Canada's banks eye business-succession planning for boomers

Thu Dec 20, 2012 10:44am EST
 
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By Andrea Hopkins

TORONTO (Reuters) - For many Canadian business owners, it may take the sudden death of a colleague or a debilitating illness before they realize they don't have a succession plan and need one badly.

Baby boomers own the bulk of small and medium-sized businesses in Canada, and many have neglected to make formal plans for passing on their businesses - either to relatives or through a sale. That has left a void that Canada's banks are vying to fill.

"Our business owner clients are very quickly turning 60, 61, 62, 63, 64, 65," said Tony Maiorino, head of wealth management services at Royal Bank of Canada RY.TO, the nation's largest bank. "They see a colleague who dies, who gets cancer, who has a stroke, and their business is disrupted and their family is at a loss."

These are "groundhog moments," he says, and a startled business owner may think, "'Holy crap, I don't want that to happen to me'."

The looming need for contingency planning is helping RBC's business succession unit swim against the tide, Maiorino says, as it expands rapidly at a time when many global banks have cut back on staffing in the wake of the financial crisis.

Maiorino's team is now nearly 200 strong, up from 56 people in 2007, and Canada's major banks are not shy about stealing talent from one another to build the strongest team.

RBC recently raided Bank of Montreal BMO.TO, Canada's No. 4 bank, to hire James Wong, who co-authored "The Transition Experience: What every Canadian family business owner should know beyond succession planning" while at BMO.

While the actual work of succession planning is not a revenue-generating business - RBC and rivals don't even charge for most of the service - the payoff comes when clients start implementing the plan, which typically includes investing money, setting up trusts, tax planning and dealing with estate details.   Continued...