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Families who have conversations on succession planning are better off, RBC tells eprivateclient

10/10/2017 Beth Abel

Demographics, geographies and cultures play a role in the ease at which family-owned business members can discuss succession planning, but those who do have ‘the conversation’ “end up being much better off than those that don’t”, according to RBC Wealth Management’s British Isles managing director for its business owners and entrepreneurs client segment.

John Younger, who heads the client segment, told eprivateclient that from a generational perspective, conversations about succession planning within families can be “tricky”, and in previous generations the “important” conversation was not had. However, he highlighted that relatively speaking, business owners and entrepreneurs tend to be better at having the chat than other successful counterparts.

For business owners, Mr Younger noted the risk of “windfall” that can occur “if a patriarch or matriarch passes away and there hasn’t been adequate succession planning and conversations”, with regard to the future of the family business. He also drew attention to the usefulness of trustees in family business-related scenarios, particularly within trust businesses: “With their fiduciary duty to be neutral, they are good referees in these types of conversations.”

In addition, younger generations tend to be “much better at talking about money”, as well as those in North America compared to those in the UK, said Mr Younger, though he added that older people are catching up to the times: “People talk about it much more now. Both young and old generations are broaching the matter of inheritance.”

Furthermore, legacy is currently being “more seriously taken than ever before”, as many family business owners wish to leave a legacy in relation to both their families and philanthropy. According to Mr Younger, there is a wide spectrum of how much parents leave to their children, from some leaving everything to their children and some leaving nothing.

From a philanthropic perspective, “children can be brought into conversations from a young age and involved in their parents’ wishes to give something back”.

Business owners and entrepreneurs is the largest client segment for RBC Wealth Management in the British Isles, making up between 50 and 60 percent of business and are often the “largest and most complex” clients.

Of what RBC Wealth Management can offer them, Mr Younger said: “We don’t think of business owners and entrepreneur clients as retail clients. They don’t want just a mortgage or discretionary portfolio management – we have to think broadly about what is relevant to them and how we can bring that to them from all the tools and opportunities we have in the bank globally.”

The “four pillars” of the RBC Wealth Management business in the British Isles are trust, banking, investment and credit, Mr Younger stated. While “everyone does them”, it is important to differentiate how the core offering is presented and positioned to clients: “We don’t sell products, but start with the client first and tailor our offering to their unique needs through bespoke structures,” Mr Younger said.

He continued: “The one-size-fits-all approach, particularly in the business owner and entrepreneur sector and high net worth and ultra-high net worth categories, does not work. We look at strategies on a case-by-case basis and our specialised teams of relationship managers have a deep understanding of the challenges and opportunities this unique client segment faces.”

He concluded that while “everybody does discretionary portfolio management and everyone does advisory, many sophisticated ultra-high net worth clients are looking for something different, so within the breadth of RBC, we find we can add most value to clients”.

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