Farming is not for the faint-hearted, and you need your proceeds to work as hard for you as you have worked for it. Given all the external factors that count against you, it is clear to see how hard you have laboured to earn that money.
Therefore you need someone just as committed as you are to turning your money into whatever is important to you.
I prefer using financial solutions for agricultural business owners that have been designed to help you make the most of your money and prepare your agricultural business for the future.
Time has proven that a three-dimensional approach to financial planning for farmers are the best solution and eliminates any blind spots that could put a temporary or permanent halt to your farming practice. This three-dimensional approach consists of:
- You, the agricultural business owner, and looking after your personal risk and investment needs;
- Your agricultural business needs continuity, risk management and saving for the future; and
- Your employees need their benefits and personal and investment needs addressed, and you need employee retention strategies.
How to find optimal solutions
By following the six steps of financial planning, you first need to identify potential risk areas in your business and personal life. These include anything from unsuited products or strategies, an outdated will, and right up to cash needed to wind up a deceased estate.
The next step is to quantify these risks and then structure a solution. The following analytical tools in the analysis phase are vital and most effective:
- Estate planning is an analysis process that ensures the feasibility of your will.
- The 1-2-3 of business identifies and quantifies the seven major financial planning risks of your agricultural business.
The role of the financial adviser
As your agricultural business and your personal financial interests are complex, you are well advised to consult a knowledgeable financial adviser. This adviser will be able to help you make the most of the financial solutions available to you.
A suitable portfolio of financial solutions for agricultural business owners should consist of the following aspects:
- Asset protection (short-term insurance)
- Buy-and-sell cover (ensures the business can continue smoothly after the death of a partner)
- Employee benefits
- Funeral cover for employees (funeral plans can cover the employee and family members)
- Fiduciary services (wills, trusts and estates)
- Healthcare (medical aid, including gap cover)
- Key person insurance (assists in continuation of farming operations in the event of a vital person in your operation dying, or becoming disabled or seriously ill)
- Retirement provision for agricultural business owners and employees
- Risk cover for agricultural business owners and employees (life, disability and critical illness cover)
- Surety cover (when agricultural business owners stand surety for business debts)
- Wealth management (savings and investment)
It might seem overwhelming at first, but if you speak to a trusted and reputable financial adviser, you will be guided through all the aspects step by step, and they will explain everything in detail. It will be easier to tackle the process and look at the solutions one at a time, until your financial adviser has addressed and covered everything.
Should you wish to talk to a financial adviser with regards to any of these financial solutions for yourself and/or your farm, contact Neil Botes via email: [email protected]
