Covid–19: protecting your wealth

The coronavirus crisis is putting many businesses under pressure and placing a huge strain on entrepreneurs’ finances. For the majority of business owners, personal wealth is closely linked with business wealth, which means the threat to their money and future lifestyles is amplified.

It’s not uncommon for the lines between personal and business wealth to become blurred. Technical Connection consultant Simon Martin says: “An entrepreneur is extremely reliant upon his or her business. It provides for their present and future – their lifestyle is dependent on how their business is doing – so naturally it’s going to be quite important to get it right. As business owning entrepreneurs, often they are not very well diversified, so considering diversification as a removal of risk is important.”

Thinking about risk

In light of the pandemic, there is a lot to consider, and knowing what to do in such an unfamiliar situation can be daunting. Simon explains: “For a financial planner, risk is the key thing to consider and mitigate. Thinking about how to protect your business – because your business is the driver of your wealth.

“So, think about what actions you may need to take. It might be protection in terms of life insurance. It might be an element of diversification within your business; maybe look at new markets or new opportunities. Creating a really detailed financial plan that incorporates both business and personal assets is important. And also engaging with specialists to look at your business and make sure it’s as efficient and effective as it can be. The key action is – create a plan.”

Martin Brown of business growth advisers Elephants Child adds: “First you’ve got to survive and stabilise your business, but then you want to push on and thrive. Now is a really good time to think about what your agenda looks like. Although we are in the midst of a crisis, there will be a way through it, the market will recover and we will recover, and everyone needs to be best placed to take advantage of that.”

Look after yourself

For you to effectively manage your personal wealth at the moment, he suggests that it’s important to start by looking after yourself: “Don’t be afraid to feel vulnerable or to lean on people. Don’t panic or bury your head in the sand. Do something positive and do something logical. If that means you need a bit of help, then so be it. It will pay dividends in the long run.”

To prepare for when we come out of the crisis, he suggests forward thinking and strategic planning: “Think about what you want in retirement, when you are going to retire, what you need and what you want to leave to others. From that standpoint, you can see what your pension looks like, what the gaps are, and what protection or tax-efficient wrappers you need to get in place.

“You then need to know what the business needs to do for you. If you think about it as enabling your future, you can review remuneration packages, consider key person shareholder protection and whether you are fully funding your pension. All those things often get lost because we’re just thinking about satisfying our next client, paying our next supplier and managing our teams. But these are things that you can do now, even in a time of crisis.”

The St. James’s Place Entrepreneur Club is uniquely placed to help you navigate the Covid-19 crisis. We can provide the business advice you need from people with many years of experience of running businesses themselves. And through your St. James’s Place Partner you can also access financial expertise so that you can develop a seamless and robust plan that spans your business and personal finances.

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