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Guidant Financial's Email to Partners about Closing Its Small Business and Franchise Financing Services

BREAKING NEWS: (Editor's Note) Below is a statement emailed to Blue MauMau from Guidant Financial Group's CEO, Stephan Roche. The firm has just emailed it to partners to inform them of the decision to suspend sales of Guidant's 401(k) investment products, which are the majority of the company's services. FULL STORY HERE.

Dear Larry,

Effective immediately, Guidant Financial Group is no longer providing small business financing services.  

In October of 2008, the IRS released a Field Directive about 401(k) rollovers that they termed Rollovers as Business Start-ups (ROBS). The Field Directive provided guidance as to what an IRS Field Examiner should evaluate when auditing a ROBS transaction. Guidant believes its 401(k) rollover product is in full compliance with the IRS Field Directive guidelines. As part of its assessment of the ROBS transactions, the IRS acknowledged the following:

Although we do not believe that the form of all of these transactions may be challenged as non-compliant per se (our emphasis), issues such as those described within this memorandum should be developed on a case-by-case basis.

IRS Field Directive: Guidelines Regarding Rollovers as Business Start-ups
(October 1, 2008)

We became one of the leading providers of the 401(k) investing strategy by being a more customer-centric organization. Our Outside Counsel program was developed to ensure that a qualified tax and ERISA attorney reviewed each and every one of our client's transaction. We have paid nearly 10% of our gross revenues as part of this program because we believed it was in the client's best interest to have their own legal representation. Our goal was to do business differently than our competitors by providing a more rigorous and comprehensive compliance standard. 

Since the IRS Field Directive was released, we have made several attempts to contact the IRS and the Department of Labor (DOL) in order to gain further clarity on their interpretation of this product. Through those efforts we have determined that both the IRS and DOL are concerned about the "promoters" of such products. Guidant is disheartened by the intense focus directed on promoters of the small business 401(k) investing strategy.

Our disappointment is particularly acute as Guidant has not been given the opportunity to work directly with either the IRS or DOL as part of their investigation. It is out of an abundance of caution that we have determined that our best course of action was to suspend sales to new clients. It is our hope and expectation that the federal agencies will seek our direct input into their investigations to help provide clearer guidelines for investing an individual's retirement savings into America's small businesses.

We are in an economy that is shrinking, where small businesses are not being funded, and where millions of jobs have been lost. The ROBS product allows people to invest in a small business as a way to enrich their retirement account. It is creating jobs, opening businesses, and in a small way stimulating an economy that is on life support.

Thus, it is with a heavy heart that Guidant has chosen to suspend sales of any new products unless or until we have further clarity from the IRS and DOL. As we have since we launched this business over five years ago, Guidant and its employees believe in this product and hope to reinstate it in the future.

In anticipation of a higher call volume, we would ask you email us and allow forty eight (48) hours to respond. Please email any inquiries to We will keep you posted with any new developments.

David Nilssen


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Don Sniegowski is editor of Blue MauMau, the daily news journal for franchise & small business owners. Call him at +1 (270) 321-1268, tweet @bluemaumau or email