Program teaches advisors how to work better with family-owned business

By Susan Yellin | November 01 2013 03:52PM

A relatively new program to help financial advisors work more effectively with family-owned businesses will soon be expanding to the Richard Ivey School of Business and negotiations are under way to take the program even further.
The program offering the Family Enterprise Designation (FEA) began a few years ago at the Sauder School of Business at the University of British Columbia in Vancouver which then started up a course in Toronto. The designation’s governing body, the Institute of Family Enterprise Advisors (IFEA), is now taking the course to the Toronto satellite campus of the Richard Ivey School of Business, which is based in London, Ont.

As well, IFEA wants to partner with other universities across Canada and the United States in hopes of making the designation a North American standard among financial advisors and other business experts, including accountants, lawyers, investment executives and directors on family business boards, said Kathy Bright, IFEA president.

Family-owned businesses make up anywhere from 40 per cent to 80 per cent of GDP globally, and 40 per cent to 60 per cent in Canada, said Bright.

The 15-day program is spread out over a number of months, culminating in a team project where the advisors are put into multi-disciplinary teams and work with a real client under a specific set of criteria.

This approach follows the basic aim of the program: to provide a holistic approach to working with other advisors, such as those in the financial and legal professions, to the benefit of families, said Bright. “It’s systems-based – the family is a system and you need to understand that if you work with one part it will affect the others.”

Bright, who has been teaching strategic planning for a number of years, said the program has been an excellent lens for her to look through while she works with clients who have family-owned enterprises.

“It makes me think a little bit differently in the approach I take with them,” she said. “When I am working with Telus, for example, I don’t think a lot about how this affects [Telus president and CEO] Darren Entwistles’ wife and children. But when I am working with Rocky Mountaineer, I am definitely thoughtful about the fact that [founder] Peter Armstrong is the chairman and his family is actively involved and I need to think differently about the goals for those organizations.”

The program was originally set up by Judi Cunningham, the executive director of the Business Families Centre at UBC’s Sauder School of Business, who noticed that family businesses, especially those with high net worth, had complex business arrangements. The business owners would receive excellent technical advice from individual advisors, such as creating a trust or a buy-sell agreement, but found they lacked the proper advice when it came to dealing with families.

The problem was that family advisors, as a rule, have worked individually with little or no communication with the other advisors, said Russel Baskin, IFEA’s managing director. They also tend to work with one member of the family – the person who called them in – but the dynamics of the family may mean that not everyone agrees with that one person’s goals.

“It’s like advisors are working with the tip of the iceberg and are not aware that underneath the water is the whole foundation of that family,” said Baskin, who has completed the program herself. “What we see happening is that families are often torn apart. Plans are put into place that they don’t know anything about. By then, it’s too late to try to solve some of these problems because they are already set in stone.”

Advisors must first take the program, which runs about $13,900, and then take the $500-exam (broken into both written and oral sections) to get their designation. They must also have another professional designation (or equivalent) and take annual CE credits.

Keith Brown, co-CEO of Daystar Financial Group in Vancouver, was among one of the first Canadian advisors to earn his FEA designation.

Brown had been working with family-owned businesses almost since he started in 1981 and always considered that part of his practice to be his favourite.

The course affirmed some of the practices he was already using, such as working with a number of other professional advisors, including lawyers, accountants and dispute resolution experts, to better give a family business holistic advice.

“I do try to work through the system from the information we learned in the course, but I think I now have a better understanding of the whole system. It gives you a more formal business approach as well,” he said.

Broader implications

Brown said he also believes it’s important for independent advisors to understand the broader implications of working as a team for family enterprises.

“There’s lots of competition in the marketplace right now,” he said. “The banks, in particular, have the capacity and financial resources to do everything in house. There are a lot of independents who need to have people in other disciplines to call on. We need a course out there so that independents have the resources to call on. It will help protect the futures of independent advisors as well as independent accounting firms.”