Assume nothing – How client priorities have shifted post-pandemic

Business leaders across the country have reassessed their strategies countless times over the past two years, as the pandemic drastically changed the way businesses operate and plan. Now as we transition into a new era, business owners are reviewing their financial planning and structures - with asset protection emerging as a trending move for business leaders who have reassessed their priorities. As we explore the motivations behind owners’ steps to protect their assets, there is much to be learned about how we as accountants can offer the best strategic advice for our clients during these new circumstances, as well as being reminded that there is no room for presumptions of our client’s attitudes towards the future. Who is exploring asset protection? All owners of companies of a certain size - regardless of sector - are looking to protect their assets to some extent and, where possible, capitalise further on the growth that they're seeing on their balance sheets. In any case where the value of asset protection outweighs the investment in its implementation, the service will be of great benefit – but there are certain circumstances where asset protection will offer a particularly high return on investment. For clients who are accelerating exit strategies, asset protection can help them do this efficiently without losing any value from their exit deal or causing any damage to this business. Others who were forced to make an injection of personal funds to their business during the pandemic have turned to asset protection to secure their own position - and ensure they aren’t forced to do the same again should another crisis arise. Similarly, the clarity that comes with a crisis like the pandemic has reminded many leaders that there can always be a shock around the corner, and they are now taking steps to ensure the longevity of their enterprise through whatever they may be faced with next. This might be achieved by diversifying into other sectors or restructuring a Group business so that everything isn’t sat with one trading entity. Companies that saw growth during the pandemic might be looking to set up Family Investment Companies to help manage the reinvestment of new cash, as well as to add protections to increased personal wealth by planning taxes efficiently for future generations. As a rule, businesses that were set up five or ten years ago may now have an outdated structure. However, following the extent of change we have experienced over the past two years, there’s an even wider need for structures to be reassessed to make sure they are fit for not only the present, but for the future too. What has sparked this spiking trend? The motivations behind exploring asset protection can largely be defined as an overwhelming shift in attitudes. Two years of introspective thinking have forced business owners to reflect on their mortality, lifestyles, and survival instincts, and now they have reassessed their priorities and are considering what their new goals and aspirations are. As an example: those with imminent plans to exit may be looking to spend more time with their families or to avoid navigating another crisis during the late stages of their career. There are many technical considerations for accountants to assess when looking at asset protection, but where we as advisors can offer added value is by finding out what clients want in the short, medium, and long term, and design the new structure in a way that specifically protects their priority matters. That might involve setting up a family investment vehicle in such a way that it removes as much personal risk as possible, for example: by protecting the parents from children who might look to sell shares unexpectedly, or divorces that risk wealth being passed onto places it wasn’t intended. This long-term thinking can also help identify major financial opportunities, such as savings on capital gains and inheritance tax, which are benefits that will be felt much further down the line. On top of the personal considerations, there are heavy social and economic pressures coming out of the pandemic, and business owners are now leaning on asset protection to regain the feeling of control and safety that they’ve been lacking in recent months. Knowing your clients well allows you to understand all potential risks that they might not think to flag – this is how you safeguard them, their business, and their families, establishing yourself as an invaluable part of their support network. How can we learn from restructuring for asset protection? While the technicalities of asset protection are generally well-known across the industry, what we can truly learn from this spike in service interest is this: assume nothing and stay on top of your clients’ needs. As accountants, we can all be guilty of thinking we know what the client wants and what is best for them, because we asked them all these questions years ago. But we must recognise that the world has changed drastically. Many high-net-worth business owners are in their fifties, sixties, and seventies, and with new stages of life come new priorities. For accountants, it’s time to do what we don’t do very often - rip up the rule book and start from scratch. Mortality and ambition might feel like sensitive topics to broach but having strong and trusting relationships with your clients comes from having candid conversations that demonstrate you have their priorities at heart. For my team, getting out to see clients in person again as soon as restrictions would allow was key to sensing who needed to have conversations about asset protections, or indeed discuss any other kind of need they might not have had before the pandemic. As a starting point, you can ask how life has changed for them since the pandemic - no doubt that will reveal any new challenges that need to be solved. Remote working and tech enabled services are great, but the truly irreplaceable value of accountants is how we understand the people we work with and take steps on their behalf that protect what they hold dearest. Accountants tend to be reactionary, but what clients truly need is proactive thinking to build the path to get them to where they need to be. As soon as you become out of touch from your client’s needs, you are on track to losing their business - if you aren’t having sensible conversations with your clients, then other firms will be. Accountants can find comfort in following standard practices but investing your time in building new ideas and having new conversations will pay dividends for you and your clients. Meeting needs before they have even been identified is how you demonstrate value to your clients and build relationships that last into the future - which is ultimately where we all want to be. By Tim Pearce, managing director at Haines Watts Worcester