In this episode, I’m talking about the modern meaning of intergenerational wealth.

Generational wealth refers to having more wealth than what one generation needs. Intergenerational wealth refers to having more wealth than what two generations need.

In both scenarios, financial advisors provide strategies to optimize the transfer for tax efficiency. For generational wealth, lawyers help with the will and accountants might provide ideas. For intergenerational wealth, accountants and lawyers are also involved in the integrated strategy.

To be an intergenerational strategy, it is more than a technical strategy. It is also a philosophy that is passed down through multiple generations.

If you leave $10M through an inheritance, and the beneficiary frivolously spends it all in a few years and struggles to have a comfortable life thereafter, is that a transfer of wealth? No. It was just a transfer of assets.

Wealth has no serious relationship to a person’s financial value. It’s knowing how to be smart with your financial value.

Thus, the modern meaning of intergenerational wealth is that it's mostly a strategy to pass financial intelligence with the intent that the intelligence continues through multiple generations. It also comes with the expectation that the value continues to grow sustainably from generation to generation.

With this modern meaning of intergenerational wealth, it applies to everyone.

How do you achieve this?

Most people don’t want to talk about financial intelligence with their family as it introduces the hazard and risk of fueling greed. Thus, financial intelligence is primarily a philosophy that is learned through osmosis.

The best way I know for you to enable this strategy is to have you and your family listen to this podcast, particularly this episode. The more it becomes a philosophy that you know naturally without reminders, it becomes something that transfers through by osmosis.

What complements this intelligence is to have yourself and your family exposed to other sources that also possess the same intelligence. Like a financial advisor that expresses the philosophy in the context of every meeting. When exposed to other sources that don’t possess this intelligence, it will encourage the intelligence to fade away.

Contact me at informedcanadianinvestor@gmail.com

In this episode, I’ll share with you the HNW client experience.

HNW clients are below ultra HNW clients and above everyone else. As the division between these three categories of clients is subjective, to keep things simple, HNW clients have something between $1M and $10M for this discussion.

When a client has grown her investments to $1M, she begins to benefit from additional strategic management services that apply to the structure of the accounts. This is because structural management contributes to the performance of your net worth.

When you are a HNW client, you want the best experience you can get. I’ll describe what this looks like using standard Fortune 500 business terms.

You will have three types of people working for you.

There are the directors, who are the people with the highest credentials. Each director introduces a unique specialized skill related to their designations. Together, they define the tax efficient and strategic structure of your account management as part of your net worth.

Sometimes you get introduced to directors before you give the firm your business. Thereafter, you talk to directors when there is a problem, when they want more business from you or when they fear you are taking your business elsewhere.

There is the account manager who looks after your investment accounts, the structure of your account management provided by the directors and your financial strategy.

In the investment industry, the traditional title for an account manager is a financial advisor or a financial planner.

The account manager is the person you speak with regularly who works on your behalf to keep things within your strategy. This person is accountable for managing your accounts within the strategic tolerances defined by the directors and engages the directors when there is a need to redefine the structure, like when the HNW client’s interests change.

Many HNW clients like the account manager to also invest directly in stocks and fixed income instruments. This is because they don’t want to feel like they are a commodity to the firm looking after their investments. They want the account manager to be accountable to them. HNW clients feel mistreated when the account manager behaves like a gatekeeper.

Lastly, there is the client service associate.

This very important person looks after the administration side of your accounts and many client interests. This person frees up the account manager’s time so that they together exceed your expectations when delivering your account management.

That is the ideal high net worth client experience. It is a glorious thing.

Contact me at informedcanadianinvestor@gmail.com

In this episode is the topic of the investing benchmark.

In the investing sense, we want to beat the benchmark. When we can’t beat it, then we want to invest in the benchmark. Write that down in a journal as that is the most important detail. If we can’t beat the benchmark, we want to invest in the benchmark.

As a client, you want to see the performance of your portfolio against the benchmark. This is how your financial advisor demonstrates his or her accountability.

If you don’t see how your investment performs in comparison to the benchmark, then you have to assume you are underperforming the benchmark. Thinking otherwise is like drinking the kool-aid.

Next, you want to know how your financial advisor constructs the benchmark.

You want to see a benchmark constructed with a few indexes as that is a demonstration of sophistication. You also don’t want to see too many indexes as the theory of the design goes beyond what you can comprehend. When it gets confusing, it feels like you are drinking the kool-aid once again.

Lastly, the benchmark needs to be assessed in the short term and the mid term.

The objective is to outperform the benchmark in the mid term with outperforming the short term benchmark more often than not. In the short term, there are swings in performance relative to the benchmark. It’s unavoidable. Patience in the short term is where success is found.

Contact me at informedcanadianinvestor@gmail.com