Performance figures for each account are calculated using time weighted rate of returns on a daily basis. The Composite returns are calculated based on the asset-weighted monthly composite constituents based on beginning of month asset mix and include the reinvestment of all earnings as of the payment date. Composite returns are as follows:

5 Things To Consider When Creating & Distributing Wealth


By Rick Goossen, Business Development

Rick has extensive experience with high net worth individuals and families, working with them in both a financial and governance capacity. He thrives on understanding the business and entrepreneurial journey of individuals and families and then using creative and strategic thinking skills to help them succeed. 

The Family Business Life Cycle: Creating & Distributing Wealth

“I hated all my labour in which I toiled under the sun because I must leave it to the person who comes after me. And who knows whether they will be wise or a fool?” According to the writer of Ecclesiastes, passing on wealth was a problem 2,500 years ago. It remains a challenge today, too.

Many families experience turbulence when transitioning their businesses (and wealth) to the next generation. Don Corleone of The Godfather movie trilogy tried. Michael Corleone, the youngest son, reluctantly joined “the family business.” It was a bit messy. In our present times, the media is regularly filled with sagas of family squabbles from mom & pop operations to global conglomerates.

Families and their leaders often create wealth, but they don’t always effectively manage the two aspects of building wealth through the life cycle. One is to create it. The other is to distribute it. They are equally important.

Wealth can be created at each stage of the life cycle of the family business. Here are some of the keys:

  • Good communication and transparency. Most people don’t communicate well or fully—and that includes families.
  • Have shareholder agreements that are not only well-drafted but comprehended.
  • Practice good governance, which includes issue identification and conflict resolution
  • Stoke the entrepreneurial spirit. The business was likely birthed in innovation—if that spirit dies, the company’s days are numbered.
  • Create systems rooted in best practices rather than personalities.

Creating value is great, but it’s largely for naught if you drop the baton on the handoff. Below are five things to consider when building and sustaining wealth while maintaining harmony within your family business:

  1. Careful financial planning will mitigate risk.
  2. When passing on wealth, consider tax implications carefully. The stories are commonplace of a generation receiving assets they must sell upon receipt—and a lifetime of work evaporates.
  3. Think about how management and shareholders, which often overlap, get paid.
  4. Have a life insurance strategy rather than simply a policy (particularly as part of buy-sell provisions in agreements)
  5. Integrate your family business strategy with your estate planning.

 

This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Nicola Wealth is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities commissions.