Family Enterprise Advisors offer businesses a holistic planning approach

By Susan Yellin | May 08 2017 07:00AM

Jim Burton, chairman and CEO of PPI

Jim Burton knew he had to get involved.

Starting out as a life insurance agent serving family businesses, Burton quickly discovered that many owners, even if they were successful, needed well-rounded and expert advice on their next steps both for their businesses and for succession planning.

“I became concerned that a lot of the advice they were getting is what I call ‘linear’,” Burton said in an interview. “It was narrow expertise based on tax planning or based on estate or corporate planning, but never really considered their family issues.”

So it was really the logical next step when he was asked to become the Foundation Chair of the Family Enterprise Xchange (FEX), a recent combination of the Canadian Association of Family Enterprise (CAFE) and the Institute of Family Enterprise Advisors (IFEA).

In doing so, Burton, also the chair and CEO of managing general agency PPI Canada, is eager to point out the benefits of the Family Enterprise Advisor (FEA) designation, a 14-day course spread out over a number of months. So won over is he with the contents of the course that he can foresee the day when family business owners insist that their advisors have the FEA designation if they want to work with their firm.

Holistic approach

“I thought it was a natural because it’s going to work in developing a number of new advisors who will have a much more holistic approach… As we looked at it, it was just as apparent to me that families need all these issues too.”

The ideal situation is for insurance advisors, for example, to first attain their CLU and CFP designations. However, he noted, that the FEA program emphasizes that advisors should not work in isolation; rather, they should be part of a team of other experts, such as lawyers and accountants, who work together to provide recommendations to business owners. Many FEA advisors have grown into working with family businesses rather than starting with them from scratch.

Burton said when he started selling insurance he always believed he needed more training than just narrowly understanding insurance. “We need a broad range of knowledge and you will see a lot of insurance providers who not only have an insurance background – a CLU may have a CFP, or they may have additional designations – as they fill up their knowledge for their practice.”

On the flip side, Burton said there are courses for family members involved in their businesses, but only a few universities, like Harvard and Kellogg School of Management, offer them. These courses tend to revolve around programs on succession and family enterprise, he said.

Helping to push the FEX forward is the Conference Board of Canada, which is embarking on two initiatives with the family business organization.

More research

Its first task is to get a handle on new and more extensive Canadian research on family businesses.

There are about 880,000 family enterprises in Canada, producing 60% of the country’s GDP, proving they do matter to our economy, said Burton. “But we don’t have a lot of scientific data on the value of family enterprise and the value as it goes from first generation to second generation or from fifth generation to six generation.”

As well, the FEX is ambitiously looking forward to creating a Centre for Family Enterprise within two years, which would be jointly sponsored by the Conference Board and the FEX Foundation.

Burton recognizes that a large percentage of family businesses can’t make it to the second generation, a situation he partly blames on the current limited advice family enterprises are given.

FEA advisors

“There are too many examples of that,” said Burton. “The newspapers have examples of several major families where the succession hasn’t worked well probably because they’ve had less than consultative, holistic advice. And that’s where I see the FEA designation and the FEA advisor really being much more involved in looking at the family issues, in addition to the corporate and shareholder issues.”

Burton said there are currently a total of about 80,000 financial advisors across Canada with about 225 of them having their FEA designation. By 2019, he said FEX hopes the number of FEA advisors will grow to 500 and to 2,500 by 2026.

“I believe this is right and it’s essential and we believe we can make a difference with Canadian families.” 

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