Business Innovators Radio - Interview with Russell Thompson with H&R Insurance and Financial Services- What Happens When Business Owners Want to Retire

Episode Date: May 19, 2026

Russell brings a unique combination of market insight, relentless work ethic, and a passion for education to his role as a financial advisor. With a deep understanding of market cycles and a commitment to going above and beyond for his clients, he is uniquely positioned to help business owners, individuals, and families pursue and protect their financial goals with confidence. In 2014, after a 24-year career in industrial construction and professional MMA fighting, Russell made a pivotal shift into the financial services industry. His decision was driven by a personal realization: many of his business owner friends and family were unprepared for the financial risks that could erode a lifetime of hard work and asset accumulation. Since then, he has developed and refined a comprehensive planning process designed to help clients set clear goals, uncover potential risks, and implement personalized strategies to protect and grow their wealth. Russell lives in Daytona Beach, where he enjoys an active lifestyle that includes weightlifting, Brazilian Jiu-Jitsu, golf, and time at the beach. He’s also passionate about motorcycles and regularly attends local biking events and live music venues.Learn More: Email: [e-mail] or www.hr-ifs.comSecurities offered through Regulus Financial Group, LLC, Member FINRA /SIPC. Advisory services offered through Regal Investment Advisors, LLC an SEC Registered Investment Advisor.Regal Financial Group, Regal Investment Advisors and Regulus Financial Group are affiliated entities. Registration with the SEC does not imply any level of skill or training.

Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us Russell Thompson with H&R insurance and financial services and we'll be talking about what happens when business owners want to retire. Russell, welcome back to the program. Thank you. You know, I think that it's interesting when you think about, oh, when someone wants to retire, they file paperwork, sign up for Social Security and retire.

But maybe business owners, it's a little bit more. of a process. What is different with when someone that's a business owner wants to retire? What are some of those extra things that they need to be considering? There's a lot. And there is a big difference. So most business owners, their business is their retirement plan. So at some point, they need to turn that business in the income. and they want to exit and go away and live a happy retirement life. So there's not a date. There's a process.

Yeah. So, you know, a lot of business owners, they're busy growing their business and they're busy making money. And they actually don't have, they don't take the time because they are busy to plan an exit strategy. How am I going to retire? So, you know, there's several ways to do that while you're growing your business. you have you can do some type of 401k for your business um you got to figure out at some point who's going who are you going to how are you going to turn that business in income you know and a lot of the exit paths typically are sell to a third party such a you know a competitor or

some type of private equity group you can transition it to a family member or some type of internal success or someone you trust who's worked with you, been with you a long time. A structure about is needs to be put in place early. It's hard for these guys to come out and say, okay, I'm 65. Maybe they had a health hiccup or something, but they can't perform at their work the way they used to. So they have to sell it quickly. Well, that's hard. if you haven't done other things because a lot of businesses are valuable, very valuable,

and they produce a lot of money, but they're ill-liquid. So there's not cash there for them to take. So there's several ways to build cash as you go. Again, please get out there and meet with a professional way beforehand, way before you decide to retire. Yeah. Yeah, you can't decide. oh hey i'm done with this i had a bad month and i'm just going to sell so let me put it for sale sign

up on the business you can't do that it's very similar i would venture to say to like oh i want to sell my house let's have an agent come in and let me give me a value and oh look you should do the following repairs and renovations to get the highest price same with the business what's the business worth now what could it be worth with a little bit of effort and time and maybe you spruce this up and that up and that's a whole process that's a whole you know three day seminar right there in that conversation. But to your point, you've got to know well ahead of time. And then, you know, what about a buyout and a structure buyout and all of those options,

selling it to family, selling it to the employees? There's a whole process. You cannot just do it on your own. But I want to ask you this question. I've read a book recently on, I think it was called exit without exiting. And it was talking about how some business owners, it's just their life. They want to get out of the day-to-day grind because it's just wearing them down they're ready to retire but they're not really really ready to give up the baby that they built

so what they were talking about is look let's spruce things up and create processes and operationally um to where you come in once a week you've got a CEO you've got a president and you're doing all the fun stuff the stuff you love to do whatever that that is but all the things on the list that you hate to do that just make you just feel overwhelmed you have the other people do that so that now in essence you're exiting because you're exiting the things that you don't don't like, but yet you're just coming in once a week, maybe then once every other week, then once a month, and you're doing all the things you want to do. Have you seen some of that play out with your clients? I have.

And at the end of the day, if that's what you're doing, what you want, that's great. But what if the people or a main person you're relying on wants to leave? They get a better offer at another job or whatever. Yeah. So you have to prepare for that. Yes. Several strategies to do all this. But the one, I'll touch on first, that a lot of people go this right, especially in larger businesses.

And when I first got into the industry, I was really surprised how many business owners would take out life insurance policies, cash value life insurance policies on key employees. So you're relying on this. person to run your business so you don't have to do it. What happens if they sudden pass? What do you do then? And then how do you retain them? What if they do want to get a better job? How do you, it's called golden handcuffs? How do you convince them to stay? What's at the end of that rainbow? You know, and people use life insurance for this and they call it key man life insurance and you tell this individual you stay and say you're here for 10 years I'm going to take this life insurance policy out on you because I rely on you and if something

happens to you my business is in a mess now but if you stay here for 10 years 15 years whatever that timeframe is, you know, I'm going to give this to you and there's going to be cashed out in a minute that you can access tax free to help you with your retirement. And you will have life insurance to leave those legacy to your beneficiaries. But you have to stay here this long. Yep. So, and it's a great strategy. It can be structured multiple ways.

that's too much to kind of get into on this podcast. But you can use that in so many aspects of retaining key employees. Because they know, okay, I might pay me more about the hour, but when I retire, I have this extra money for when I retire. And they might be thinking, well, I'm just going to leave because they give me a better lunch hour or a vacation or a little bit more pay. But in reality, if you got something like this in place, that really could help retain those key employees longer.

Now, that's a big thing with business owners is employee retention. It's taking the time to train someone and then trust them and around them and they get vested. You don't want them to go away. You know, you put a lot of time and effort and money into this employee. So, you know, it serves multiple purposes. I know you're not a tax person, but have you heard of tax benefits, to the business owner for setting up something like this, because I do know that if you were to set up a 401K for employees,

when the business contributes to the employees 401K, that contribution has some type of business tax benefit to reduce things like that. But is there a similar thing when you're funding this type of a plan to help retain employees? There is. It's a little different. but it's a tax code that says if you do this life insurance policy for this person and you give it to them,

the premiums are taxable to them. Okay. But you can bonus them the money to pay the taxes on that. Got it. So there are tax benefits to this. And then, of course, when you do this, it's a write-up. for the business. Yeah, so definitely talk to, talk to your CPA, talk to your tax preparer to make sure of all the

things. But, but suffice it to say, if you're going to do this kind of a thing to retain key employees, there could also be some business benefit to the business. So you're going to get some double benefit that way. Absolutely. And also, I would think that if this plan is in place to retain key employees, it would also, on the flip side be an attractive plan to attract top performers. So you might not only, you might have more than one key person that you want to have this

for and you might be growing. You might be in a business where you're wanting to hire three or four or five VPs over the next five or 10 years. And if you've got this plan in place, you can point to it. And that would help attract key people when they're trying to choose between your company or someone else. and this might be a wonderful way to attract and hire key players. Yes.

And I'll give you a kind of a story on that. I remember when this came out, Forge magazine put out when Jim Harbaugh went to Michigan, a big part of his package was an index universal life insurance policy that the college put in for his hiring package. And it was large, but they structured it and when it's called a split dollar plan

and business owners can do this. So they're putting a bunch of money into this life insurance policy because remember, if this individual takes cash out as tax free and definitely high income earners use this a lot. But at a certain point, say 15 years

into the policy, they've paid on this. Now they can stop paying and take the premiums back that they paid into the policy. And that's called split dollar. And there's enough cash left in it to support the policy. And the way it's structured and the way this is done.

So it's not a normal life. The life insurance policy is a life insurance policy. It's whatever we guess. It's just the design and a structure of it that allows this, these businesses come in and take their premiums back. And that policy has enough cash in it to support it. so that this person can take money out, tax-free, and that policy still stay intact. So it's a new concept and a neat plan.

Yeah, who would have thought, I mean, that's high, high, high level. And probably in the Harbaugh example, it would be neat to see the case study, but probably in his decision-making process, he's looking at this school or that school, and now he's looking at this opportunity and going, hey, that's unique, that's great, that's legacy from my family. the school's looking at it going, hey, well, if we structure it the right way, we get these benefits, and it's a win, win. So that's really, really neat to hear.

So you mentioned the key person that then you mentioned briefly. I want to dive a little bit deeper into the buy-sell agreement for business partners. You know, yes, that's very important. We know. We've heard about that. But why are, you know, properly structuring or at least having a buy-sell agreement? Why is that so important? Well, two people

were partners and you can go on for four or five and one of those partners pass away if you do not have a structure by a sell agreement

you just came partners with their heirs and they have a right that owner has and I've had so many conversations

on this to where people business owners say yeah we have it in contract what happens how much the buyout is not well is it funded because if it's not funded it's not worth the papers written on

what is what is funding look what does that mean what does it look like to have it funded versus just have it on paper meaning that that buy out of those shares of that individual is there okay where does that come from you know so do you have the money on the side do you have it are you liquid enough as something happens for one partner to buy out the other. Right. If you don't have this in place, I ran across one business owner, who had a partner who passed away

like a month before I met with him, and his business was put into probate. That takes a long time. Oh, that did. And it was very stressful on him, and he didn't know what he was going to do because he didn't have the money to just buy them out. And he did not want to be partners with that individual's,

that partner's heirs. So it's very important to have. And the funding part, you can agree on a price, but if you don't tell the errors how they're going to get their money, or are they just going to take your word for it? Are they even going to agree that what your partner view agreed on what a fair buyout looks like?

Are they going to say, I agree, that's what it's worth. So it needs to be contractual. And this, a lot of times, so much just, you know, pennies on the dollar to buy a life intern's policy to cover that. So you're not having to take a loan or you're not pulling that cash out of the business, which could affect the operating. Yeah. For the business. Yeah, a couple. a couple things there.

Like, I didn't think before like, oh, I'm a partner with so-and-so and they passed away and, oh, well, I don't like his brother who's going to take over. And that could be a nightmare. Well, having that proper by-sell structured is important to protect that. Secondly, how is it funded? If you have a bunch of money sitting liquid in the business, it could be better deployed somewhere else potentially. So you need to know how it would be funded and maybe having a good cash value life.

insurance policy on the partner would be that funding and then that would be a better use of the funds rather than being liquid because many businesses don't have that huge amount of money liquid at all and even if they did is it the best place to have that money sitting correct it serves multiple purchases that cash value can so say the partner gets hurt and can't perform he's not the asset to the business that he was, or you just can't work and he has to retire. Where's that money come from? No, first cash value in that life insurance policy, the business has been paying the premiums more than likely that, usually what happens with that.

And you go, okay, there's this much cash value in this life insurance policy, this is going to be a part of your buyer. So you can transfer, say the business owns it. Usually individuals own it on each other. So it's easy to transfer. But when you transfer ownership of a life insurance policy from an owner to the insured, there's a rule called the transfer of value rule. So it avoids that transfer of value rule.

So, and again, get with your CPA on this. I'm not an accountant. I've been through this and know how it works. but that transfer to the insured avoids that transfer value rule so there's no taxes on that transfer of cash to that individual. Mm-hmm. You know, all of these things that we've been touching on, you know, structured buyout, full by a partial buyout, exit without exiting, all of these things means you should be doing it well ahead of when you want to leave or exit, right? how early should you begin? I mean, I know in a perfect world, you know,

you'd want to have these things way ahead, but, you know, bare bones, how early should a business owner be starting to have these things in place and prepare? That's a broad question, because when businesses first start up is when they should do it, but if they're not making, you know,

producing the money to do it, and he's done quickly. So there's not, it all depends on the business, how much they're making, how much they can afford. At the end of the day, the business has to be able to afford it.

It needs done. I wouldn't go, I mean, it is really it's imperative to have it done at some point. And the sooner the better, because life insurance premiums are based off age and health. And several things, but those are the two driving factors and how much a life insurance policy cost. And when you're looking at a certain debt benefit,

because that's what is needed to fund it, then the older you are, the more that's going to cost. And can the business afford that? So the earlier, the better. But it's such a broad question because every business is unique and our situation is unique. So let's wrap up with this question. If you were to say, hey, the number one biggest retirement planning mistake business owners make is what? Not planning.

Yeah, not having a plan. And that's the biggest mistake. I only ran into a few businesses. And again, this has been for the first 10 years in my 15-year career, this is what I did, which I helped with succession planning with businesses. And only a couple said, yeah, we did that when we drafted up the contract to start the business together. It just doesn't happen that often.

It's kind of like when you fail to plan, you're planning to fail. That's exactly it. It's a great house. Yeah. Wow. Well, Russell, this has been really eye-opening for business owners wanting to plan for their retirement. If someone is interested in reaching out, maybe having a little bit of help that way in their business,

what's the best way they can connect with you? They can email me at Russell at HR-I-FS. and endemfrankseera.com or just go to our website at www.h-r-r-ifs.com. That's endem-franc Sierra. Excellent. Russell, thank you so much for coming back on. It's been a real pleasure chatting with you today. Thank you.