Tips To Protect and Build Family Wealth For High-Net-Worth Families

Building wealth is the process of generating and maintaining long-term income from your assets. It also entails protecting your wealth. We’ve all heard of the basic formula—earn more money than you spend, save, and invest wisely—but if you are responsible for the household investable assets of a high-net-worth family, what else can you do to protect and build family wealth? Here are some tips.

Have A Comprehensive Financial Plan

If your household has more than $1M in investable assets, you have concerns not shared by the average Canadian family. Unique issues include a higher tax burden and a larger investment portfolio. They may also include managing multiple properties, preparing for business succession, and transferring family assets while minimizing taxes, to name a few.

With above-average assets to manage, you may wish to have an above-average comprehensive financial plan to address your unique concerns and identify strategies to protect and build your family wealth.

Make The Most Out Of Your Surplus Assets

You may have surplus assets that provide income beyond the needs of your lifespan. Consider strategies to protect your surplus assets instead of continuing to expose them to your high tax rate. One strategy is to make lifetime gifts to lower-income family members whose capital gains tax rate may be in a lower tax bracket.

If charitable giving is what you have in mind for some of your surplus assets, there are also strategies to make the most of your donations. One strategy is to donate publicly traded securities in-kind to a registered charity, which does not trigger capital gains tax. You will also receive a donation receipt that is equal to the donated security’s fair market value.

Speaking to a professional can help you understand the most up to date information on strategies to utilize tax breaks and make the most out of your surplus assets.

Grow Your Assets

Lastly, of course, keeping money where it will grow is a reliable way to protect and build family wealth. Prudent and patient long-term investments in dividend-paying stocks and Real Estate Investment Trusts (REITs) are two strategies to protect and build family wealth.

Dividend-paying stocks allow you to seek a total return approach to investing, providing capital gains and dividend income that can be reinvested or withdrawn as an additional stable income stream for your family. Dividend-paying stocks have not only proven to be less volatile, but also outperformed the broader stock market over many decades. In today’s low interest rate environment, placing surplus household investable assets in your savings account or depending on interest from GICs and other fixed income investments alone are often insufficient to keep pace with inflation, thereby eroding your family wealth over time.

On the other hand, REITs are an attractive asset class that can provide superior capital gains and robust income distributions. When you invest in a REIT, the income generated by the real estate properties in the REIT’s portfolio flows through to you in the form of distributions. This is a great way to diversify your household investable assets and/or invest in real estate without directly investing in properties.

The Bottom Line

Protecting family wealth takes a lot of time, energy and expertise, and building family wealth requires even more, which is why many high-net-worth families find it onerous to manage the wealth that they have created. To ensure that your family wealth can last for generations, consider working directly with a trusted investment management firm, where a portfolio manager will take control and ensure that your family wealth is protected and grows to benefit generations to come. Each client is unique; the way your household investable assets are allocated should be too.


Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing customized, actively managed, Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.

Founded in 1985, Bloom has experience in managing in excess of $2.5B in assets over the years. We believe that generating independent cash flow is central to the success of our clients’ portfolios because it provides capital for the present day, if needed, while continuing to preserve and build wealth for the future.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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