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Behind the Scenes - Educate Your Clientele

Submitted by Lisa Fannin on Fri, 06/25/2021 - 8:00am

In this week’s Behind the Scenes blog, we welcome T. Ray Phillips, Founder of The Family Business Legacies. T. Ray has been in the industry for more than 2 decades and is a Certified Family Business Specialist. He formed what is now The Family Business Legacies in 1998 and has seen significant growth since the beginning. He helps family businesses prepare to pass the baton to the next generation. His goal behind every plan he creates is to keep the original owner’s legacy and purpose intact.

BEI: Why did you decide to work with business owners to help them exit?

T. Ray: I first got interested in working closely with business owners in my first job out of college. I was working in the rural farming markets outside of Indianapolis and enjoyed working with the people who really made an impact on that community.

But the main reason why I chose to focus on working with business owners has more to do with my own family's business. My family started a produce company in Oklahoma, and it ran into some challenges in 1920. They started in the land run of 1889 and by the 1920s they had a transitional challenge. The challenges that they faced in the '20s are very similar to what we see businesses facing today. I saw the impact of those challenges on my family over 80 years and watched history repeat itself time and time again. I just want to help other family businesses avoid what my family had to go through all those years ago.

What I find interesting is that some people think family business legacies are only for family businesses. But this really isn’t the case. Even two unrelated owners can have family values. People are finally starting to better understand family legacy. In its purest form, the culture that exists in most companies is a family business culture, even in international companies. My company was designed to speak to the issues of family legacy in any business. As I get introduced to and start working with more owners, our message really starts to resonate with them. I'm not coming in with this corporate mentality that of does not function well in the culture of a privately-held company.  

BEI: Tell us about how an unexpected challenge with a client impacted your practice and how you work with business owners.

T. Ray: I think the primary area of focus for any financial professional to be successful is understanding how to ask the questions. Many financial professionals may only ask questions that fit into their own agenda, but we really need to focus on questions that address the owner’s specific needs. It is extremely important to truly understand what they value, not what you think is the most important. By getting them to tell their story, you’ll get a better understanding of what they don’t know or haven’t considered yet.

A family business can feel like the owner’s child. Therefore, you must approach criticism about the business cautiously. As financial professionals, we need to understand just how protective owners can be about their businesses. A business is often much more than just brick walls. There's a whole lot more to it and coming in with this understanding helps get your foot in the door. Break down that barrier of mistrust so that owners will share their priorities with you.

One of the core elements of my job is to help distinguish between what an owner might think they need vs. what they actually need. For example, an owner came to me requesting a succession plan. After quick analysis of their situation, I determined they needed a transition plan, not a succession plan. Often this is the first time owners have had any kind of discussion around succession, transition, or Exit Planning. They’ve never had anyone sit down with them to help them understand the differences and explain to them what they need. Each kind of plan is interchangeable in some respects and I help them understand the differences and what the expectations are of each.

This is where I think we can provide tremendous amount of value so that they don't go down the wrong path. We help them see the whole picture and outline each of their options.

BEI: What tools, resources, or different strategies do you use to support your business owner clients?

T. Ray: A lot of trial and error. I often found that I was trying to do too much, too soon.  I was providing owners with a lot of valid information, but they would become overwhelmed.

I now do a phased approach where I only introduce certain resources and tools in the first four months of my relationship with a client. We will eventually get to a point where we can move into the next stage and I can introduce another set of tools to help progress the project forward. Because most owners are not ready to transfer ownership in the next six months or a year, you are essentially just setting the stage for these owner clients. I've used all the BEI Exit Tools at one point in time or another based upon what stage a particular client might be in.

The newsletter has brought me more opportunities time and time again. Two of the clients that I've picked up in the last three months were from people receiving my newsletter over time. Finally, one newsletter hit a cord with these prospects at the right moment and they finally gave me a call. The newsletter is worth the entire BEI Membership cost before I even touch another tool.

I love using the EPIC Assessments and showcasing the pie chart of the different priorities and discussing the areas of focus specific to that client. This is a tool that isn’t overwhelming and is easy for the business owner to understand. They can clearly see the next steps that you need to focus on. Most owners don't know how to plan past one year much less two. Having tools and resources to help map out their path is extremely helpful. The entire process is about momentum.

BEI: How has adding Exit Planning to your practice broadened the work you do with business owners?

I am constantly wearing different hats for my role. One hat I wear is my planning hat that I put on when I first start drafting the exit strategy for my clients. But I also have a risk management insurance hat that I have to put on in certain occasions. And finally, I switch to my wealth management investment hat occasionally as well. Any good financial professional wears multiple hats depending on the needs of their client. 

Along with being a well-rounded financial professional, I also think it is important to have a healthy relationship with the other financial professionals you work with. I find it extremely valuable to support and boast about the other financial professionals on my planning team. They in turn do the same for me once you establish that rapport. The CPA I typically work with, for example, will tell my clients what a hard worker I am and how efficient and diligent I am. He tells them how good I am at helping my clients organize their thoughts and bring everything together. I do the same for him.

This brings the team of financial professionals closer together, can help alleviate any stress or doubt the client might be experiencing, and helps progress the process forward more efficiently. In turn, this can also lead to future referrals. When you have a team you can trust, and we uniformly have the client’s best interest in mind, the planning process runs much more smoothly.  

BEI: How did you start working the in the Exit Planning Space

T. Ray Phillips: When I got into the Exit Planning space in 1998, I started with organizing workshops. I was creating workshop content before I even knew about BEI. It wasn’t more than 10 -15 years ago that my clients started to want to hear more about this thing called “Exit Planning” or ownership transfers.

I had noticed there was a negative connotation to the term “Exit Planning” with a lot of clients I was working with. To me, this just meant that there was a lack of knowledge on the topic. The term gained momentum and interest quickly once owners started to understand the importance of planning. There was a huge market of baby boomers about to retire and many businesses didn’t have plans or know where to start. Internal business analysis was also not very common at this time, so businesses were also really struggling to fully understanding the need for an Exit Plan. There was a wealth of opportunity, I just needed to inform business owners of the process and what Exit Planning really was.

I had a wealth of informational content to provide to these confused and overwhelmed business owners that I had been working with since 1998, when I first started my business. I wanted to teach them about what was going on in the industry, and what they needed to start planning for. This really resonated with them.

In order to have future clients, I needed to inform them of the risks of not planning. Because they weren’t going to be clients of mine if they lose their business because of a lack of planning, right? I speak at all kinds of conferences and associations simply just to educate owners and get them thinking about their futures. This is commonly the first time they hear about this kind of content.

T.Ray Phillips is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC.  Family Business Legacies is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliate companies.  900 E 96th St Suite 300.  317-469-9999. CA Insurance License #0G89358, State of Domicile: IN

CRN202405-195812



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