The Next Stage in Life: Preserve, Protect, and Pass On Your Wealth


Date: 01/03/2018

Success for a business owner is a strange thing. An entrepreneur spends most of his or her life doing things that few others would do, such as working sixteen-hour days, getting a second mortgage to manage through hard times, or signing a lease with a personal guarantee that ties family financial security to the success of a business.

At some point, the nature of financial worries changes. Meeting payroll is not the challenge it once was. The balance sheet looks different and conversations with banks are not so difficult. And time becomes available for family holidays; a vacation home may become a possibility.

But even with success, this new stage of life is unsettling. The entrepreneur realizes that despite a prospering business, personal financial worries remain. Fears emerge around funding retirement years or the inability to leave a legacy that reflects the success of the business.

The Shift To A New Stage

“Simply put,” explains Stuart Sutton, a partner at Sutton Financial, “to be in control of your wealth you need answers to how you will achieve peace, freedom, and impact.” What defines these three goals is different for each person. Sutton’s experience working with entrepreneurs provides a valuable perspective.

Peace of mind emerges when people gain control of their finances. Often, the issue is not a lack of wealth. The issue is simply the lack of clarity around their situation and the need to align various decisions with a long-term goal.

Sutton is open to sharing his experience helping clients to achieve peace of mind with their personal finances. “It’s interesting to see how people change when they realize that they do not have to worry about protecting, preserving, and passing along wealth. They might still be up at night – these are business people after all – and face significant pressures. But personal finances are no longer their primary source of stress.”

When people take more time for themselves, they begin to have “walk-about freedom.” They can do what they want, go where they choose, and spend time with the people who mean the most to them.

Having an impact on the lives of others is a deeply personal and rewarding goal. Once their personal stability materializes, business owners begin to decide what sort of legacy they’ll leave behind. Tax planning is usually the catalyst for philanthropic planning, but having a unique and meaningful impact on one’s community is incredibly rewarding.

The Need To Control Your Wealth

Most people feel that rather than being in control of their wealth, their wealth controls them. The costs and obligations of personal life seem to escalate with the success of the business. Time becomes scarce and a nagging feeling emerges that many things the entrepreneur values in life are being ignored. Most business owners don’t have a strategy to deal with what matters.

“Many barriers prevent people from being in control of their wealth,” Sutton explains. “The top three are most definitely the fear of running out of money, anxiety around restrictions related to healthcare and lifestyle, and concerns about paying more tax than necessary.”

These barriers can affect a person’s stress level. For example, many entrepreneurs struggle to plan cash flow so they don’t run out of money in retirement. A person can prepare a mathematical projection, but needs a good understanding of the variables that can disrupt cash flow – expected returns and taxes, for example.

It is important to consider lifestyle-related costs when planning cash flow, such as healthcare needs and other spending – for example, purchasing another property or travelling. Some people don’t account for inflation, and it can be very difficult to live off a fixed income when expenses increase annually. Working through these considerations can be emotional, but most often the lifestyle expenses are the ones that cause a great deal of worry. People don’t want their kids to be stressed out about these decisions. They don’t want to rely on their kids, either.

Capturing tax saving opportunities is a crucial factor in cash flow planning. People understand that tax is a reality, but also that it is prudent to avoid sending more than necessary to the Canada Revenue Agency.

Beyond considering direct cash flow needs related to their retirement, many business people are grateful and wish to have a meaningful impact on their communities. But they often realize they are making random choices or perhaps not making any contributions at all.

These barriers to feeling in control are real. Most people structure their financial situation in a piecemeal fashion, with each decision well-intentioned but not coordinated around removing barriers to controlling their wealth.

Knocking Down The Barriers

“Removing the barriers is not as difficult as it seems,” explains Sutton. “It takes some knowledge to pull the pieces together as you work through the puzzle, but the real key to the process is to ask the right questions and ensure that decisions align with your values and goals.”

Consider the typical situation with a retired entrepreneur. Clearly identifying barriers and making careful decisions to remove these barriers provides clarity on where the money will come from without a salary from the business, identifies whether the family will have enough cash to retire, and provides confidence that they will not squander their wealth but rather use it well. Stress evaporates when people are no longer afraid of making the wrong decision. The focus can then be on supporting family, friends, and the causes that have a meaningful connection to one’s life.

Sutton says it can be rewarding to work with clients who undergo this type of change. “I can’t tell you how many times I’ve had someone in my office in tears because they never understood what was happening and now they know that everything will be OK. There’s no reason for a successful business owner or their spouse to be up at night worrying about their wealth.”

The process of removing barriers requires an understanding of what others have gone through in similar situations. The information available in Sutton Financial Group’s special report Five Serious Barriers to Your Retirement Plans can provide some of that background. Removing the barriers also requires a variety of perspectives. Every person needs advice on some aspect of their situation, whether from a lawyer, accountant, or financial advisor. Often, bringing in a new perspective can be that important first step toward regaining control over personal wealth.

First published in the March 2018 edition of The Business Advisor.

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