The economic downturn and current upswing have shaken up the business model at Tacoma-based Cornerstone Financial Strategies.
In the last several years, the financial planning company has seen a significant rise in the number of business entity clients seeking its services.
“It’s gone from 0 percent of our business five years ago to 25 percent today, and I anticipate it being 50 percent of our business five years from now,” said Bill Pickles, co-managing partner and owner at Cornerstone.
These businesses are small to medium size companies that have only a couple of shareholders or owners controlling the operations, so the financial planning responsibility typically falls on the shoulders of an owner or manager, rather than a professional trained in financial planning, Pickles said.
“There’s lots of gaps that arise or lack of planning that happens because of time constraints that firms are under or individuals are under,” Pickles said. “As the marketplace gets more complex, there’s wealth management, asset management (and) risk management efforts that need to be done on a day-to-day basis in a very complex economic, financial and regulatory environment. There are lots of moving pieces that have to be analyzed, and you need to have a process to do that.”
Beyond its existing services, these entities are in need of a more holistic approach, which includes “integration of advice for legal, tax, benefits, financial planning, financial advising and wealth management,” he said.
“We’ve been able to provide that for individual clients. It’s now being requested of us via our business clients,” Pickles said.
He said the need for integrated services has always been there, but the recession made it more apparent for businesses.
“The changes over the last several years, I think, are driving the perception of value, and they see the benefit of doing this much more than they did previously. I think that has to do with the volatility of the marketplace and the speed of it – the speed of the risk,” Pickles said. “A stable world – in the sense of you know how the next quarter is going to look, you know how next year is going to look, has been stripped away, and the confidence that you can just sort of motor along and ignore these things – has been stripped away.”
Pickles said financial risks for a business can change at any time because of a credit change, a regulatory change, or a market or economic change.
“All of those things can impact them in some way or another, positively or negatively, and they’re going to happen more quickly than they have over the previous decade, and that’s independent of the business itself,” he said.
Business entities seeking his company’s services are now looking at the next five years and beyond, so that they can prepare themselves for the next opportunity, whether difficult or prosperous.
“Did that business exist five or 10 years ago? Not exactly, and we’re looking to build out that portion of our business aggressively over the next several years because the market is demanding it.”
To meet the demand, the firm is continuing to build its partnerships with accountants, attorneys, risk management firms and others. It’s also looking to add another advisor to its local team.