Business accounts create new opportunities for advisors to support clients

Taking care of a client’s whole financial life is central to the work of a fiduciary advisor, a task that becomes even more important – and challenging – when the client owns a small business or leads a non-profit organization. Accounts designated specifically for business cash reserves can be essential for entrepreneurs and small business owners, but their needs often differ from that of an individual client in distinct ways. And to make things more challenging, the options available to business owners are limited and are often characterized by dramatically lower rates than retail options, cumbersome account opening processes, and frequent restrictions on liquidity.

Advisors who support this growing demographic have the opportunity to build a deeper, stickier relationship with their business-owning clients and expand the potential of their own business in turn. 

According to the U.S. Chamber of Commerce, a record-breaking 5.4 million new business applications were filed in 2021.¹ Typically defined as a business with less than 500 employees, small businesses make up 99.9% of companies in the U.S.² “Small businesses play an important role in our country and in the fabric of our society,” said Flourish CEO Max Lane. “They are more likely to be tied to their community and aware of its needs. However, when it comes to financial services, they are often underserved. Small businesses are often more complicated for banks to service than individuals, but don't hold the significant balances of major corporations to warrant an expanded relationship with the bank, creating a gap.”

The financial needs of a small business – from banking and financing to cash flow and tax management – can be vastly different from the financial needs of individuals. Small businesses and nonprofits typically lack the in-house financial expertise that is often central to the successful operation of large corporations. Their owners can struggle to find banking solutions tailored to their specific needs, often navigating this unfamiliar territory on their own. 

Implementing a cash-management solution for business cash reserves has the potential to yield an array of benefits for owners. “There’s a tremendous opportunity for services like Flourish Cash to help small businesses with their reserve cash, adding more protection and helping them earn a better rate,” said Lane. "We frequently hear from small business owners that the rates they earn on their business cash is a small fraction of the rates that they are able to earn on personal cash. While the rate for typical business accounts often can be below 3%, Flourish is proud to pay the same great rate to business owners as we do to retail customers, helping clients of all types achieve their goals."

Flourish Cash is used by thousands of businesses and nonprofits, from doctors and accountants to foundations and home-owners associations. A Flourish Cash business account has the potential to help owners:

• Earn more with a competitive interest rate, 4.25% APY^§ as of 11/08/2024
  • Rates are subject to change. View program summary.
• Protect their business cash with 20x the FDIC coverage – up to $5M – through our Program Banks^Ω 
• Maintain access to funds with daily liquidity^| and unlimited transfers
• Avoid the cost of standard business accounts with no Flourish account fees^ƒ or minimums 
• Easily get started with a completely online account opening experience

A cash-management account can support the financial needs of businesses of all types and sizes, but could be most beneficial for businesses that align with certain use cases – in addition to the use cases we explored for personal account owners in The Cash Opportunity. Business accounts could be useful to hold: 

• General reserve cash for small businesses
• Endowments of nonprofits
• Annual profit sharing contributions of medical practices, legal firms, financial firms, and more to earn interest on the funds before distributing 
• Contributions to HOAs held for repairs, development, etc.
• Quarterly tax payments
• Short-term liabilities
• Funds intended for business expansion
• And much more

Additionally, helping small businesses and nonprofits improve their cash management can potentially provide a substantial source of additional income, as outlined in the next section. This benefit can help business owners increase the financial security of their business and, by extension, themselves – and with extra income and a stronger sense of security comes increased peace of mind.

Based on conversations with hundreds of advisors, we’ve commonly heard three key benefits to focusing on businesses and nonprofits:

1. Deepen relationships with clients
   Advisors who provide financial advice to individuals who manage a small business or nonprofit aren’t necessarily involved in the financial and tax planning for that business. However, that doesn’t mean that the business’ finances are out of their realm of influence. Advisors should embrace the chance to help small businesses and nonprofits, even if they don’t have a direct relationship with the business entity itself, as a powerful opportunity to improve the relationship.
   
   
2. Help the business, help the client
   Rather than viewing the small business or nonprofit as a distinct entity, advisors would be well served to see it as an extension of the client. “If you can help improve the business in some small way, it can only benefit the advisor who, of course, wants a deeper, stickier, more meaningful relationship with their client,” said Lane. Even if the advisor isn’t managing the wealth of that business directly, providing access to a business account serves as another touchpoint for the relationship and can have positive repercussions that deepen and improve the relationship.
   
   
3. A powerful prospecting engine
   Offering business accounts can be a differentiator for firms and a potential growth driver: 
   
   1. Many advisors have found success with offering Flourish Cash invitations to prospective clients. Flourish Cash provides advisors with the ability to immediately add value – long before advisory agreements are signed and assets transferred over – while prospective clients will be reminded of your brand every time they log in to Flourish.
   2. By helping out businesses and nonprofits managed by current clients, for example, advisors may be able to secure audiences with key executives and board members that may turn into private wealth leads. 
   3. For advisors that manage retirement plans, offering Flourish Cash Business accounts can be a powerful way to increase mindshare with CFOs outside of quarterly investment committee meetings – while the ability to offer Flourish Cash personally can be a powerful way to start the private wealth conversation with key executives at the businesses you serve.