A recent survey conducted by U.S. Trust revealed that business owners feel responsible for creating new jobs and opportunities for their communities, though many entrepreneurs are neglecting financial security.
Of more than 600 high net worth poll participants, approximately 75 percent said that they feel that they “have a responsibility to create jobs” and 76 percent feel obligated to keep on employees even if it results in lower profits.
“Some of the most successful business owners and entrepreneurs in history have been driven by a desire to change the world and improve the lives of others,” Keith T. Banks, the president of U.S. Trust, said. “The country was founded on that spirit of entrepreneurism, and it is a tremendous engine of economic growth and prosperity. Yet many business owners are so caught up in what they are doing that they often don’t envision a world without them in it. By not anticipating risks or a change in circumstances, they unintentionally may put the financial security of their families and employees at risk, despite their best intentions.”
While business owners may be looking out for their communities, they may be neglecting their own personal financial future and security. Seventy-seven percent of business owners said that it was important that they leave a financial inheritance to children and grandchildren.
The survey found, however, that 55 percent of business owners have not set up a formal succession plan for their businesses, and 60 percent of entrepreneurs do not have a comprehensive estate plan.
Families that rely on a business and the business’ owner may require special planning and consideration.
“The business is often the primary source of wealth and income for the family, and financial responsibilities and risks often extend well beyond immediate family members to include parents, grandparents and siblings,” Banks said. “The modern American family comes in all shapes and sizes, and managing the dynamics of extended, blended and single-parent families or any special health, financial and emotional circumstances can have a big impact on planning needs.”
While more than 50 percent of entrepreneurs indicated that they felt financially responsible for less fortunate family members, 40 percent of respondents said that they did not have a financial plan in place to cover long-term care costs, and less than 50 percent have purchased long-term care insurance.