Tag Archives: business owner

Breaking Away from the Big Box Store

A new independent RIA (Registered Investment Advisor) sat down for an interview recently about the reasons he left one of the major investment firms. We found most of his reasons familiar because they are the same reasons we set up our own independent firm five years ago.

Here are some of the things he said.

The financial world has changed ….

Besides working at [three different firms I have] more than 30 years in the business. Post–financial crisis, the world around us has dramatically changed. Over the past several years, I’ve seen former colleagues leave to start their own practices. They were doing so well that about two years ago I started seriously exploring my own options.

He likes the freedom of independence …

At [his last firm] I found their support a little cookie-cutter in nature. As part of an organization serving about 7,000 other advisors, I felt like my practice was being forced to manage our clients in a way that appealed to the lowest common denominator. … I still felt limited in what type of services I could offer my clients.

Simply helping business clients connect with bankers, lawyers and other professionals can prove very beneficial. At [Big Box Store], I had to make sure to refer outside businesses only if they met with the wirehouse’s approval. I found that somewhat limiting. … So being able to control my own referral network should create more opportunities to provide a broader network of value-added contacts to clients.

What else can you do that you have not been able to do before?

A big advantage of being independent is being able to advise clients with assets held at other institutions. But we’re also finding more freedom in other areas. For example, one of our clients owns a business that lends to farmers. He has asked me to help open a new line of credit worth about $30 million and shop for the best deal. With another client, we’re helping him interview investment bankers and begin a formal process to sell his software business, which we think is worth between $40 and $50 million.

At Korving & Company, a lot of what we do for our clients has nothing to do with investment management. Right now we are helping a recent widow gain control of her financial affairs. She asked us what we owe her for our services. As a client, there is no extra fee; it’s part of our holistic service model when we act in our fiduciary capacity.

If your financial advisor works for a major firm he is constrained – in many ways – by the limitations placed on him by his employer. Give us a call and see what independence can do for you.

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Korving & Company – Suffolk Small Business of the Year

We are very proud that Korving & Company has been named Suffolk Small Business of the Year by the Hampton Roads Chamber of Commerce (HRCC).

HRCC Suffolk SBOY award 2015

We were honored at a luncheon on Norfolk sponsored by the HRCC on June 12th. Pictures of the event can be found on our Facebook page.

Here is what Inside Business had to say about us:

Father-and-son duo Arie and Stephen Korving have more than four decades of experience in financial advising between the two of them.

Arie Korving entered the business in 1986, working for a global wealth management firm, and Stephen joined him at the firm in 2004, after working in institutional money management. Branching out to start Korving & Co. in 2010 gave them the opportunity to provide individualized financial advice to clients. Their purpose is managing money but putting people first is at the core of what they do.

“We know our clients,” Stephen said. “We manage money for them to help them achieve what it is they want.”
Today, they have clients in every stage and circumstance of life, from the widow in an assisted living facility to the corporate executive. The common denominator among clients is that they remain with Korving & Co. for a long time, some for over 20 years.

Because of Arie’s establishment in the industry and his ability to maintain relationships, they are not just nationwide but across countries, Stephen said. Given the nature of how they invest, long distance relationships with clients have never been an impediment.

“We are a family business that works with families,” Stephen said. “We do for our clients what we would do for our family members if they were in the clients’ situation.”

“We decided to run this business to help people achieve their goals and we want to do it in a highly ethical, highly transparent way,” Arie added.

It is this type of personalized guidance that has kept the company increasing at 15 percent to 20 percent per year, a rate that they want to continue to see as long as it provides the opportunity to work with people in a meaningful and impactful way.

This principle was further established during the market crashes of 2000 and 2008, after which the company decided to become totally independent of large investment firms, allowing them to provide service based on their clients’ needs.

“It really resonates with people when you can say let’s find what you really want to do rather than what the market wants to do,” Arie said. “That type of risk control is an important service we offer.”

Located in Suffolk, they are truly a small business by choice with only one other employee beside themselves on payroll. By staying small, they are able to grow in relationships and be involved in the community, Stephen said.
Arie recently published a book, “Before I Go,” which shares his life experiences from an educational standpoint. They also have had articles in local publications and are currently rated No. 4 in financial blogging in Virginia and in the top 100 in the U.S….

Their bottom line is helping people. “We can continue to grow in the amount of money we manage, but we want to maintain the very personal relationships we have with people,” Arie said.
“People never want to think of themselves as a number.”

We welcome your inquiries.

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Business Owners Often Neglect Their Own Finances

Entrepreneurs spend a lot of time figuring out how to succeed in business. But when it comes to their own personal financial situations, they tend to let things go.

… a new survey of business owners … concludes. Nearly half of poll respondents — 667 owners of firms with revenue of $5 million or less — say they lack a personal financial plan. Furthermore, about a quarter of participants who built a company from the ground up plan to fund their retirement by closing their business.

However, the survey also found that some of the business owners would not have enough to cover their retirement needs.

Owning a small business involves much more risk than business owners often realize. It’s like planning for your retirement by owning a single stock. What happens to the retirement plan if the stock drops?  The same thing happens if a small business falls on hard times.  It’s called putting all your eggs in one basket.  Unfortunately lots of things can go wrong, and many of them are outside of the business owner’s control.

Small business owners need to realize that depending on the business to provide for their retirement income needs is too uncertain.  They should think of themselves as employees who need to plan for their eventual retirement independent of their business. That way, if the business succeeds they can walk away with even more money.   And if it does not, their basic retirement plans are secure.

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Family Business Financial Planning

A family business is one of the ways that individuals build something of value for themselves and their family. Suffolk is a great example of a community where family owned restaurants, hardware stores, gift shops, bike shops, jewelry, sporting goods, clothing and furniture stores line the streets. Suffolk has its national chains, but its most recognizable businesses – in the pork and peanut industry – began as family businesses.

These family shops often provide a comfortable living as well as job opportunities for family members of the founders. Whether they stay small and local or grow into large businesses, there are challenges that everyone running a business has to face.

The first is competition. For every business there is a better financed competitor. The supermarket doomed the family-run grocery store. Wal Mart is a feared competitor for anyone selling groceries, clothing, furniture, electronics, toys, eyeglasses; and now it’s even getting into banking.

The second challenge is a bad economy. Many communities have seen their downtowns shuttered when local industry left. The businesses depending on housing have still not fully recovered from the crash of 2008.

Finally, most small businesses are very dependent on one or a few key people. If the children don’t want to get into the business when the parents are ready to retire, the business often closes. There is no guarantee that a business can be sold when they owner is ready to retire. Unless the owner has prepared for this, the financial results can be devastating.

For all these reasons, the family business owner has to make sure that they have prepared themselves financially for life after the business. Succession planning is critically important and should be part of the business plan from the moment the business is started. If a business is a partnership, buy-sell agreements should be in place to avoid complications from the death of a partner. If a business is going to be passed along to children, the owners should be clear about the division of assets. Otherwise there is likely to be wrangling – or even lawsuits – over who is entitled to what.

Most people in business choose to convert from individual proprietorships to limited liability companies. This protects the business owners’ personal assets in case of a lawsuit against the business. Some convert to “Chapter C” corporations for tax purposes. If a company wants to grow even larger, it may want to raise cash by “going public” and selling shares to the general public.

One of the most common mistakes that business owners make is to invest too much of their money in the business. It’s a fact that a family business is a high-risk enterprise. Competition, the economy – even a change in traffic patterns – can bring a business to its knees. Building an investment portfolio should go hand-in-hand with building a business. When most of your money is tied up in your business you are making the same mistake as the investor who owns only one stock. Diversification reduces risk and provides a safety net. Factors that are out of your control could end up severely damaging your business value, thereby crippling your total savings and your future goals and ambitions.

In addition to the traditional savings and investment accounts, the tax code provides many ways for business owners to put money aside in a variety of tax-deferred accounts such as SEP-IRAs, 401(k) plans, and SIMPLE-IRA plans. As a business owner you can even set up a “Defined Benefit Plan” which works much like a traditional pension.

There are a great many things that running a business entails beyond offering customers a great product or service. People who start a business are usually focused on this aspect of the business. But to insure that the business – and the family – survives and thrives, business owners should seek the assistance and guidance of a team consisting of an attorney, an accountant and a financial planner. They may be in the background, but they are critical for the financial success of the family business.

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