The importance of having a wealth strategy

There is a lot of advice being offered on the topic of personal finance. It can seem contradictory and often times confusing. The truth is there is no universal financial advice that applies to everyone equally, except perhaps to spend less than you earn.

What does it mean to be strategic in your wealth planning? Building wealth is about more than just money: it means making sure you get the most out of what you enjoy.

Having a wealth strategy is knowing where you want to go, how to get there, making sure it is done in a tax-efficient manner and that the details are handled in the way you want. Money is a means to an end and your strategy should include the major parts of your life: work, lifestyle, family and community. Proper wealth management is the big picture, financial planning is just one part of it.

For women entrepreneurs, being strategic about your wealth is especially important because:

  • Women entrepreneurs typically have fewer earning years due to taking time off to have children, to care for ailing family members, the time it takes to get the business profitable or all of the above.
  • Women typically live longer than men, which means we should save more and need to be more strategic to make the money last.
  • As an entrepreneur, you may not benefit from an employer pension plan, which means that responsibility for retirement saving falls solely on your shoulders.

There are several components to wealth strategy such as financial planning, investment/portfolio management, insurance, estate planning, tax planning and business succession planning. Most of these don't work in isolation so be sure to talk to the experts to make sure all the parts work together. Make sure the experts you hire can see the whole picture. For instance, if you are planning to pass your business to your child, is the process tax efficient? Do you need to review your insurance? How will your estate compensate your other children not involved with the business? Sometimes things that reduce wealth are from inefficiencies in the overall plan.

An important part of a wealth strategy is to have two streams of wealth creation: 1) the wealth created in your business; and 2) the wealth created from investing in other businesses. A lot of talk surrounds investing, how and where to invest. To have a good long-term plan there are a few things to do before you start investing in that second stream:

  1. Define your goals and where you want to go. While this may change over time and with changing life events, be as specific as you can at any point in time. This aspect is important for financial planning, estate planning and portfolio design.
  2. Make sure you have short-term savings, cash holdings usually held in a bank account. This is what you will use in case of emergency or for something you are saving for and plan to purchase in the near future (renovations, kids’ camp fees, travel, etc.)
  3. Know your personal cash flow. How much do you need to live your life and where does it come from? This is a key point in financial planning.
  4. Pay down your non-mortgage, non-investment-related debt. This debt typically is not growing your wealth, restricts your options and is not tax efficient.
  5. Understand the basics and hire experts where needed. With so many different parts to a wealth strategy you will need to understand the basics to know what you are comfortable doing, when to hire experts and what to ask the experts before you hire them. Remember that although they are professionals, they work for you. Make sure you know what they do, what they don't do and that you feel like you are getting value for the fees you pay.

Creating a wealth strategy is a big process, but knowing everything is in order and having peace of mind is well worth it.

Genova Private Management is the family firm that helps Canadians prosper. Genova can be your family's private office, guiding the growth and ultimately the distribution of wealth. We love to talk about wealth management and are always available to answer any questions you may have. You can contact Jennifer A at