Why Planners NEED to Assist Clients to Protect Their Assets!

Posted on October 28, 2022

As Planners, why is it important to offer Asset Protection services? First, some things to consider: Small and medium-sized businesses make up over 90% of businesses worldwide. (IFAC). Small and medium businesses drive global economic growth and contribute to over half of the overall GDP of the world.  Small and medium businesses account for and provide almost 70% of all jobs. There are 31.7 million small businesses in the USA, (CDN) with said small and medium businesses making up the vast majority of all U.S. companies. Given this, it's probably safe to say those small enterprises are the backbone, if not the heart and soul of the global economy.

Despite their importance to the US and world economy, small businesses often face significant headwinds – so much so that statistics on small business startups show that 50% of small businesses fail in the first five years. One factor contributing to the abysmal failure rate for these small businesses is both the threat and cost of litigation. In a study conducted among 65,000 small businesses, researchers found that a staggering 36% to 53% of small businesses get sued every year! Businesses victimized by the American Legal System in particular need to brace themselves for when they have to pay for massive attorneys’ fees, settlements and verdicts never mind the emotional distress and reputational damage that can lead to loss of business opportunities.

Here are some more interesting statistics to consider:

· As of 2020, there were 1.32 million lawyers in the US.

· The US holds the top spot for the largest number of lawsuits with over 40 million filed here every year.

· US companies spent $22.8 billion in 2020 because of commercial litigation; a figure that goes up virtually every year.

· American companies spend almost two times more of their total revenue on litigation than the worldwide average.

· A study released by the US Chamber Institute for Legal Reform found litigation-related costs increased 14% from 2016 to 2018 with businesses spending $343 billion in 2018, up $43 billion from 2016.

· Medical lawsuit statistics show that conservatively, 34% of all physicians get sued at least once in their career. (American Medical Association), with medical malpractice payouts reaching $4.03 billion in 2018. (Leverage RX)

I suspect that none of this really comes as a surprise to anyone reading this. We all know that the rising costs of defending frivolous lawsuits filed by those looking to make easy money are a huge problem. Our clients know this too. Luckily, our clients will also recognize the value of tools to help them to get out of litigation quickly and inexpensively. In other words, creditor protection planning is an opportunity for advisors to solve a real problem in their clients' lives. Isn’t that why we got into planning in the first place?

If the peace of mind you provide your clients in offering these services isn't enough incentive, I would go a step further and argue that it is downright unethical not to offer them!  No one would disagree that it is not ethical to advise clients to do something that we know they should not do or to do something they do not need to do because it will not benefit them. Does it not follow that it is unethical to fail to advise clients that there are things they should be doing when we know it could potentially benefit them?  To put it another way, as attorneys, do we ever want to hear from a client after they are notified of a claim or served with a summons, "why didn't you tell me there was something I could have done to protect myself?!?"

I make this offer to any advisor reading this - I will train you at no cost, or work in conjunction with you to offer these services. I will help make you an expert in a valuable space where your competitors aren’t. If you would like to get on a call to discuss these services please do not hesitate to contact me via the 'contact' page of this website. Thanks for reading this far, and I hope to chat with you soon!