By: Elli Schochet, CFP, FEA and Sarah Brown, FEA
In many Canadian family businesses, the hardest planning questions are not technical. A succession plan can be sound on paper and still stall because siblings disagree about who should lead the company next. A founder may never have said out loud what a fair outcome looks like.
Insurance and estate planning sit at the center of these conversations. A policy can provide exactly the right amount of liquidity and still create friction if one child inherits the business and another inherits a cheque. The numbers are only part of the work. The rest is understanding the family that must live with the result.
The Family Enterprise Advisor (FEA) designation addresses the intersection of financial structure and family relationships. Both Elli Schochet and Sarah Brown have completed the designation.
The FEA designation
Family Enterprise Canada, the national organization for family businesses and the advisors who work with them, grants the FEA designation. Its program is offered in collaboration with the Alberta School of Business, Ivey Business School and the Sauder School of Business.
The designation is built for professionals who already practise in their own field. Candidates must hold a degree or professional designation, and the program draws accountants, lawyers, bankers, insurance and wealth advisors, coaches and family therapists. It is not meant to turn any of them into one another; it teaches them how to collaborate.
The curriculum spans business family dynamics during leadership transitions, family enterprise governance, facilitation and conflict resolution, and continuity planning, which Family Enterprise Canada describes as the “human” side of succession.
Why a family enterprise lens matters in insurance planning
Most of the planning Al G. Brown & Associates does for business-owning families touches more than one generation and more than one relationship. Consider these examples, where skilled conversations matter as much as the technical solutions.
Fair treatment in a business context may differ from fair treatment in a family. The use of insurance to equalize the material or financial value of the enterprise is useful when accompanied by open dialogue. People are more accepting of unequal results when they are included in the conversation, there is transparency, and they trust the decision makers.
Liquidity has a family dimension. When an owner dies, the tax on accrued gains is often due before the business can be sold or restructured. Insurance provides liquidity when it is needed, relieving pressure and creating stability. Insurance can provide the cash. Who controls that cash, and who decides what happens to the company, are questions about the family as much as the estate.
Shareholder agreements involve relatives. A buy-sell arrangement between siblings or cousins is a legal document, but it is also a statement about trust. Structuring the shareholder agreement appropriately is as much about family governance as it is about family dynamics. Understanding the family and communication is the key to a successful transition and succession plan.
The FEA framework provides advisors with a common way to work through the human questions and bring in the family’s lawyer, accountant, and other advisors at the right moment.
To learn more about how a family enterprise perspective can inform your planning, contact info@algbrown.com.
Sign up here and receive news and insights directly into your inbox.
