting was arranged on the basis that I would show him how to reduce his company tax by deflecting profits into his own account, in other words I was there to sell him a company pension scheme.

During my conversation I gathered a lot of information about his Age, health, any insurance protection he had and his business turnover etc.

In the course of my 30 plus years in the business I never failed to be surprised by the total lack of awareness by 90% of small to medium business owners of the personal financial risk they are building as they develop their businesses.

Typically they invest their blood sweat and tears and their capital for years, they take relatively small incomes and plough the profits back in to build up their asset base. As the business develops the Bank will gradually increase their company overdraft and often the owner will take on a Mortgage to build larger offices or work unit.

They truly believe the size of their holding in the company is their financial security. Some of them never live to find out how wrong this strategy is. If you study the statistics as I did, you will find that amongst the male population one out of six does not reach the age of thirty and another one will not make it to retirement (including businessmen) i.e.:- one out of three do not make it. John was the one. I did not know this, neither did John. At the meeting I showed him the risk he faced, all his asset was in his business. He like so many others had no life insurance.

I explained how he could get a lot of term protection in the cheapest way possible through a company pension scheme with full tax relief with the premiums paid by the company.

As the holiday was imminent he deferred the medical for such a large sum to the following week. I went to his office the following week and he wasn't there. One of his employees told me he had had a massive heart attack while playing squash 2 days before and had not survived.

The scenario that played out after this was a horror story that affected me deeply and impacted on the way I would insist on urgent action once a person had seen the need to follow my advice. As soon as the bank learned that John was no longer there to run the business, they put a stop on the Companies trading account, no more money was allowed to be paid out. Like all banks they moved to secure their money. They didn't want Johns' plant or stock or car, they wanted cash. John like most businessmen did not have a huge pile of cash in reserve for this emergency.

If they could not get cash they had to have a sale. Have you ever seen the result of a forced sale of a business property. I have seen many and it's never a pretty sight.

As I said I have been in hundreds of businesses and 9 out of 10 of the owners are at risk in the same way. If you know any tell them about John and make them get protection immediately.

Ask a successful businessman what is his most valuable asset is and he will probably say it is his business. Yet he is the business, he may have a few people around him in the business, but would it survive without him? As his investment in the business grows so to does his personal risk. It is a problem created by the increasing value of the company so he needs an increasing amount of asset protection on his life, which is so inexpensive when bought and paid for by the company.

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