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Financial Plans: Part II 13 min read

Financial plans: Part II – Executing your plan & wealth management’s role on your expert team

From the moment you know your business is going to make it you should start planning your exit strategy.

There’s planning at every stage of being a business owner. From starting your business, to maintaining it, to growing it, to how and when you’ll eventually hand over the reigns.

The financial planning process aligns with these stages, too.

Say you’ve trusted your financial partner to support you with a business financial plan and a personal one that reflects it – and things have been going well. Now it’s time for wealth experts to layer in. This helps keep the business thriving and takes a longer-term view on how you’ll maintain your lifestyle when it comes time to pass the torch (or keys) and sail off into the sunset.

In our first article in this two-part blog series on financial plans for business owners, we chatted with CWB experts from business banking and personal banking for an overview of the financial planning process and the importance of working with a financial partner who sees the full picture.

In this second article, we connect with CWB Wealth Management for insights on their strategic and philosophical approach to helping business owners, the role of wealth planning, and who should be sitting at the table to help you execute your financial plan.


8 insights for business owners on wealth management and financial plans

Brett Phare, AVP and Private Wealth Specialist and Ralph Muth, VP and Associate Portfolio Manager offer these thoughts from their wealth of experience supporting the complex financial needs of successful business families.

  1. When it comes to financial planning for business owners, there’s a lot to consider.

    “If you look at an individual employee it’s a pretty straightforward planning process, and any relationship you have with a bank or wealth company is relatively simple,” says Muth. “You’ve got an RRSP, you’ve got a TFSA, you probably have some insurance and things like that, but the approach is basic tax rules. When you get into a small business situation it’s entirely different. For example, a typical employee is not going to have access to other types of investment strategies like individual pension plans and other compensation structures. And then there are decisions like how you pay yourself and your family members – or what you do with the business when you retire or decide the time is up. It’s really complex and that’s why you need to have subject matter experts in the room – and on the same page – about what you’re trying to accomplish.”


    Phare adds the more capital the client has accumulated, the more multi-level and multi-generational the strategies need to be. “So now we’re talking about estate planning and trusts and having all that layered in on top of succession planning. In addition to that, a lot of business owners feel an obligation to their community. They employ people, they create jobs for others. I would argue if you asked business owners what keeps them up at night it’s worrying about how to take care of their people. That means the planning approach needs to help them through those scenarios as well.”


  2. You own your financial plan – and you need a full team of experts at your table to help execute it.

    “It’s your financial plan and at the end of the day you make all the decisions. That said, you’re busy and this probably isn’t your wheelhouse, so you need to engage a team of experts to bring you the information so you can make sound decisions,” says Phare.

    “A key word here being team. Because if anybody tells you they can be a subject matter expert on all of away. That’s like going to a doctor who says they’re an expert in both brain surgery and heart surgery.”

     So, who should be sitting around your table? Phare says your team should include your personal banking, business banking, wealth partner, accounting, legal, estate planning, and insurance.


    “To make sure everyone’s on the same page, they should all be brought together at some point to get a common understanding of what they’re there to do,” he says. “Because otherwise accountants are doing one thing, lawyers are telling you something else, wealth’s got all these good ideas, bankers do what bankers do, and so the client’s sort of being pulled between all of them.” 


  3. Your financial partner can play a valuable role in helping to coordinate your team of experts.

    “As a business owner, your focus should be on acquiring new clients or customers and implementing strategies to help drive and grow your business. You can’t be spending huge amounts of time being stretched in different directions – especially when it’s outside your area of expertise,” says Phare. “At CWB, we help to coordinate specialized experts for our clients. We can reach out and bring in the accountant, the lawyer, whoever it is that aligns with the issue being addressed. Typically, the CWB contact who has the main relationship with the client will coordinate and quarterback the other individuals who are key to making crucial decisions.”


  4. Invest in good planning – and the right experts.

    Yes, there are costs to running a business and, especially when you’re just getting started as a business owner, you’re worried about all the pennies. But if you do the proper planning up front and you’re successful, it will pay for itself tenfold, says Phare. “You might have a $1,000 accounting or legal bill, but it could save you hundreds of thousands of dollars 10 years from now.” 


    Muth adds it’s not only about having the right plans in place. It’s also about having the right people on your team of experts. “For example, when it comes to accounting, we’re not talking about just inputting numbers,” he says. “You need someone who understands tax planning so they can work with us and say here’s how we need to put things together from a tax perspective. And then we can look at that and say here’s how we can withdraw money for that.”


  5. Time is your greatest asset.

    “Money doesn’t make problems go away. It just changes the nature of them.” says Phare. “For wealthy people, the biggest thing they can’t buy more of is time. You need multiple tax years for a lot of strategies, so the longer you have, the more you can use the Tax Act to your advantage. We’re here to create time. 

    It’s never too early to start talking about this and the client should really be thinking about wealth planning from the first time they’re not relying on their line of credit. Ok, the business is going to make it. Great! Now, what’s my exit strategy? That’s good planning.” 
  6. Know why you’re saving your money.

    “I think a lot of business owners, especially successful ones, have their head down in the business for a long period of time,” says Phare. “They’re good at making money. And in some cases, they haven’t really thought about the end goal. So I always talk about the why. The why isn’t because your accountant said to max out your RRSP or put the $200,000 into investments. The why is because you and your wife want to spend six months in Tuscany after retirement or have an amazing garden in the backyard to enjoy with the grandkids. And that means having conversations with your team around what the next two, three, five years look like. The money piece, you’ve probably got that covered. Now let’s figure out what’s the most efficient and effective way to access capital and have good cash flow in retirement. Because you’ve been wealthy as a business owner for a long time. But now as you’re getting ready to leave the business, you’re accessing buckets of cash or selling assets, and you’re sitting on money, and you’ve never had to deal with that. If your lifestyle is based on your company’s dividends, we need to look at what buckets we can tap to keep that pretty level.”


  7. Don’t wait to have an exit strategy.

    “The question becomes how are we going to best get money for your retirement out of all those specific investments you have,” says Muth. “I’ve encountered it before where people say ok, I’m turning 65 next year and I’m thinking maybe it’s a good idea to get out. In this case, you haven’t spent enough time planning with each of your subject matter experts to determine the best exit strategy. Insurance should be part of this conversation, too. If you’ve got a family and grandkids and you want to preserve as much of your estate as possible, you can re-purpose insurance for longer-term planning and have a mechanism to offset your taxes.”


    Phare adds that early planning around retirement and succession allows you to manage your future cash flow buckets for multiple years in advance, leading to more efficient income when you’re ready to wind down. “All the work that goes into being ready to retire is not a short process. It’s at least two to three years before you exit your business. And really, it’s more like 10 years out. For business owners, the bulk of their wealth is in their company or it’s tied up in something. So, you likely need a few years to clean it up.”


  8. Your plan is a living document. When something changes in your life, tell your team.
    “The big piece that falls on the client is communication. We’re really good at what we do, but if we don’t know something changed in your life, we can’t plan for it,” says Phare. “When something big happens, take a breath, and call us. We’ll say let’s get the team around the table and we’ll get back to you with a couple of options. That kind of trusted relationship is what’s needed – to call us right away if something happens that’s outside of what you planned.”

    Muth agrees, adding that whenever he does a plan for someone he explains it’s just an initial roadmap. “It’s an aid to help you make decisions. It’s not something we look at and throw in a drawer and never look at again. This is a living document. It needs to be updated at least every two years, and if something changes that’s significant, we need to update it right away.”


Bringing it all together

We hope this two-part series on financial plans has added to your financial literacy toolbox. Continue the journey with the links below.

Tools & resources

Financial plans: Part I – Why it’s important to align business with personal

CWB – Financial Planning

CWB Wealth Management