Wealth Management

Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen My Amazon Authors' page Twitter:@ jacolineloewen Linkedin: Jacoline Loewen Profile

June 22, 2018

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.

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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.

June 8, 2018

Financial performance of family-owned companies is superior

Usually family and business blends are developed in countries where there is low trust. As Western countries have law and order to ensure corporations work well, family businesses are less in demand. Those that do work and get passed to the next generation properly, tend to do exceptionally well.

The de Gaspe Beaubien family is a great example where the next Gen. were able to influence the sale of the original business that made the wealth. Now the next Gen. is re-inventing the family business to the next level.

Here are a few excerpts from a Globe article talking about some of the questions to ask to achieve a strong and positive family business:

While there’s an old adage that says never go into business with family (or friends), experts say the corporate pairing of relatives can be powerful, if properly handled. A recent report of 1,000 family-owned firms worldwide​​, including some in Canada, showed the financial performance of family-owned companies is superior to that of non-family-owned businesses. Family-owned companies generated a cumulative return of 126 per cent since the start of 2006. Revenue and earning growth (measured by earnings before interest, taxes, depreciation and amortization, or EBITDA) was stronger, EBITDA margins were higher and cash flow returns are better, the report said, adding that family-owned businesses have a “longer-term and conservative focus.”
A well-known example many experts point to is consumer products conglomerate SC Johnson, now being run by the fifth-generation of the Johnson family. It even uses the slogan “A Family Company,” to help boost its brand.
“When an entrepreneurial family gets together to work on something, they care so much more than someone who doesn’t have their name on the building or doesn’t have a stake in the community. To me, that’s a recipe for building a great business,” says David Simpson, head of the Business Families Centre at Western University’s Ivey School of Business. “However, when it goes poorly, it goes poorly doubled down because you’re losing your brother or sister or cousin.”
“There’s an intrinsic conflict that comes with family businesses,” says Mark Barnicutt, co-founder and CEO of HighView Financial Group, which works with high-net-worth families, many of whom are entrepreneurs with their own companies.
“Emotional issues easily come to the surface,” he says. The most successful family businesses recognize that could happen and put in place the proper governance, including family roles and responsibilities, to cover what happens when conflicts arise. “A business isn’t a family and a family isn’t a business. You really need to separate the two,” Mr. Barnicutt says.
Family members in business together should also outline what happens if one person wants out, or there’s a disagreement in direction, Mr. Simpson says.
“It’s unromantic … but a business is an organism that lives, dies and changes,” he says. “Businesses aren’t worth blowing up a family for. A business is just an instrument of economic gain … If you go the nuclear option of suing each other, you’ve hurt both the family and the business.”
Mr. Simpson once ran a business with his younger brother, Craig Simpson, a former National Hockey League player who is now a broadcaster with Hockey Night in Canada. The business relationship ended after his brother retired from hockey and focused more on the company. “We found out that our formerly passive, equal partnership didn’t work as active partners,” Mr. Simpson says. “We didn’t share the same vision, risk tolerance and personal objectives and our general assumption that siblings are of course similar, was surprisingly inaccurate. We were better brothers than business partners.”
Most often, it’s money and corporate strategy – including how various family members are compensated and disagreement over the direction of the company – that lead to family business feuds, says Jane-Michèle Clark, an instructor who teaches the family enterprise course in the entrepreneurship program at York University’s Schulich School of Business.
Ms. Clark recommends business families hold strategy sessions that cover topics such as their family values, how they want the business to work for them and vision for the company.
“When you start by reaffirming the family values and relationship, then get clear about each person’s expectations about what they want the family business to do for them, and then move on to the vision, the conversation takes on a whole different tone,” she says. And while she recommends family businesses bring in a family council or an advisory board “to act as both a resource and a buffer,” few do, believing it’s not necessary or conflict won’t happen in their case.

June 3, 2018

3 Questions to ask to check your portfolio

The only limit to making impact is your imagination and your commitment. This is why I am proud to being part of a team dedicated to adding more value to investors and their families.

This past month has been interesting, in my role as business development for my team of financial advisers. I have heard the same three questions from prospective clients.

To see if you also share these, I thought I would give a quick answer to these important questions to ask in regards to managing your money:

1. How will you react in a coming correction? 

Most people will tell you they are cool under pressure, yet during a correction in the market, the truth is that many will panic and do the worst thing – sell at the wrong time. Selling is exactly what you should not do and this fear over common market occurrences is probably the number one reason you should partner with an expert to manage your wealth. They protect you from your own psychology.  The past years have been smooth sailing where most could have made money but what about when the correction arrives - and it will arrive. Talk to your adviser about an upcoming correction and how are you protected from the downside.

2.Are you overpaying for performance? 

It is no longer about the fees. In fact, it is about the economics. Do you understand the business model of a broker versus the Financial Adviser being rewarded to advise you to achieve your goals? What would you do if you had your doctor prescribing treatments where he got a kick back from the drug company? That is the broker model, which I believe is flawed, and people are realizing the economics are set up to reward the house, not the client. Ask your adviser for the economics of your portfolio. Are they able to source investments outside of their institution? How are they paid? Ask if they earn an additional fee when you accept their recommendation.

Does your adviser have conflicts of interest? 

Again, the broker model is set up to reward the broker, not you, the investor. If your financial adviser is pressuring you to trade often and to buy their own products, rather than offer an open-house architecture, your long term financial outcome will be compromised. Is your broker stuck selling you their in-house products or do they have a global diversification and product diversification capability at minimal cost?

Visit Amazon Author page for Jacoline Loewen. Click here.

Money Magnet, by Jacoline Loewen