Sustainable, Impact Investing Assets Surge - Study reports

This week, I am running three Sustainable Investing events with our experts from New York and Switzerland. This article on Sustainable investing and the rapid uptake of funds came across my desk today. It is written by one of my favourite editors, Tom Burroughes, Group Editor, Family Wealth Report.  The full article was posting on November 5, 2018:

The trend of ESG and impact investing continues to build momentum, according to figures from the US.

Investments that are deemed sustainable or that achieve certain impact beyond purely monetary results are now worth $12 trillion in the US, new figures show, a quarter of all the total assets managed professionally in the country, and a 38 per cent jump from just two years ago.

The data comes from the US SIF Foundation’s 2018 biennial report on such trends. Since the report was first issued in 1995, when sustainable/impact investing accounted for about $639 billion of AuM, the market has surged 18-fold.

Such ways of using investment muscle are gaining ground because, advocates say, they appeal to people who want to not just accumulate savings for the long term but to address issues such as pollution, crime, educational failure and mistreatment of women, among other concerns.

The latest report identified $11.6 trillion in ESG incorporation assets under management at the outset of 2018 held by 496 institutional investors, 365 money managers and 1,145 community investing financial institutions. The largest percentage of money managers cited client demand as their top motivation for pursuing ESG incorporation, while the largest number of institutional investors cited fulfilling mission and pursuing social benefit as their top motivations.

“Money managers and institutions are utilizing ESG criteria and shareholder engagement to address a plethora of issues including climate change, diversity, human rights, weapons and political spending,” Lisa Woll, US SIF Foundation CEO, said.

Retail and high net worth individuals are increasingly utilizing this investment approach with $3 trillion in sustainable assets, the US SIF Foundation reported.

2 Changes to Estate and Tax Law in Ontario

The recent changes to Ontario estate law and U.S. tax law might impact families with wealth. These 2 new changes are worth reviewing:

1. For those of you with multiple wills (used commonly to avoid Probate) should review their Wills. A recent decision, Re Milne, rendered a Primary Will void because it contained a commonly used provision that gave the Trustee discretion to determine what assets to include in the Primary Estate. As a result, multiple wills are only valid if the assets that comprise each of the Primary and Secondary Estate are defined with sufficient certainty. This decision is currently applicable in Ontario, but it is possible that it could be applied in other provinces.
2.  U.S. citizens in Canada may be impacted by the changes to the Tax Cuts and Jobs Act, specifically the global intangible low-taxed income (GILTI) tax. U.S. GILTI tax is relevant for any U.S. Shareholder owning 10% or more of a controlled foreign corporation (i.e. a Canadian Corporation with US shareholder). U.S. Shareholders in that situation may have a one-time 15.5% tax, plus they must include in income such profits in excess of a 10% return annually on depreciable tangible assets owned by the corporation whether or not a distribution is made to the U.S. Shareholder.

 

Clients with wealth need to know you see their needs first

We are striving to talk to clients the way they think about their money, not the way we do. Many advisors jump into talking about themselves, how they have been doing their role for 20 years and so forth.  This does not give the client ease of mind.  The client wants to know that you see them and you understand their special circumstances, not that you are shoehorning them into a standard "solution".

Clients feel their money “has a job to do” – to help them develop and educate their children, care for their parents, fund their businesses and homes, spin out a monthly cash flow, etc. In our client relationships, we are focused on helping our clients achieve their desired outcomes – offering the right capabilities, removing complexity and truly listening.

Our clients have their best practices in managing their wealth. This mutual sharing of knowledge has developed the wealth management practices over the past 150 years and this is a responsibility we take very seriously.

Family Wealth: 5 Essential Questions

Having listened to many families of wealth and seeing their family situations, for better or for worse, it does appear that money can impact also for better or for worse. After creating their wealth, entrepreneurs then are concerned about investing, but their overriding concern is the impact on their children. How will the new money affect them? 
Actually, it worries them deeply and we have all heard stories of families who had wayward next generation due to the wealth. What should a wealthy family do?

Listening to entrepreneurs who have sold their business and received an eye watering amount of money, I notice that the great families tend to ask themselves these six questions. 

1.       What is really important to our family?

2.       What are our family’s true assets?

3.       What should I do to guide and support the life journey of each of my family members over time?

4.       How wealthy do I want my children to be?

5.       Do I feel any responsibility to society?

You might also ask what sort of family do you want to be? What do you want - both with family legacy or family stories? Even the answer from your children might be – "meh" – and that says a great deal.

What legacy do you want to leave your children? What about a legacy left for society? Deciding where you want to go with your financial success and why you want to meet those goals will get your strategy going. Determining how to get there and which legal arrangements to use are secondary tactical decisions.

Your financial wealth a is wonderful vehicle to help your family do a shared goal.  In my experience, families who go through this process achieve better results – financially and emotionally.

By the way, my definition of a successful family is one that knows who it is, what it stands for and where it is going. Successful families manage themselves deliberately.  There is a lot at stake for families and each family member. If you and your family can define what is significant, before doing, then your next generation have an excellent chance of thriving.

A staggering amount of wealth has been created in the USA and inheritances given, foundations endowed and legacies created.  The wealthy family is trying to find this other dimension more and more.

The other question, after answering "what is important", is what will be the impact on my children and heirs? I often think that the second question is more important. It is also far more unpredictable. It is why you want to know the life lessons of the best entrepreneurs and how they have managed their family wealth.

 

Christiane Amanpour honoured for her media stories dedicated to Peace

Christiane Amanpour was honoured by Daughters for Life at a gala dinner held at The Carlu in Toronto. She took the opportunity to give the message of peace and to see others as human and not "the Other".

Christiane knows first hand about politics and the power it holds over behavior. She is Iranian and was educated in Britain, during her youth.  This early experience of different cultures, and not quite fitting into the community, gives her a deep insight into belonging and how politicians can warp their people's minds.

Christiane Amanpour, CNN, and Jacoline Loewen, UBS Bank (Canada)

Christiane has an admirable career and here are a few reminders of her assignments around the world to the hot spots of the world:

During her early years as a correspondent, Amanpour was given her first major assignment covering the Iran–Iraq War, which led to her being transferred in 1986 to Eastern Europe to report on the fall of European communism.

1990:

Following Iraq's occupation of Kuwait in 1990, Amanpour's reports of the Persian Gulf War brought her wide notice while also taking CNN to a new level of news coverage.

1992:

On 22 December 1992, during the Bosnian War, Amanpour was reporting from Kiseljak, not far from Sarajevo.e Amanpour, CNN Global Head of Media,

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More Billionnaires are self-made, and fewer come from the finance industry

More billionaires are self made and fewer are from the finance industry. The USA is a good country for growing new billionaires, but that may be because they are transparent about their wealth, as compared to Russia or other countries or geographic regions.
The philanthropy by the super wealthy is admirable too. The Bill Gates foundation, for example, seems to fund many of the early stage companies here in Canada. 

According to the UBS Billionaires Report, compiled by UBS and PwC, the "new [US] billionaire is different", writes On Wall Street, quoting John Mathews, Head Private Wealth Management UBS Global Wealth Management USA. More and more of them are self-made, and fewer come from the finance industry, the report says. The US created a total of 53 new billionaires in 2017, 26 percent of whom were female, compared to 12 percent of all North American billionaires. Only nine new billionaires came from the finance sector, compared to 20 in 2012, while 40 percent came from the consumer and retail industry. Besides record wealth levels, the report points to an upcoming massive generational shift in wealth between generations, with USD 3.4 trillion in wealth set to be handed over to a new generation in the next two decades. Judy Spalthoff, Head Family and Philanthropy Advisory Americas UBS Global Wealth Management, notes that the passing on of vast wealth takes careful preparation and can be a years-long process encompassing a vast range of issues. "It's not enough to only consider the transfer," she says.

Citywire writes that Asia is recording far stronger growth, however, with UBS estimating that China alone creates two new billionaires every week.

Le Monde writes that the outlook is not all fair sailing, however, with Josef Stadler, Head UHNW UBS Global Wealth Management, warning that "the risk of a trade war between the United States and China could [...] disrupt economic growth in both countries, and consequently the resulting wealth creation."

The UBS Billionaires Report has attracted a vast volume of media coverage from a broad range of outlets across different regions. These include a CNBC interview with Josef Stadler, a Bloomberg interview with John Mathews, as well as articles by the Financial Times, The Wall Street Journal, Bloomberg, Reuters, Barron's, South China Morning Post, The Business Times, Frankfurter Allgemeine Zeitung, Handelsblatt, Spiegel Online, Manager Magazin, WirtschaftsWoche, Les Echoes, and Quartz.

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Tech Centers opening in India

FinTech is popping up everywhere, in America and other countries India, with new technologies being introduced daily. Dean Hopkins, head of OneEleven, says he is the PhD of Global Scaleups and he is opening Canadian tech incubators around the world. He was in London last week opening the newest OneEleven tech incubator.

Dean Hopkins, OneEleven, Toronto, Canada

As Dean says, "Keeping ahead of FinTechs and how they could potentially disrupt bank business practices is critical. It is becoming a critical skill to be able to assess technologies and bring them on board to mix or replace legacy systems."

Not easy to do.

Some banks are increasing their strategy to develop their own tech centers to access the best new FinTechs and their hot shot founders. These centers are springing up in developed  cities such as Toronto and London, but also emerging countries are benefitting:

"UBS has opened a second tech center in the Indian city of Pune, reports Verdict. It is the fourth in the country, with a further two located in Mumbai. The new UBS tech center will focus on the development of Neo, UBS's cross-asset platform, while also monitoring applications and data for the bank. "We want to benefit from the huge demographic dividend which India has. When we started our journey with risk management in 2015, the first product from the Pune site gave us a lot of confidence to grow our footprint In India," comments Harald Egger, Head Group Sourcing UBS. "

"The Times of India quotes Egger as further explaining that UBS is looking to hire computer scientists in India, but is facing tough competition. "The Indian talent landscape puts us in direct competition with our vendors," he points out.."

In China, female billionaires are growing in number.

Billionaires Report

According to the UBS PwC Billionaires Report, the total wealth controlled by the world's billionaires rose by more than 19 percent year-on-year in 2017, to USD 8.9 trillion, reports CNBC. The driving force behind the trend is Chinese wealth creation, the report says, with the country creating two new billionaires every week last year. The number of female billionaires is also growing strongly, particularly in China, where their number grew by 13 percent last year, outstripping global growth in female billionaires, which stood at 11 percent. One key difference, explains Josef Stadler, Head of UHNW UBS Global Wealth Management, is that "we see in China entrepreneurial female billionaires, whereas in Europe and the United States there are more females who inherit, but then get into entrepreneurial activities as a result."

The UBS PwC Billionaires Report 2018 shows that the combined wealth of China's billionaires surged 39 percent to USD 1.12 trillion last year, which is more than double the gains reaped by their peers in the US and Europe, whose collective fortunes increased 12 percent and 19 percent, respectively. John Mathews, Head of UHNW Americas UBS Global Wealth Management, says that "we're in a new gilded age," with "unbelievable and unprecedented wealth" in China. Some of the wealth gains may be illusory, however, cautions Bloomberg. The report showed that roughly half of China's new billionaires saw their wealth dip below 10 digits by the end of the year in 2017, a trend that is continuing in 2018.

The US remains the largest concentration of wealth worldwide, and is still the home of innovation, John Mathews, Head of UHNW Americas UBS Global Wealth Management, says on Monocle24's The Bulletin With UBS. According to Mike Ryan, UBS Chief Investment Officer Americas, the major takeaway from the Billionaires Report is that the figures represent the rise of China. Josef Stadler, Head of UHNW UBS Global Wealth Management, points out that China no longer copies innovations from elsewhere, but exports its own innovations out into the world. Judy Spalthoff, Head of Family and Philanthropy Advisory Americas at UBS Financial Services, discusses the importance of the growing number of women billionaires, and the importance of succession planning.

Neue Zürcher Zeitung am Sonntag writes that Chinese authorities are increasingly scrutinizing the country's ultra-wealthy, and cracking down where they suspect wrongdoing. They cite the example of high-profile actress Fan Bingbing, who disappeared for months before making a tearful public confession, admitting to tax evasion and promising to repay CHF 130 million. Banks can easily get caught up in the mix, the paper says, citing the current example of a UBS employee asked to remain in Beijing and assist investigators in matters unknown. UBS Group CEO Sergio Ermotti has assured that this has nothing to do with either the bank or the employee, but several other banks quickly issued China travel bans to their staff, the paper notes.


If you would like a copy of the report, please contact me at jacoline.loewen  at  ubs dot com

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How prepared you are to live well in retirement?

MIT AgeLab has identified three questions you should ask yourself to assess how prepared you are to live well in retirement:

1. Who will change my light bulbs?2. How will I get an ice cream cone?3. Who will I have lunch with?

What do these questions have to do with retirement planning? 

A lot more than you might think. They actually uncover important factors about aging in place, staying mobile, and maintaining a strong social network in retirement. These factors can serve as a starting point for planning a satisfying retirement.

See my books on Amazon: Jacoline Loewen, Amazon Author's page

Bloom Burton Award honours Dr. Clarissa Desjardins, Clementia Pharmaceuticals

Bloom Burton Gala 2018, Jacoline Loewen

Recognizing entrepreneurs stirs up the economy in many ways. The reason the Bloom Burton Awards Gala 2018 worked so well is the spirit of the two leaders of the firm. - Brian Bloom and Jolyon Burton. They not only stirred up the health and pharma industry, but also put on a spectacular gala. The duo were inspiring as they talked about the nominees and their journey to success.  They also lifted the spirits of everyone with Brian's story about his choice of tuxedo for the evening, a great choice, I must add.

Getting serious, the winner was Dr. Clarissa Desjardins, Founder and CEO of Clementia Pharmaceuticals Inc., which specializes in bone disorders.

Bestowed annually, the Bloom Burton Award honours an individual scientist, inventor, executive, entrepreneur, industry leader, or policy maker who made the greatest contribution to Canada’s innovative healthcare industry in the previous year. 

Nominees are accepted from any of the biotechnology, pharmaceutical, medical device, diagnostic/imaging, research instrumentation, consumer health, services or healthcare IT sectors, and equal consideration was given to contributions across any stage of development – from discovery to commercial end markets.

There were good wishes sent from the Prime Minister of Canada, as well as the leader of Ontario and our City of Toronto. Well done, Bloom Burton, for a tremendous event.
 

See my books on Amazon: Jacoline Loewen, Amazon Author's page

Jolyon Burton, Dr Desjardins and Brian Bloom, 2018

Craig Loewen and his UWaterloo team win James Dyson Engineering Award for Canada

Craig Loewen with /university of Waterloo tea, winners of James Dyson Award

Very proud of my son and his award by Dyson. He was interviewed by the University of Waterloo: 

A blog post, written by a visually impaired person about the challenges she faced trying to use the office’s new touch screen coffee maker, was the inspiration behind a recent Waterloo Engineering Capstone Design project. WatVision took home top honours in the national leg at this year’s James Dyson Award for its clever, yet simple engineering principles.

Developed by six mechatronics engineering students, WatVision is a system that reads out words or numbers on a device allowing visually impaired individuals to make a cup of java, select an elevator floor or perform other functions most people take for granted.

“We looked at creating braille readers at first, but decided that would be way too hard,” says Craig Loewen, a WatVision member. “When [a team member] read a blog post about an individual not being able to make coffee because she couldn’t use the touch screen, we all said that we could solve that problem.”

“In about 30 minutes, the person who was blind was able to go through a few screens on a touch screen. Another individual with low vision was able to use it instantly and really liked it,” says Loewen.

In March, WatVision captured a GM Innovation Award as well as second place in the People’s Choice Award during TronCon, an annual mechatronics engineering event that connects alumni with current students.

Read full article.

Family Offices and Wealth Management: What's driving investment trends.

Family Offices: Dave Mason, Jacoline Loewen, Ed Montero, Sarah Beven

In Calgary, the team held a series of events where they presented the proprietary research on Family Offices and Wealth Management: What's driving investment trends. Five families with wealth case studies were discussed about family businesses, and their best practices as well as stumbling blocks.  

Creating corporate governance around wealth is a simple rule to state but as they say, the devil is in the details. Yet, those families, or founders, will fail if there are no rules of the road.  If the goal is ongoing transfer of wealth to the next generation which sparks the second generation to live a happy life, there needs to be thought put into action. It does all boil down to setting up governance in order to keep running family wealth management.

Held at The Petroleum Club in Calgary offered exclusive peer network of other UBS Global Family Office clients to share knowledge and discover new business opportunities.

In addition to the proprietary research, other areas of interest to wealthy families and their wealth management are:

·         Financing and advisory solutions for real estate, art collections, aircraft, hedge fund portfolios, securities backed lending, margin capabilities and more

·         Around-the-clock direct contact with our bankers, traders, specialists and sales teams in every market, product class and currency - Fully customizable real-time reporting of holdings, balances, margin, risk profiles and tax status for assets held with UBS and elsewhere

·         Tailored client portfolios to meet specific investment objectives, along with hedge fund portfolio monitoring

·         Participation in private placement deals for qualified pre-IPO clients, anchor investments and global syndicate offerings

·         Legacy advisory services, including estate planning, a young successors program and philanthropy strategies to sustain achievements and make lasting impact through giving

·         Customized guidance from the Strategic Equity Solutions Group to optimize risk/return profiles, funding, tax and accounting treatment, capital consumption, market risk, legal treatment

·         Full range of core and advisory services from UBS Prime Brokerage for family offices to efficiently gain access to the entire firm

·         Family advisory services, including governance frameworks, governing bodies, corporate advisory, management platforms, asset holding structures and business succession plans.

To learn more about family advisory, please send a request to receive the Family Office Compass, a practical guide for families setting up and maintaining their own dedicated family office.
See my books on Amazon: Jacoline Loewen, Amazon Author's page

5 lessons can we learn from Bezos’s rise to become the richest man

Interesting to learn that Amazon founder Jeff Bezos will become the world’s richest person this year, or next. After yet another fantastic report of results, and yet another boost in the company’s share price, Bezos is $5 billion away from the Microsoft founder Bill Gates and likely to overtake him soon.

From my view, I remember when Amazon was just starting and seemed an interesting but not a sure thing on the stock market. I sold my Amazon for AOL back in 1999. I was wrong! 

To learn that Bezos is now passing Bill Gates means that there are lessons to learn and Bezos shares his views. I am interested in how the title of richest person (that is tracked and legitimate) sets a role model for entrepreneurs and business leaders around the world.

After all, if making more money than anyone else doesn’t tell you they are doing something right, it is hard to know what might. 

So what lessons can we learn from Bezos’s rise to the top of the pile? In brief: That you should 

1. Think big, 
2. Innovate furiously, 
3. Ignore failures, 
4. Forget about obsessing over profits, and 
5. Avoid major acquisitions. 

Those are 5 pretty good guidelines for any business heading into the 2020s. 

In the past five years, Amazon’s share price has more than quadrupled, rising from US$220 to more than $US900 as the company powers into new industries and markets. He has already overtaken Warren Buffett and Amancio Ortega, the Spanish founder of Zara owner Inditex, to become the world’s second richest. 

Read the article HERE

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Jacoline Loewen, MBA, ICD.D, is a best selling author and expert in Wealth Management. She is Canada’s leading wealth, legacy, founder and family business finance expert. Ms. Loewen's clients are entrepreneurs who transition from focus on business to managing their money. She helps overcome common wealth creation issues while optimizing investments in order to manage and nurture significant wealth with confidence.

You never know when you might get that call from a buyer making an offer you can't refuse

If you are thinking about selling your company within the next few years, here are a few reminders to keep you on track. It's from a blog written by Alan Crossley who sells companies and who shares his observations about business owners as they get ready to sell. Here is an excerpt:

Some call these the Dog Days of Summer. The business world tends to slow down. I think it's a great time to reflect and regroup on how ready your business is for being sold. Even if selling seems a long way down the road for you, it's never too early to start. Plus, you never know when you might get that call from a buyer making an offer you can't refuse (or can you?). As for my Dog Days of Summer, I found an article (rather than write my own) on this very topic. A few points here that are worth noting: To read more...

Breaking down blockchain

Truck News

TORONTO, Ont. – If trucking wants to take advantage of blockchain, it needs to come together and work as one unified team.

That was the message from panelists at this year’s TransCore Link Logistics’ 20th annual conference at the Markland Wood Golf Club in Toronto.

Panelists, that included Dave Brajkovich, CTO of Polaris, Jacoline Loewen, director of business development at UBS Wealth Management, Mark Southey, executive v.p. of business development at Traffix, and Moe Sabry, director of IT at TransCore all agreed that the best way for trucking to be successful with blockchain technology is to work together.

The trucking industry is just dipping its toes into the water, so to speak when it comes to blockchain, because many don’t know much about it, or, don’t know how to get started.

Blockchain is, in simple terms, a digital ledger where transactions are made and recorded permanently. It is decentralized, in that information isn’t going to and stored in one place (like a centralized system), rather, several places.

The greatest advantage blockchain will bring to the industry that it desperately needs, is trust, panelists said.

“Blockchain will eliminate paperwork because there’s trust,” explained Southey. “Because we have all these nodes feeding information into a shared ledger…it means that when a warehouse puts 1000 boxes on truck, there is no question there are 1000 boxes on the truck. There is no proof required…and then we have trust between the shipper and the transporter. This negates the bill of lading. Because of that, we can automate payment. We can automate transfer responsibility. Half of our industry (with blockchain) can be automated. That’s where blockchain will have a fundamental shift.”

He added that the trust between driver and employer will also improve.

“Driver behavior won’t be questioned because it will all be recorded,” he said. “There is no dispute whether an action occurred or not.”
Brajkovich agreed, calling blockchain an API manager on steroids. He said the greatest advantage blockchain will offer transportation is quality, speed, and efficiency.

And while many may be panicking saying blockchain could eminate jobs like dispatchers or other administration roles within trucking, Barjkovich says this is not the case.

“Those people that handle paperwork today in trucking, they can be repurposed to do more efficient things,” he said.

He said that banks are the leaders in blockchain right now because they “are leaders together and understand that these paradigm shifts happen quickly.”

Right now only 1% of the supply chain industry is using blockchain.

“The industry needs to come together. If we can’t come up with a singular composed strategy, it’s going to be difficult to implement blockchain,” Southey said.

Loewen said to those in trucking who don’t know where to get started when it comes to trucking, should research groups you can join that are looking into blockchain now.

“There are all these business incubators,” she added. “There are lots of tiny companies looking for problems to solve. As individuals, go meet with these people. Give them problems to solve. They will likely solve them for you, for free. There’s some out of Ryerson University and some from Waterloo University. Canada is leading-edge with this stuff..you could go from a five truck trucking company to the next Walmart of trucking if you wanted to dream that big.”

The next gen of technology is here - Blockchain and Transportation

Transcore Conference with Jacoline Loewen, Blockchain

I am honoured to speak about Blockchain at the Transcore Conference - a great event designed for Carrier, Loaders and users of LoadLink.

Join us on July 16th.

Plus prizes to win!

4 steps for business owners to minimize personal financial risk

"My riskeist investment was into my business," says John Rothschild, CARA Operations Ltd. Read the full article here:
The following article is a summary of a conversation with Mr. Rothschild, CARA Operations, Ltd., speaking with David Simpson, Ivey Business School, at the UBS Speakers Series, 2018. We were honoured to have John share his journey from entrepreneur to managing wealth. 

Phaby Utomo, John Rothschild, David Simpson, Jacoline Loewen,

First published in The Globe and Mail, written by Jacoline Loewen.

Business owners are challenged to make decisions every day, and it is essential for them to know their risk tolerance.

“My riskiest investment was the ownership in my business,” says John Rothschild, senior vice-president of CARA Operations  and former Chairman and CEO of Prime Restaurants.

Mr. Rothschild knows about risk. When the opportunity emerged to buy Prime, a family owned business in which he served as an investment manager, he decided to take on the challenge despite the unhealthy balance sheet. His friends were aghast. He had a very comfortable life and he was in a strong financial position and they questioned his decision to risk buying a questionable business. Mr. Rothschild personally guaranteed all the loans required to make the acquisition.

He offered these four ideas on how business owners can minimize their personal financial risk:

1. Plan succession early.

You’ve seen the statistics: more than two-thirds of business owners over 60 years of age don’t have an exit plan. They want to sell their businesses, but fewer than 15 per cent are able to pass them along to a family member.

After Mr. Rothschild made the transition to business owner, he had to figure out how to take money out of the company.

“I knew that passing the family business to the next generation was not in the plans and that I had to monetize the business in a different way,” he says. “We did an income trust in 2002, where shares are held by outsiders. I had bought my business with borrowed money and personal guarantees. The income trust allowed me to pay off loans and personal guarantees, and there was some money left over. Also, I still got to keep my role.”

2. When opportunities come along, be ready to take them.

Mr. Rothschild says income trusts “were a great opportunity and only came by once.” Then he was faced with another opportunity when Fairfax Financial came shopping for restaurant companies. Fairfax is a blue-chip Canadian investment firm modelled after Berkshire Hathaway, founded by Warren Buffett, where the investment company buys businesses and holds them for a long time. Fairfax offered to buy the public part of Prime Restaurants and Mr. Rothschild was invited to stay on and grow the business.

“It was a defining moment when Fairfax then invested in Cara and merged Prime into it. Prime could have stayed an independent business, but the opportunity to scale up and turn something around was tremendous. You can’t pick your exit, or the moments when these opportunities come along, necessarily. You can just say yes or no. I saw this as the opportunity to make restaurant history. We are now the third largest in Canada.”

A business owner needs to plan for the company to be ready for monetizing at any stage, Mr. Rothschild explains. He pointed out that being ready is critical. For example, tax planning in advance is essential. When the opportunity arrives, that is a bad time to be starting your tax planning.

3. Know yourself and plug the gaps.

Mr. Rothschild recognized his strengths and he was honest about his gaps. “I don’t cook, but at Prime, I get to do what I love to do every day. I would tell people not to be afraid to go into an industry where you are not the core expert. It’s about running a business.”

Going from investor to business owner and operator meant that he needed to understand how to build customer loyalty.

When asked the key to success, Mr. Rothschild says: “It’s about the people surrounding me. My team is wonderful. I also had a five-person board for Prime Restaurants and the majority were outsiders who would challenge me, otherwise I would just be talking to myself. I can't make great deals by myself. I’m a numbers guy so I plug the gaps with people who have talents beyond my own.”

4. Take money off the table.

Keeping all your eggs in the one basket is risky. Business owners have the majority of their wealth invested in their own business.

The idea of having more wealth invested in what the business owners know best leads them to concentrate their wealth back into their company. This leads to concentration risk. This specific risk is the type of uncertainty that comes with the company or industry they are invested in. In the case of business owners, this is quite high.

The risk can be reduced through diversification, such as taking exposures across other industries. That is where a wealth manager becomes important.

It’s possible to diversify the long-term wealth preservation for your family by taking some money out of the business in a disciplined, mechanical way. By keeping money aside, Mr. Rothschild could handle the risks in the business, but have peace of mind by setting aside a nest egg for the family.

“I recognized that my highest risk was the business,” Mr. Rothschild says. “You do need to reinvest in the business. You do have to put money in the business or it will die. You have to manage that business on a daily basis.

"But it’s also essential to take money for your personal portfolio. I don’t have the time to manage my personal money. I choose people who I trust and they do it well. I made the effort to balance personal wealth and operating company investment. I stayed within my lifestyle, and shared the gains with those around me.”

During the conversation, Mr. Rothschild’s humble, quiet style of leadership stands out, as well as his deep concern and interest in his employees. But as an accountant, he also understands the financial factors driving the restaurant business. 

“My friends thought I was crazy, as I did take on personal debt at a time when I was set up with my home and family and my career was stable."

"Buying a business was seen as financially risky but it has been an adventure worth living.”

Published in "The Globe and Mail," August 12, 2014. 

Jacoline Loewen is the director of business development of UBS Bank (Canada). She has over 25 years of experience in finance for high-achieving entrepreneurs and family businesses. She specializes in the transition from business to sudden wealth from sale of a business and the impact on the Founder, their family, inter-generational wealth transfer and philanthropy. Prior to joining UBS Bank, Ms. Loewen specialized in finance, specifically sales and acquisitions, successions and private equity financing.

Ms. Loewen has authored numerous best-seller books such as, Money Magnet: How to Attract Investors to Your Business, Business e-Volution and The Power of Strategy. She is a guest columnist to the Globe & Mail and contributor to the National Post, Thomson Reuter, Profit and was a regular panellist on BNN: The Pitch. In 2018, Ms. Loewen was awarded #1 Forecast for Markets and Stocks by The Ticker Club Annual Forecast. She is ranked # 6 in the Top 100 Family Business Influencers on social media and awarded Top 50 Board Diversity.  She is on a director on the Toronto Atmospheric Fund board and investment committee, Chair of the OCAD University business catalyst advisory board, as well as  former  director  on  the  Private  Capital  Market  Association   board.

You can follow her on Twitter @jacolineloewen Contact: 416-662-1930 or jacoline.loewen@ubs.com.