Entrepreneurs are among the most interesting and dynamic clients that wealth managers can work with. Some entrepreneurs are highly engaging and others can be highly demanding, but what links all of them is that each is successful in their own right.
Achieving that success frequently means their sole focus in life has been on their business ventures, rather than their personal finances. This is where we come in.
Our role as a wealth manager goes beyond simply providing investment advice; we educate our clients and help to safeguard their wealth for the future. Sometimes this means sticking our head above the parapet and discussing challenging, sensitive topics.
When someone is managing a business, it can become their primary focus in life; success often comes from working long hours and taking big risks. By the time they come to us for advice, they have usually already made big returns.
Connect with a relationship manager
Don’t have an RBC relationship manager and wish to find one? Let us match you
Business owners with most or all of their wealth tied up in their business may not be aware of their potential exposure to concentration risk.
Someone whose investments are focused on a single asset may benefit from diversifying their wealth to help reduce this exposure.
We help these clients secure their wealth for the future through diversification, even though it may clash with how they have gone about life before.
Business owners are often so subsumed in their business that they are comfortable with taking big risks in order to achieve large gains. Many have seen this pay off as their own businesses have doubled, tripled or even quadrupled in value as a result.
By comparison, a balanced portfolio of equities and bonds that could deliver high single-digit returns year in, year out, might not seem exciting to a business owner.
Indeed, some might even ask why they would invest in something that they do not understand and that delivers lower returns than their business.
So, while portfolio values will of course fluctuate in line with market performance, it is our job to have at heart-to-heart discussion and demonstrate that diversifying their wealth is important in order to preserve it for the future.
It is important that we gain a deep understanding of their objectives and provide a solution that suits their specific financial and personal needs.
Leaving behind a legacy can be an important issue for many clients. There are a number of ways that business owners and entrepreneurs want to leave their mark on the world. For some, their hope is that their children will take over the business.
Others may simply wish to leave their wealth to their children, while still more may be thinking of philanthropy. That is why many of our clients need different wealth solutions for each of their distinct needs, rather than an off-the shelf collective investment.
Choosing a discretionary investment portfolio that can cater to the specific needs and risk profile of the individual is one potential option.
For example, if a client is looking to establish a legacy for their children, they might select a growth orientated equity-focused portfolio.
This article was orginally published on Private Banker International.
This publication has been issued by Royal Bank of Canada on behalf of certain RBC ® companies that form part of the international network of RBC Wealth Management. You should carefully read any risk warnings or regulatory disclosures in this publication or in any other literature accompanying this publication or transmitted to you by Royal Bank of Canada, its affiliates or subsidiaries.
The information contained in this report has been compiled by Royal Bank of Canada and/or its affiliates from sources believed to be reliable, but no representation or warranty, express or implied is made to its accuracy, completeness or correctness. All opinions and estimates contained in this report are judgments as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Every province in Canada, state in the U.S. and most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, any securities discussed in this report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment advice.
This material is prepared for general circulation to clients, including clients who are affiliates of Royal Bank of Canada, and does not have regard to the particular circumstances or needs of any specific person who may read it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. To the full extent permitted by law neither Royal Bank of Canada nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of Royal Bank of Canada.
Clients of United Kingdom companies may be entitled to compensation from the UK Financial Services Compensation Scheme if any of these entities cannot meet its obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for up to a total of £85,000. The Channel Island subsidiaries are not covered by the UK Financial Services Compensation Scheme; the offices of Royal Bank of Canada (Channel Islands) Limited in Guernsey and Jersey are covered by the respective compensation schemes in these jurisdictions for deposit taking business only.