New way to help manage your wealth
Everyone seems to be talking these days about the economic prosperity of Western Canada and the challenges the region faces looking forward.
Like the provinces, those individuals who have benefited by pioneering new businesses or enterprises also need to develop a long-term wealth preservation plan. Fortunately, there are professionals such as multi-family offices that can help.
A multi-family office pools the resources of high net-worth individuals and can often offer in-house accounting and legal services, including record keeping and administration, lifestyle and estate planning, objective financial planning, offshore protection, and oversee the management of your public and private investments by outside portfolio managers.
Using one means relinquishing some control over the administration of your wealth. While this can be a difficult thing to do at first, once undertaken it can actually be quite liberating to know that someone is dedicated to managing your hardearned wealth.
In contrast to the east, many consider Western Canada to be in the early to mid-stages of its growth profile. In particular, a lot of the wealth in the region was created in the past 50 years with the foundation formed on the backs of those that settled in the provinces in the early 1900s.
The subsequent two generations of hard-working, risk-taking entrepreneurs developed the region’s plentiful resources from agriculture to oil and gas. These years of hard work have paid some handsome dividends as the 300 kilometres between Edmonton and Calgary has become one of the wealthiest regions in North America.
As a result, many have been rewarded with newfound wealth, especially those who took calculated risks with both their time and capital.
This includes people who established or built companies exploring for and developing local resources, as well as business operators indirectly benefiting from this growth in activity.
Success in many cases was the result of putting all of their eggs in one basket and watching it very carefully. Often, their investment plans mean putting any additional wealth created back into what they know best — their own businesses and similar industry friends and associates.
A sense of control often drives these decisions, but this control can prove to be an illusion. Wealth that took years to create can be lost in a relatively short period of time, especially if it is highly concentrated.
That’s why wealth preservation is especially important for those generating it from a business or industry, such as the resource sector, that is susceptible to large market swings.
This is where an independent financial planner or multi-family office can be especially helpful. A good financial planner will help develop a long-term wealth preservation plan that includes working with independent portfolio managers, accountants and legal counsel if necessary.
For anyone with a higher net worth, say, in excess of $10 million, an independent multi-family office can provide an invaluable one-stop service.
Some will provide succession planning services as well as assist in the set-up and administration of foundations and endowments. We even know some that have co-ordinated travel plans, hired nannies, undertaken one-off diligence on transactions, and done the bookkeeping for families’ investee companies.
We’ve worked with a number of multi-family offices while at TriVest and at previous investment firms and have been quite impressed with the level of diligence they undertake and, more importantly, their strong commitment and loyalty to their clients.
But beware of any financial planner or multi-family office that offers their services as a means of securing the management of your investments. Instead, look for independents, meaning they primarily use outside investment managers and do not sell in-house financial or insurance products.