At a time of great optimism, many are seeking qualified advisors
by Juan José (JJ) PérezMr. Pérez is President of Nationwide Corporate Solutions. Visit www.nationwide.com.
After nearly three years of living through COVID-19 and the related economic fallout, we’ve all faced challenges we never could have imagined. It’s exciting to see that business leaders across the country are getting back to what they do best – focusing on growing their businesses.
One segment of business owners is looking to the future with optimism. Thanks to a partnership with the U.S. Hispanic Chamber of Commerce (USHCC) and Reimagine Main Street, we had the opportunity to talk to Hispanic small business (HSB) owners and found that 69% remain optimistic about the future of their businesses.
However, according to our survey, many may be missing the resources and relationships they need to prepare for the next unexpected business disruption. With the threat of a recession on the horizon, business owners could be facing new challenges just as they begin to feel like they are finally putting the pandemic in the rear-view mirror. This presents an important opportunity for advisors and financial professionals to build and enhance relationships with this important segment of business clients.
It doesn’t surprise me to see that many Hispanic business leaders are optimistic, or that they are wearing many hats as they focus on solving each day’s new challenge. I watched my father, a former Mexican migrant worker, create a thriving business. His ability to self-serve and problem-solve was indicative of the strength and resolve that is common among Hispanic Americans.
But many HSBs have acknowledged that they would appreciate the expertise of some new partners. In fact, our survey found that almost all (94%) HSBs are open to seeking guidance about ways to make their business more resilient. However, nearly half (44%) told us they are struggling to find the right partners.
As you look to grow your practice with this fast-growing segment, you can build trust and credibility by positioning yourself as more than just their financial advisor. You can solidify your position in your clients’ inner circle when you establish yourself as a risk management partner, helping clients identify and prepare for potential risks of all types.
In some cases, you may have the solution they need. There may also be opportunities where you could leverage your network to bring other experts such as insurance agents, attorneys, cyber security experts, benefits consultants, creditors, etc., to the table to fill an important gap in their plan for business resilience.
Based on our survey, here are a few things you need to know when working with HSBs that may help you build a successful relationship and position yourself as a risk management partner for the long term:
HSBs Are Facing Headwinds Without A Safety Net
82% of HSBs reported a negative impact on their business as a result of the pandemic. Many told us they are experiencing the effects of high inflation (51%), soft demand (41%), increased input costs (77%), supply chain disruptions (74%) and a tight labor market (60%). More than half (56%) said the difficulties of the last few years left them with no cash reserves, which means that many are navigating these challenges without a financial cushion.
One way you can help right away is by developing a strategy for securing capital to replenish reserves. This could involve helping clients build a stronger relationship with a bank or financial institution – or understanding solutions like securities-backed lending to help your clients access cash to grow their business or sustain in it through a rough period.
HSBs Need To Attract And Retain Talent
Like many businesses across the country, HSBs told us they are hiring. According to our survey, only 18% have increased benefit offerings and more than half (55%) told us they offer no benefits at all. In a competitive job market, a company’s benefits package can be the difference between attracting or retaining the human capital they need to succeed.
This is an opportunity for financial professionals to connect Hispanic business clients with a benefits professional to help them understand their options. With only 14% of HSBs saying they worked with a consultant to explore new employee benefit offerings in the past year, this could make a huge difference. In many cases, employers can add benefits and pass some or all of the cost to employees who choose to select them – meaning they can offer added value to employees with limited impact to the company’s bottom line.
HSBs Are Looking To Cut Costs
Many business leaders seek to enhance their business’ resilience by finding cost savings. Our survey reflected this thinking with 55% of HSBs indicating they are reducing their operating costs to prepare for future shocks.
Financial professionals may be able to help in a variety of ways. For example, one way a business owner can cut costs is by self-funding their health insurance plan. You can help them understand what’s involved in this process, or even connect them with a benefits consultant to discuss how medical stop loss insurance can protect against costly spikes in claims.
Many HSBs Are Operating Without Risk Management Strategies
Our survey showed that some HSBs are taking positive steps to prepare for future adversity including enhancing their company’s risk management strategy (18%), conducting a formal risk assessment (14%), creating a business continuity plan (28%) or creating a succession plan (19%).
These are all great ideas for any business to consider. However, the majority of those we surveyed do not have updated plans of this nature in place. As their risk management partner, you can flag the opportunity to get ahead of the game with some strategic planning that doesn’t need to impact their bottom line.
Additional Resources To Help Business Owner Clients
Nationwide created a discussion guide to help advisors and financial professionals have conversations with business owners to identify opportunities to enhance their business’ resilience. This can be a great jumping off point to position yourself as a true risk management partner.
Your business clients already count on you to help them address financial risk. By engaging in broader proactive conversations about business risk management and bringing new solutions or partners to the table to address protection gaps, you’ll solidify yourself as an indispensable partner.