Ten things keeping well-to-do Canadians awake at night

Article content

The French have a term for it: nuit blanche.

We’ve all had them, those exhausting “white nights” spent tossing and turning while our brain races through the disturbing thoughts we keep at bay during the daylight hours.

Wealth doesn’t banish worry, and our experts would agree as they describe 10 things currently keeping wealthier people up at night, from minor problems to full-blown fears:

10. New opportunities

Generally, when one imagines the thoughts that keep us awake, we tend to think of fears and anxieties, but sometimes the best ideas pop into our heads when we’re halfway between sleep and waking.

“We do also see families kept up at night by opportunities as well as risks, and I think COVID has had an impact here,” says Ralph Awrey, director of Stonehage Fleming (Canada) Inc.’s family office in Toronto. “Families are trying to figure out how to use their social and cultural capital as well as their financial capital to help their communities, how to best structure and execute their philanthropic efforts: How do we want to use our family wealth?”

9. Losing it all

“Everyone who’s wealthy – whether they created the wealth or inherited it – is always afraid of the money going away,” says Adam Hoffman, an advisor with Vesta Wealth Partners Ltd., a family office in Calgary. This is despite the fact, he points out, that many highly successful people speak of the remarkable and valuable qualities of their lives before they had money.

Ironically, excessive risk aversion driven by the fear of losing wealth can lead to the kind of poor financial decision-making that can put a fortune in peril. “You should behave like the money could leave at a moment’s notice,” he says, “because if you behave otherwise, you’re probably acting with too much fear.”

8. Cyber-security

There’s no doubt that wealthy families present a prime target for cyber-criminals, and the vulnerabilities are legion, from hacked financial data to intimate information inadvertently disclosed on social media.

While the family business may be well protected, the family members probably aren’t, says Mindy Mayman, partner, chief compliance officer and portfolio manager with Richter in Montreal: “This is still a special expertise, and most families don’t have a strong grasp of it.”

Families need professional advice to reduce real risks: “Some of it is monitoring and some of it is best practices and education.”

7. Appointing an executor

No one wants to confront their own mortality, and it can be extremely hard for someone who’s used to pulling the strings to plan for letting go. “Changing your asset mix to benefit heirs when you are gone is a pretty difficult topic for most people.

However, reducing complex and illiquid assets is such a gift to heirs and executors,” says Hoffman.

His best advice? “Don’t necessarily choose an executor based on your existing trusted network; pick one your heirs are going to trust.”

6. Family disputes

“There probably are as many origins of family disputes as there are people out there,” says Awrey, but they often arise from the assignment of leadership roles or disposition of assets within the family.

“At Stonehage Fleming, we’re very much focused on helping families develop a strong sense of purpose for their family wealth,” he says. “If families can solve for that, if there’s broad understanding, there may not be agreements, but conversations can happen.”

The alternative can be damaging, he says: “When those areas that are causing the dispute aren’t subject to conversations within the family, things will fester.” Thus, making sure family members have effective ways to communicate is the first step to preventing conflict before it arises.

5. Passing on founding values

For members of the wealth-building generation, it can be challenging to understand and appreciate the outlook of younger folks who have been born into it. And indeed, how can someone accustomed to a big house, private schools and first-class travel possibly share the attitudes of someone who built an empire from the ground up?

Mayman recommends that wealth-builders make time to talk with younger family members about their own journey, including “risks, sacrifices, maybe even failures on the way to success.” She adds that philanthropy is a great tool for education in values as well as finance.

4. The family member who needs help

Rich or poor, we all lose sleep over that loved one who’s struggling with challenges to their physical, emotional or financial well-being.

“Addiction is one example of how trying to make too comfortable a life for your family can impair their lives,” Hoffman says.

In fact, using money to “fix” the situation can get in the way of healing by helping to hide the underlying problem. Having the courage to withdraw some support may sometimes be a better way to aid self-sufficiency, he says: “Usually people can survive their addiction cycle with a lot less than people used to living a life of wealth could imagine.”

3. Lack of leadership

“We see families struggling with the reality that different family members may make appropriate leaders at different times,” Awrey says. For example, selling the family business and managing wealth require different skillsets, so it’s important to understand what type of leadership is needed in the moment.

“Can a family train and grow them, or do they need to look outside the family circle?” Awrey asks.

2. Deciding when to have the money talk

We’ve all heard the stories about the children who had no idea until the reading of the will that they were inheriting a fortune. So when is the right time to divulge the details about the wealth?

For children and teens, it’s enough to teach basic financial concepts, says Mayman. Further explanations can wait until they’ve spent a few years in the work world, she says, but longer delay can be risky, “because it’s not fair to say ‘some day this will all be yours’ without creating a realistic expectation on both sides.”

1. Preparing the next generation

This is the top dog of all the midnight monsters. “Is this wealth empowering or infantilizing for my heirs?” asks Hoffman. “The key thing to figure out is how you can harness the money and your good privilege into your family culture effectively.”

“You don’t force family members into roles they’re not equipped for, but ready for, passionate for, engaged in,” says Awrey. “It may be that some would benefit by exploring their skills and passions outside the family for a certain time.”

More from Canadian Family Offices: 

• Drivers for the wealthy and famous: a discreet fly on the wall
• Luxury travel: Murder mystery and spy coaching
• Learning from past bear markets takes teeth out of current downturn
• Thirteen more books highly recommended by family advisors

Please visit here to see information about our standards of journalistic excellence.