The more one learns about Kerr Financial, the more the expression “like father, like daughter” comes to mind.
Krista Kerr was 13 years old when her father, Robert, founded the firm to help affluent individuals and families manage their finances more effectively. Today it has offices in Toronto and Montreal.
“Corporations have always had accountants, lawyers, strategic planners and boards of directors to handle financial matters and future planning. But back in 1979, individuals and families lacked a centralized resource for financial guidance,” says Kerr, who joined her father at the firm in 1993 and is now its chief executive officer.
“My dad always said, ‘If I wasn’t around to advise my family, I’d want there to be a place where they could go and get good, unbiased financial advice with everything taken care of in one place,’” she says. “That was his vision, and it speaks volumes that we’ve been doing exactly that for so long.”
As one of the oldest independently owned firms of its kind in Canada, the 40-member Kerr team provides holistic advice that draws on in-house expertise in investment management, risk mitigation, income tax planning and estate planning.
“Ensuring objectivity is crucial for making the best decisions on behalf of our clients, which is why our compensation comes solely from them with no external fees involved,” Kerr says. “I find the work rewarding because there are always new and emerging complexities that fuel my intellectual curiosity, and because we help families make a difference in the world.”
Kerr recently spent time with Canadian Family Offices talking about how the firm gains a thorough understanding of its clients’ aspirations and concerns, the evolving value of alternative investments and assets, and the key challenges and opportunities ahead for Canada’s wealthiest families.
I’ve learned a lot from successful clients as they’ve built their businesses, and from my peers in the financial services industry. But I actually feel most influenced by the people who have taught me lessons beyond finance.
My father is a very empathetic person who listens carefully. He is excellent at connecting with people, and he’s always had very strong relationships with our clients. I have learned so much simply by watching how deeply he listens.
There’s a tendency, especially when you’re young, to talk a lot about what you know. But that’s not really what this business is about. It’s about deeply understanding the needs and concerns of clients so you can provide the best service to them using best practices.
I’ve also learned a great deal through our membership in the Family Office Exchange [FOX], and through some of the work I did with the CFA Institute. Through this, we were introduced to James Hughes, who’s a seminal figure in the family office industry. His books taught us that wealth isn’t just money in the bank. It’s more about human capital (your relationships with family members), and social capital (your relationships with the community around you), and how you support those two pieces with your intellectual capital (what you know as a group). Your financial capital is the enabler, as opposed to being the result.
Of course we want to have the best risk-adjusted returns and pay the least taxes, but it’s really about much more than that. When I explain this to clients who’ve had a liquidity event, they get excited about these broader opportunities.
I’ve also been fortunate throughout my career to sit on a number of nonprofit boards. I’ve been on the board of the National Ballet of Canada for a long time, and I’ve worked with a lot of very successful business people who are philanthropists. Seeing the value they and their families get from connecting to their communities and giving back has made an enormous impression on me.
My dad has been instrumental in developing deep and meaningful relationships with clients. Through this, we can help clients find purpose in their wealth. He is passionate about exploring the roots of a family’s success and their values. For instance, is it about having access to world-class education? Is it about providing entrepreneurial capital? Is it about preparing the next generation in a consistent way that helps steward family wealth?
All of our clients want to enable their family members to be successful, but the definition of success can vary from family to family. A lot of people want to make sure their children aren’t worried about their financial future, but not so much that they don’t have the incentive to build things on their own.
Many of our clients are actively involved in family philanthropy. They want to give back and find that getting their children involved can help them to become financially literate and to make better decisions as a family.
Differences around purpose tend to stem from preserving the family dynamic in a way that benefits future generations without ruling from the grave. Sometimes families come in after a liquidity event, and they mainly want to focus on investing the money wisely and making sure all the financial structures are efficient while they travel and do other things. This is a good starting point, but by taking the time to broaden the conversation and really identify the purpose of their wealth and what they want it to help them achieve for their families, you can help to unlock much more value in the long term. These conversations can happen at the outset or over the years.
Why do you think there is more openness regarding the search for purpose?
Historically, we have found Canadians to be quite private about money. But we do find clients opening up further to these broader discussions.
How do you persuade clients to open up and start talking about their purpose?
Sometimes people aren’t ready for those conversations right away, while other people are naturally more open. For us, a big part of it involves sharing examples of what we’ve done with other families, and how this work has been valuable for them. Everything’s confidential and we don’t talk specifics.
We start out at the beginning of the year having discussions about strategic opportunities and risks for the family, and setting an annual calendar that usually includes quarterly meetings where we bring everything together. Through those meetings, we weave the themes of financial, social, human and intellectual capital together, and identify objectives for each.
Some people become more open to the purpose discussion as they get closer to making estate decisions, whereas others are open right from the beginning. I do find that family foundations are a great way to open the conversation, because they often revolve around family values in the context of giving money away jointly, as opposed to defining purpose, which can be daunting for some people.
How has Kerr’s service model evolved, and how does purpose fit in?
We’ve always had three distinct areas of business within the firm to help clients manage all of their financial needs: An accounting and tax practice to help clients stay on top of compliance, a financial planning group that helps people make good decisions for the future, and an investment advisory function.
As we’ve grown to provide full-service, multi-family office services to our clients, we have broadened our offering around defining purpose, family governance and next-generation engagement and education. And since becoming members of the Family Office Exchange about 20 years ago, we’ve further deepened our capabilities in this area.
Are there any assets or investments that are particularly appealing to Kerr’s clients these days?
It is not uncommon for clients to only have investments with certain Canadian institutions, or they might only have North American equity. We believe it is important to be diversified across asset classes, geographies, sectors, positions and investment styles. In this regard we work with a number of investment managers that our Investment Committee has done a deep due diligence on that we think are very good. The managers have different specializations. We pair investment managers to provide the best risk-adjusted returns.
We are seeing more interest in private equity and alternative investments. For larger, more sophisticated clients, we may have up to 30 per cent in alternative investment assets. Often when we’re looking at alternatives, it’s not only as return-enhancers. As an example, we have a manager who has a private credit fund in Europe that’s providing funding to green infrastructure projects that can satisfy environmental as well as financial objectives.
When you think about all the wealthy families you’ve worked with, what attributes are shared by those who have benefited most from your services?
Another key for many of our families is being able to evolve from a business owner who makes all the decisions by themselves into a wealth owner. Successful wealth owners learn to delegate and work well with advisers, and then they share that process with their family.
What do you see as the key challenges and opportunities ahead for Canada’s wealthy families?
One of the key challenges is navigating the growing complexities of multi-generational wealth. Tax rules and economic frameworks continue to evolve, and family members are globally mobile. Changes happen at an increasingly rapid pace. There’s growing complexity all over the place, and our role is to streamline that complexity so that the family can make decisions effectively and not be overwhelmed by it.
Oftentimes a successful family will have many people approaching them with opportunities. It’s a nice shield for our clients to be able to say, “That sounds really interesting, but let me run it by Kerr and let them have a look at the data.”
Responses have been lightly edited for clarity and length.
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