Wealth Management

Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen LinkedIn Profile

February 26, 2010

Yesterday's wealth is no guarantee of tomorrow's success

Search the phrase “sudden wealth syndrome” in Google and you'll find thousands of Web pages replete with tales of lottery winners, women who married wealthy men, and successful entrepreneurs who all have one thing in common: 
They can't handle their new riches.
It's almost become a truism that those who find themselves with a sudden windfall will blow it. In fact, the chance that a wealthy family will still be wealthy three generations down the line is less than one in 10. Experts who deal with such families say it's true that the chips are stacked against them.
“Yesterday's wealth is no guarantee of tomorrow's success,” said Sarah Bull, a principal and member of the KJH Private Services team at KJ Harrison & Partners Inc. in Toronto. “When people receive wealth for the first time they don't really know how to handle it. There are often emotional issues around handling it, and they don't know how to spend responsibly, and they don't understand the math.”
A growing body of evidence points to disturbingly low levels of financial literacy among Canadians, and one of the symptoms is the spending habits of the nouveau riche. A study released this month by research firm TNS found that only 13 per cent of Canadians could answer three basic risk-literacy questions correctly, and suggested that most consumers have very little grasp of the basic principles of financial risk.
It asked participants to assess the relative payout of two lotteries; the relative risk and returns from two investment funds; and the relative risk of investing in a single stock versus a basket of stocks. Sixteen per cent of Canadian men and 9 per cent of women answered all of the questions correctly. Those who had attended university fared better than those who hadn't, but both groups had dismal results.Read more 
Jacoline Loewen, finance expert, Author of Money Magnet: Attracting Investors to Your Business.

February 18, 2010

Private equity may like a GST tax

Another big 2010 surprise could be the U.S. dollar rebounding exceptionally strongly (even if temporarily) along with the economy.  In this event, the international contribution to multinational profits would slow, but any such shortfall would then be more than made good on the home front. Private equity would have to take this into consideration as they nurse their portfolio companies back to some semblance of health.
A further consequence of a rebounding U.S. dollar could be the price of gold and gold shares both taking a beating - what a non-consensus surprise that would be!
However, even given an exceptionally strong recovery, I still can’t see the U.S. outgrowing its intractable debt and deficit problems without something big having to give.  And, facing the hard fiscal choices that lie ahead, there could very likely be the temptation of expediently continuing stimulus and debt and deficit policies for that much longer.  Repaying ballooning sovereign debts in depreciating currencies would be another expedient way out.  These are why the risks of returning inflation must continue to loom large.
But what if these risks were to be headed off by a debt-hammered U.S. electorate being sold on a Canadian-style GST consumer tax? 
I’ll leave readers to calculate by how much a 5% tax on $10 trillion of annual consumption would reduce those gargantuan annual deficits.  It might not herald a new “Morning in America”, but investors and stock markets would rejoice the world over.

February 17, 2010

Private equity may be surprised by America's growth rate

An American Private Equity fund manager told me they are sitting under their desks and rocking back and forward gently, trying to get through this market. I reminded her that the British Empire took about 100 years to decline and the American Empire may be "lite", but the mother land, so to speak, still is a great market. America is still a good place to make money for private equity funds.
China has been attractive for its strong growth and America's growth is being ignored. One exponential non-consensus surprise would be a beleaguered U.S. economy delivering far-stronger post-stimulus GDP growth than expected in 2010.  And maybe even blowing the lights out with an explosive annual growth of 5.0% or better over the next two years, compared with consensus forecasts of 2.5% to 3.5%.
The U.S. has always been an irrepressible economy with impressive resilience.   It remains the undisputed world leader in productivity, in which there is every likelihood of an astounding further recession-induced pick-up.  Helped by a much cheaper dollar, the U.S. is also among the world’s most competitive economies and largest exporters of higher-end goods and services. 
If there are going to be the positive surprises in global economic growth that the IMF and World Bank have begun hinting at, these surprises would more than likely give an added leg-up to an ever-cheaper and more productive America?   I keep thinking of Noel Coward’s ditty: “I like America, America’s OK; I like America, give me the U.S.A.

February 10, 2010

Ivey Business Plan competition shows that investors like female businesses

Rick Spence captured the comments given at the Women Entrepreneurs of Canada conference (WEC, is run by Carrisa Reiniger) and one thought was that male investors do not get women's businesses and do not invest. I have personal experience that shows me that assumption is so 90's, but no long relevant in 2010. In fact, Loewen & Partners raised capital for the female led day care firm, Kids & Co, and it does not get more estrogen laden than that. I did notice at the time that the male investors did not even twitch an eyebrow at gender or business focus. After all, as one of the male fund managers said to me on my question about the relevance of gender, "Lululemon is one of the biggest Canadian private equity success stories out there and it is a female product company."
I wrote a letter to the National Post to comment because, honestly, it bothers me when entrepreneurs hid behind some "victim" stereotype instead of facing their brutal facts that they are not clicking with investors because their business is simply not sustainable. If these female entrepreneurs faced the brutal truth, they would be able to adapt all the sooner and go on to get the money they deserve.
For full article: http://bit.ly/whogetsvcmoneymore

Reluctant Partners, Feb. 1.
At the start-up stage, if you look at the Ivey Business Plan competition, for the past two out of three years, a female lead team won. This competition is judged by Bay Street's toughest investors. A female team that did not make it to the finals, Peer-FX, went on Dragons Den and won a deal. That female leader is still in business because she is good at what she does. I wrote an article at the time and asked her about being female in business. I was not surprised when she said it is just not part of her thinking.
Whether you have a uterus or testicles, investors want to know how much money you will make, when will they get their money back and will it be more than if they put it in a blue chip stock in the stock market? If you can show you can give that potential, you will attract investors. End of story.
Barbara Orser, professor at Carlton, has done research to back up these points and says only entrepreneurs who start robust, high potential businesses will get the money.
I do agree that it would be good for women to network and support each other more.
Jacoline Loewen, Loewen & Partners Inc., Toronto

Read more: http://www.nationalpost.com/opinion/story.html?id=2538961#email#ixzz0f9NoetUr 
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