My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. My posts are blunt, opinionated and even have a twist of humour/sarcasm. You've been warned. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Wednesday, July 13, 2011

Wealthy families and their children-any lessons to be learned for everyday Canadian families?

In my recent blog “Estate Planning-Taking it to the grave or leaving it all to the kids,” I quoted comments made by Dr. Lee Hausner in regard to how she suggests wealthy families deal with their money and their children. I remember reading Dr. Hausner’s comments in a 2007 article, titled The Trust Fund Whisperer and they have stuck with me over the years.

Although Dr. Hausner deals with extremely wealthy families, I feel that her advice is relevant for many Canadian families, from middle to upper class. In this blog I will review some of her suggestions and their applicability to Canadians who are not “über rich”.

Set an example

In the article, Dr. Hausner notes that “How children feel about money has a lot to do with how they see their parents spend it. Stay productive, be charitable and invest wisely, and your kids will too.” For a typical Canadian working class family, I think the example is set through children observing how hard their parents work to put food on the table. But what about upper middle class and upper class Canadian families? These parents also often work extremely hard, however, even with significant family income, many live pay cheque to pay cheque in an attempt to keep up with the Jones’s by spending for a house in the right area, the BMW lease and the required family vacation to Europe, while paying little attention to volunteering or charitable giving. Stepping back and paying some heed to Dr. Hausner’s comments may provide some perspective and provide a better example to your children. (I am not in anyway saying I am above this discussion and that I am not guilty of some of these sins, I am just commenting in general).

Encourage philanthropy

Dr. Hausner is very big on encouraging philanthropy and becoming involved in charitable causes. I would suggest that these two activities can be undertaken by anyone, regardless of wealth. Where children observe their parents involved in charitable causes, there is clearly a filter down effect, including discussion of these causes at the dinner table. Where children receive birthday gifts or other cash gifts, parents should encourage the child to give even $5 to a charitable cause. In Ontario, the high schools have really taken an active role by requiring community service as part of the graduation process.

Avoid cash paralysis

Dr. Hausner suggests you don't transfer any substantial amount of wealth before or during a child's career-building years. Pay for education, housing and other expenses, but large sums of cash will just "grind their productivity to a halt." This suggestion is limited in scope for most Canadian families, but should be kept in mind by any family that will inherit funds as part of the large wealth transfer currently underway.

An interesting read in this regard is an article by Leah McLaren in the July edition of Toronto Life titled Latner vs. Latner vs Latner vs Latner. To quickly recap the article: Albert Latner made millions of dollars in real estate and then sold out and branched into health care and casinos amongst other interests. He then took his healthcare company, Dynacare, public and sold out for $480 million dollars. His holding company also owns shares in the Fallsview Casino Resort. According to the article, after Albert’s wife passed away, he decided to distribute his children’s entire inheritance in full. The Toronto Life article discusses the fallout of distributing the full inheritance, it's a fascinating read to say the least.

 Encourage passions

Dr. Hausner suggests that if your child wants to be a teacher, but worries about the standard of living associated with the profession, offer to match their salary. Again, while not applicable for most Canadian families, I think this is a great suggestion for any family that will have some excess wealth. While matching a salary may not be within the grasp of many, if your family has some excess wealth, what better way to encourage your child than by supporting them in a job or profession they truly love.

Most families do not have the wealth transfer concerns Dr. Hausner addresses, however, in my opinion, her suggestions are applicable to many families, notwithstanding their incomes.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.


  1. My wife and I were discussing encouraging passions just the other day. We faced significant pressure when growing up to study in fields that pay better (engineering for both of us). We want the kids to study whatever they are interested in. Not sure if we'll be able to match their salaries though :)

  2. CC, I figured with the big bucks Money Sense pays you, matching the salaries would not be an issue. I think you need an agent next set of negotiations, you may need to remind them you have the biggest (i think) financial blog in Canada and without you their circulation would be nada :)

  3. "In Ontario, the high schools have really taken an active role by requiring community service as part of the graduation process."

    Forcing people to do things isn't encouraging charity... it's just giving equivalent-to-criminal sentences to non-dropouts. The province should stick to teaching, and refrain from conducting social engineering experiments on youth.

  4. Hi Brian

    My mindset for this blog was excessive cash and thus no need for insurance. However, as you note, there are circumstances to use insurance for estate planning even for those who are very wealthy, although I typically see it used at least a level of wealth down the ladder. Maybe another blog, thx.