Finance

Use a team approach in family financial affairs

(Special) – One of the most difficult issues that families have to confront is discussing money and inheritance.

It is estimated that over the next decade some $1 trillion in personal wealth will be transferred from one generation to the next in Canada, with roughly 70 per cent of that being in the form of financial assets.

A recent poll by IPC Private Wealth of Investment Planning Council found that 58 per cent of Canadians have not discussed instructions for their estate with their heirs, of which 12 per cent do not plan to talk about their inheritance plan with their beneficiaries. Thirty-two per cent of affluent Canadians say they are worried about how their heirs will handle their inheritance, with 36 per cent saying their children don’t have the financial literacy to manage a potential windfall. Fewer than one in five Canadians say they have introduced their children to a financial adviser or have taken them to a planning meeting with the person currently managing their money.

During a 30-year career helping Canadians manage and transfer their wealth, Chris Clarke has seen families literally break apart over money.

“It’s a taboo subject that many parents feel uncomfortable or fear talking about with their children until it’s too late,” says Clarke, CEO and co-owner of First Affiliated Holdings. “Discussions about money and family rarely happen in the same conversation. It’s time the two are united and families talk about money in an open environment.”

In her book, “True Family Wealth: Love, Money and An Inspired Life,” Clarke lays out a system based on business principles to bring family members together and get them working as a unit to improve and sustain the family’s financial wealth over time.

“A family united by a common vision can accomplish so much more than separate individuals alone,” Clarke writes. “True success is only achieved when all members of your family thrive, so whether you are a family without a business, are in business together now or have never thought of being in business, you already are … Family business and the business of family can be the same thing.”

Clarke’s model, which she calls the family treasury, is based on many of the same principles that are needed for a successful business such as a common mission, motivation that comes from expressing individual talents, teamwork, policies and procedures, education, training, best practices and continuous reinvestment of all of the above.

The family needs to create a mission statement that reflects an overall purpose, makes use of individual talents and also is challenging to accomplish.

The family treasury is built upon a foundation of esteem where all members feel they belong, are accepted and are understood. This is created through consciousness about ourselves and others, communication, collaboration and celebration of milestones and accomplishments.

Clarke believes families should have regularly scheduled meetings with agendas, set locations and defined goals.

In the event of conflicts, resolution is best achieved by following a procedure that the entire family has agreed to before there is actual conflict.

Conflict is something most people are uncomfortable with and will do just about anything to avoid, often involving deeply disturbing issues that have become taboo and are not discussed. The resulting negativity festers and relationships worsen.

But there is a silver lining. “Innovations and improvements seldom occur without some friction or discomfort causing enough conflict to attract attention to the areas needing to evolve,” Clarke says.

In essence, the family treasury can be considered to have the same potentials of a business.

“In our society there is little in the way of proven systems, processes and procedures that can help the business of family be successful (but) there is plenty of intellectual material available to make businesses successful over the long term,” Clarke writes. “The family treasury uses some of that knowledge and successfully applies it to develop the business of family and to sustain its potentials … A family is truly wealthy when each member thrives.”

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Talbot Boggs , The Canadian Press