(March 6 – 17:30 ET) – Three quarters of Canada’s small-business owners have not taken adequate steps to protect their personal assets from creditors in the event their business incurs financial problems, according to a survey just completed for Mackenzie Financial Services Inc.

The survey revealed that only 1% of business owners has invested in segregated funds. Seg funds offer growth similar to a mutual fund as well as potential protection of personal assets from market volatility and creditors. Sixty-three percent of respondents, mostly business owners with older and larger operations, own mutual funds.

Small-business owners say they are using means other than seg funds to protect personal assets from creditors in case of business failure. For example, 22% have purchased business liability insurance to protect personal assets even though this insurance may not protect personal assets in the event of business failure.

“Small-business owners in Canada may be putting their financial future in jeopardy,” said Mark Tiffin, executive vice president, Mackenzie Financial Services Inc. “By foregoing personal financial protection, especially during a period of growing economic uncertainty, business owners put their personal possessions, investments, and even their retirement plans at risk.”

While just 1% of small-business owners reported buying seg funds specifically to provide potential protection of personal assets against business creditors, another 7% of small-business owners claim to invest in them for other reasons, unaware of their protective features. Two-thirds reported never hearing or reading about seg funds.

“The statistics show that knowledge and investing go hand in hand, which is where a financial advisor is critical,” said Tiffin. “Too many business owners don’t realize that seg funds may help immunize their personal investments against creditors while providing equity-like growth.”

According to Mackenzie, new rules make seg funds a must-have for small-business owners. Recent regulatory changes require that companies offering seg funds set aside capital to cover the potential risks, which may ultimately result in higher costs for investors.

“These funds were always meant to provide estate-planning benefits and, in some cases, creditor protection,” said Tiffin. “Hopefully, with the new rules, investors and advisors will reconsider their needs and realize that you only need pay for the protection you want — nothing more. In the case of creditor protection or estate planning, a product that provides a 75% guarantee is an attractive and more affordable choice.”

Mackenzie says its seg funds were designed in anticipation of recent regulatory changes, and are among the lowest cost in the industry. The company expects to launch new seg funds by end of April 2001.

The Mackenzie survey was conducted by Market Facts through its Small-Business Panel, a pre-identified sample of Canadians who own and manage independent businesses with less than 20 employees. The survey was conducted by telephone interviews of 301 small-business owners between January 22 to January 26. The companies are involved in industries such as consulting, business services, farming, forestry, construction, manufacturing and others.