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Protecting Businesses

November 2008. UKD Learning & Development. Protecting Businesses. Tim Williams Senior Technical Development Consultant. Business Protection Agenda. The barriers to the market A track to run on The necessary support. The Market. Estimated 4.5 million businesses in the UK . 1

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Protecting Businesses

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  1. November 2008 UKD Learning & Development Protecting Businesses Tim Williams Senior Technical Development Consultant

  2. Business Protection Agenda • The barriers to the market • A track to run on • The necessary support

  3. The Market • Estimated 4.5 million businesses in the UK .1 • Combined protection gap of £500 billion.2 1Department for Business, Enterprise and Regulatory Reform – Statistical Press Release August 2007 2 Swiss Re Insurance Report 2005

  4. The Market • 63% Sole traders • 25% Companies • 12% Partnerships • Estimated 4.5 million businesses in UK* *Department for Business, Enterprise and Regulatory Reform – Statistical Press Release August 2007

  5. Why This Market? • Opportunity to diversify • Advice led • More profitable • Bigger cases, multi sales • “Company cheque book” • Easier to sign! • Repeat business • More professional

  6. The Barriers • Where are the prospects? • The “CJ” factor • The “knowledge”

  7. Prospecting • Existing client bank • Self employed / sole traders / employers • Professional connections • Solicitors / accountants / tax advisers • Chamber of commerce • www.britishchambers.org.uk • Business link centre • www.businesslink.gov.uk

  8. Prospecting • Mailing lists • Your suppliers • Local papers / Thompson’s / Yellow Pages • Mail targets clients with pre approach letters • Hold seminars • Get positive feedback

  9. The “CJ” Factor • Less control over corporate clients? • Similar process to “domestic” clients • Need to explore needs • Need to recognise the consequences of not protecting… • Need to develop “relevant knowledge”

  10. A Track To Run On • Fact-finding • “Tell me about your business?” • “What were the problems?” • “How far has it come?” • “What about the future?”

  11. The Main Issues • Loan protection • Key person – identification and protection • Succession planning • Retirement planning

  12. The Need For Key Person Cover • Replacement costs • Business interruption • Financial implications • Who is on the subs bench?

  13. Replacement Problems • Head hunters • Relocation • Training • Package: • Car • Salary • Bonus • Shares? TIME! MONEY!

  14. Consequences… • Loss of confidence… • Bank manager • Customers • Creditors • Staff

  15. Key Person Insurance • Multiple of Salary? • Percentage of profits? • Can I get tax relief on this?

  16. So, Who Is A “Key-person? • Anyone whose loss affects profit! • Sales director? • Purchasing manager? • Technical director? • Chief designer? • It could be anyone!

  17. Insolvency Act 1986 • Introduced the concept of “wrongful trading” • If a company goes into liquidation….. • Directors could be liable if…. • They didn’t take sufficient steps to protect the company!

  18. Corporate/ Partnership Protection

  19. Business Moral obligations Retaining control Resources to buy Dependants Replacement income Security of cash Market for shares? Corporate/ Partnership Protection

  20. Types of Agreement • Buy and sell • Automatic accrual • Cross (double) option

  21. Financial Underwriting • Key person limits will apply • Shareholder / partnership protection: • Total cover triggers the limit, not individual • All should effect cover • In trust / life of another • Appropriate agreement to ensure Insurable interest

  22. What About Retirement ? • Foreseeable event • Plan via endowments • Regular premium / lump sum collectives • Utilise ISA allowances • Share buy back?

  23. Other Areas For Consultation • Employee benefits • Personal arrangements for business principals • Personal guarantees • Sole proprietor and redundancy liability • Reviewing trusts • PA 1890

  24. Our Business Protection Proposition • A Dedicated Business Protection Team • Same day service • ‘High Net Worth’ Underwriters: • Pre-application assistance: • Personal case handler: • On your terms:

  25. Contact Us • Helpline: 0845 602 6181 • Email: businessprotection@friendsprovident.co.uk • Webpage:www.friendsprovident.co.uk/adviser/businessprotection

  26. Next Steps Want more information? • Find out more about Business Protection and access a whole host of useful downloads, by viewing our online seminar on 10th December at 3.00pm. • Add the event to your calendar by visiting the Seminar and Podcasts section on the Friends Provident Adviser site.

  27. This presentation is based on Friends Provident's understanding of current law and HM Revenue and Customs practice which may change at any time. The value of any tax relief depends on the financial circumstances of the investor. • FRIENDS PROVIDENT LIFE & PENSIONS LIMITED IS A MEMBER OF THE FRIENDS PROVIDENT MARKETING GROUP • AND IS AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY • www.friendsprovident.com

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