Cindy Radu champions ‘true collaboration’ in a growing family-office sector

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A family office is not the same as a law firm, an accountancy or an investment company. It must evolve with the needs of the family, so it can be tricky for that family to identify the best kind of firm to assist them.

Cindy Radu appreciates the challenge.

“I’m very unusual in this space,” says Radu, founder of Cindy Radu Advisory Ltd. in Calgary. She calls herself a “family wealth transition advisor.”

Having worked in accounting firms, law firms, financial institutions and the court system, “I understand what it’s like being in all these different roles as an advisor. It’s really hard for families to understand those distinctions.”

Plus, as the family-office sector becomes more established in Canada, she says, many different kinds of firms are entering the field.

“One of the biggest issues we have today is that everyone is calling themselves a family office,” she says. “For families, it’s really challenging because it’s pretty hard to vet them. In the U.S., there’s legislation about this: You can’t just call yourself a family office. We need to do some work on this.”

The alphabet string of designations that follows her name – B.Comm, CA* / FCPA*, CFP*, LL.B., LL.M, TEP, ICD.D. and FEA* – speaks to her roles across numerous disciplines. It also enables her to understand that a well-rounded family-office professional requires more training and experience than can be achieved simply by adding one complementary designation to professional competency in a single technical discipline.

A family’s needs can change quickly, and advisors may suddenly need to be versed in legal and financial nuance that was not previously important.

For instance, as the change in Canada’s capital gains inclusion rate approached, says Radu, advisors were “cramming people into estate freezes,” a strategic tool that shifts future growth in the value of assets – such as private company shares – into a trust structure, often for the benefit of children and grandchildren of the asset owners.

But when you create any kind of trust-company structure, you often end up with conflicting fiduciary roles, she says. “Typically, mom and dad are trustees, beneficiaries of the trust, directors and shareholders of the company, possibly also management. We’ve started to see litigation when these trust structures get ‘unwound’.”

Also, “now we have the rising generation who’ve set up their own companies, but when they go to use their capital-gains exemption [CGE], they may find out that their parents already used their children’s CGE but may not have given them a demand promissory note or the cash.”

Professional advisors do not bear all the blame for these situations, she notes. “I think families really have a responsibility, but we haven’t been super-great about creating the education pieces around understanding these structures and implementing good governance.”

Her complex education

Radu’s path to her current consulting role led her though numerous sectors, beginning with a Chartered Accountant designation. She soon decided that the accounting field didn’t suit her, however.

“No one else in my family has a university education, except my dad, and he’s a mechanical engineer,” she says. “So I just stumbled into accounting. I left my job once I got my CA and started calling law firms to ask about law-firm administration. Completely unexpectedly, I ended up as a controller at Bennett Jones, one of the top law firms in Canada.”

This time, the field was a fit. “I was 24 or 25 years old, and I just fell in love with law,” Radu says, “so much so that I decided to go to law school.”

She gained another unexpected career boost later when one of her professors invited her to co-write a textbook on taxation and estate planning. Consequently, “I ended up having this national name because every tax advisor in the country had a copy on their desk.”

The next step came when Radu served as law clerk for three B.C. Court of Appeal judges and acquired her Master’s in Law in international taxation and trade. This was followed by a three-year stint as a tax lawyer with the boutique firm Felesky Flynn LLP in Calgary before returning to Bennett Jones – this time as a tax lawyer.

“I call that my B.C. – my Before Child career,” Radu quips. After she had a daughter, she pivoted slightly to work with high-net-worth families at Royal Bank of Canada.

Then she was asked to start a privately owned trust company in Alberta, from scratch.

“I did that for quite some time, and then Tim Cestnick [co-founder and CEO of Our Family Office in Toronto] started a multi-family office for Scotiabank. They needed someone to start their Prairie provinces division. So now I’ve done accounting, law, trust company and big banks; finally, I just decided I needed to do this on my own,” she concludes.

Finding ‘true collaboration’

Today, Radu says she believes that one of the best resources for advisors trying to position themselves in the family-office arena is the Ten Domains of Family Wealth model from the UHNW Institute in the U.S.

“What Domain(s) do you work in, and how do you get paid?” she asks. If the answer is that “your primary source of revenue is from selling insurance or investment products, are you really a family office?”

She is a great believer in “true collaboration,” something she believes will be facilitated over the next few years by the UHNW Institute. “Advisors tend to work pretty cooperatively, but true collaboration is uncommon,” she says, pointing out that, with so many specializations “even within one firm, to get true collaboration is really hard.”

She offers the example of a family that had been working with a team of advisors for more than 20 years who engaged her to work on a family-governance matter that involved drafting a new shareholders’ agreement. Radu arranged for the lawyer and the accountant to meet to discuss it, and “the mom and dad called me after and said, ‘That’s the most productive meeting we’ve ever had with any of our advisors’.”

In another case, a friend told Radu that when he was buying the family business from his father, “everything was going so smoothly until the advisors got involved, and then I felt like I had to Frankenstein it.” Radu now gives a workshop in the importance of bringing advisors together called “Stop Frankensteining It.”

She speaks highly of organizations that already exist to facilitate collaboration, such as STEP Canada (the Society of Trust and Estate Practitioners), with whom she works closely. “It’s a really great organization – the people are highly collaborative and cross-disciplinary.”

Also, she says that “Family Enterprise Canada is doing a great job in building awareness, but I think that there’s still a lot of work to do. Thank goodness there are all kinds of people who are coming into this space with all kinds of backgrounds. We just need to continue to grow on the professional side and the family side.

“It’s a really exciting time in the family-office space, and we’re still really at the beginning of it in Canada. We have the opportunity to do it right if people are open-minded, willing to look south to the U.S., look at tools like the Ten Domains, be a bit more introspective and put a pause on money, money, money.”

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