Tackling the great generational wealth transfer

Meghan Meger is regional president (Prairies) of BMO Private Wealth.

Meghan Meger
Meghan Meger

Within the next decade, North America will experience the biggest transfer of wealth in its history. How many Canadian business owners will be impacted by this?

Meger: It truly is unlike anything we’ve seen before. We anticipate approximately five million Canadian business owners to transition ownership – with two-thirds likely to exit or sell their business in the next decade.

In the Prairies, we continue to see examples in agriculture whereby the family farm is getting bigger and bigger, creating more complexity when looking to the next generation. Who wants to be in the farm and who does not brings up an important question: what is equal and what is fair?

Traditionally, planning for wealth transfers within a family only involved the wealth holders and their trusted adviser(s). However, when it comes to planning for millennials, this traditional approach may not be the best strategy. Parents must remember it’s a ‘family affair’ as financial and wealth planning is about doing it with millennial children and grandchildren rather than for them.

What should business owners be doing today to plan for that day?

Meger: We want business owners to know we understand it can be overwhelming – but help is available. The time to start planning is now; we think that business owners should have a team of multi-disciplinary trusted advisers in place, including their wealth advisers, tax and legal advisers (to name a few), working toward the same goal.

What’s your sense of how unprepared Canadian businesses are to this looming huge wealth transfer?

Meger: In many cases, we’re hearing a false sense of planning security from some clients. As we engage our clients regarding succession and estate planning, we’re finding many loose ends that are still to be tied up.

For example, many of the children of business owners are not living in the Prairies while they’re pursuing their education or career aspirations. This can create out-of-province and cross-border planning issues should they not be factored into the plan.

What resources are available for families to deal with this issue now?

Meger: Families intending on transferring the business – whether it be within the agricultural or oil and gas industries – should begin involving their millennial family in succession and wealth-planning discussions, if they aren’t already.

It’s also quite normal for family members to not want to carry on the legacy. It can be tricky as emotions will be heightened when a child decides they don’t want to follow the path that the generation X, boomer and greater generations laid out for them.

We work with families across Alberta, Saskatchewan and Manitoba who are facing this reality.

Some of our top tips on how families can get started:

  • Have trusted advisers. Advisers plan an important role in broadening the definition of wealth, and helping their clients think more holistically about family wealth. Advisers also bring together the two generations to place all important items on the table.
  • Hold family meetings. An honest dialogue with younger family members on a shared vision, the family story and the philanthropic impact to carry on.
  • Embrace philanthropy. Millennials who are ‘purpose hungry’ share a passion for meaning. What better way than to invite them to discuss family giving?

When dealing with the millennial population who will be taking over many of these businesses, what’s the best piece of advice for them in particular?

Meger: Once families have developed an ongoing dialogue with younger family members about the future of the business, succession plans are generated where the reality of the everyday – not just the successful outcome – is discussed.

Here at BMO Private Wealth it all starts with the relationship and the understanding of our clients’ goals. Knowing that we have a dedicated national team that’s there to support our local wealth advisers has given our clients great comfort over the past few years.

My best piece of advice for millennials and their parents: start the conversation now and utilize the services that your full-service wealth adviser can provide to tackle the challenges that lie ahead.

Meghan was interviewed by Mario Toneguzzi, a Troy Media business reporter based in Calgary.

© Troy Media


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