Gonzalo Pagés, here with his financial planner Jennifer Black, wants to ensure his children are responsible about money.J.P. MOCZULSKI/The Globe and Mail
Canadian entrepreneur Gonzalo Pagés leaves no strategy unexplored when it comes to his legacy and protecting his seven-year-old twins – even from themselves.
The Mississauga, Ont., resident launched his company Byte Network Security Corp. a dozen years ago, and he also has a business in South America that imports commercial equipment for hotels and restaurants. He is among Canadians of high net worth – generally defined as having at least $1-million in investable assets – who want to ensure the money they're passing on to their children isn't frittered away.
"My will is structured so they will have more money if they go to university as opposed to college," Mr. Pagés says about his son and daughter. "They also won't be receiving everything at one chop – they'll be getting a certain amount through their lives.
"Can you imagine two 18-year-old kids with $5-million each? Nothing good can come out of that."
Mr. Pagés and his wife Kristine, who runs a home-based business, have raised their children to recognize the importance of saving and growing their money.
"One of the goals with my children is – and this started from an early age – that the topic of money is always talked about at the dinner table," he says. "Now my kids ask how my day was and if I closed any big deals. We usually talk about hard work, how money is made and what to do with money."
High-net-worth people – about 331,000 in Canada in 2014, 21,000 more than in the previous year, according to the 2015 World Wealth Report from Capgemini Financial Services – have more complex needs than lower-earners.
In addition to financial matters, they also must address the changing dynamics of families, including divorce and the growth of blended families, and the fact that young people are staying in school and living at home longer, and entering the work force later, says certified financial planner Jennifer Black of Dedicated Financial Solutions.
For their part, financial advisers are addressing the concerns of high-net-worth clients by educating them and their families.
"I've seen baby boomers whose parents didn't manage their estate well, so they want to become more aware of what they could be doing differently," says Ms. Black, who is Mr. Pagés's financial adviser.
Many parents in high-net-worth families also worry their children may take their privileged lives for granted, and that their estates may fall victim to the "silver spoon syndrome," says Sheri MacMillan, senior estate planning specialist and president of Calgary-based MacMillan Estate Planning Corp.
Intergenerational planning, trusts and charitable giving are among the topics Ms. MacMillan discusses at wine-and-cheese seminars she hosts for current and potential clients.
Affluence can be a double-edged sword, says Robin Taub, a Toronto-based chartered professional accountant who speaks on the importance of teaching financial literacy to children.
"It's a privilege, but also a responsibility," says Ms. Taub, who is also author of the bestselling book A Parent's Guide to Raising Money-Smart Kids.
"Wealthier parents are concerned their kids don't have the financial skills and knowledge to manage money," she says. "They want their kids to know how to handle the money, absorb the family values and understand what the family legacy is.
"But they're also afraid their [children] may not have an appreciation of what things cost and how they got to be there. It's a lot for parents to take on and it can feel a bit overwhelming and scary."
Richardson GMP, a national, independent wealth-management firm based in Toronto, holds 90-minute lunch-and-learn sessions, frequently attended by clients and their children, on topics such as choosing an executor, cottage succession and cybersecurity.
"There's so much information available through so many different access points that we find part of our value-added as advisers isn't just managing wealth but also protecting it," says Andrew Marsh, the firm's president and chief executive officer.
High-net-worth baby boomers have likely already inherited the previous generation's wealth, so they're more likely to outlive their money – meaning more for the next generation, he says.
Families are recognizing that "they've accumulated enough wealth and have become a steward of that wealth," Mr. Marsh says. Their goal is to define what that wealth means to them and how it will benefit their family while also trying to make the world better off, he says.
Even Mr. Marsh's own parents have taken steps to give them peace of mind, he says, noting that they have put a trust in place to ensure the family farm in Sarnia, Ont., won't be sold. "Trust funds are still a tool that a lot of people use ... and appropriate in certain situations to protect certain assets from generation to generation."
To control wealth once they die and reduce the chance of family infighting, wealthy people also donate at least part of their money to charity. For instance, they might set up a private foundation to support a cause, as billionaires Warren Buffett and Facebook founder Mark Zuckerberg have done.
Planning can prevent all kind of problems, both now and in the future, Ms. MacMillan stresses. "Having the money to assist your children is only one aspect of the equation. Knowing how to pass along wealth and when to do so is equally important," she says.
Adds Mr. Marsh: "The complexity of wealth leaves a lot of families needing to speak openly about what they want, but it really starts with education."