Family practice

Esposito has continued his education along the way. He is in the final stages of earning his chartered investment manager designation and he has enrolled in the course for the family enterprise advisor designation.

The team, which serves about 200 client households and has $400 million in assets under management, brands itself as a complete family office, serving business owners, executives and other professionals, as well as their families. One of the biggest challenges these clients face, Esposito says, is continuity of their wealth and businesses.

Many of these clients are newcomers to wealth, Esposito notes: “They have been frugal, kept their heads down and woken up one day to realize they’re worth a decent chunk of money.”

These clients, aside from worrying about whether their children are prepared to receive a large wealth transfer, are concerned about whether their business will carry on without them.

The longevity of the Espositos’ family business is one reason why the team is well poised to serve these clients. Fred began the business in 1986 and Dino joined in 1993. The team members know first-hand the difficulties family businesses sometimes face, especially because of the informality of familial relationships.

“There are a lot of heated debates and we get into scraps a little bit, but it’s always about pushing our business forward,” Esposito says. “And I think that’s what happens in all family businesses. The dialogue is a lot more open because I’m able to say what I feel.”

Ultimately, a business can benefit from extremely open communication and feedback, Esposito says. The key is learning how to communicate well.

One way the Espositos try to create more open communication with their clients is by encouraging client family meetings at least once a year. The Esposito team encourages clients to bring their spouses and children to these meetings so the entire client family can understand conversations the parents have about money and their thought processes. And the children are encouraged to ask questions, Esposito says.

“We want to create an environment in which we can help clients pass their values on to their future generations or beneficiaries,” Esposito says. “[These meetings] work well because carrying on the [family] legacy is very important [to the family]. The more [clients’ children] can understand why things are set up a certain way or why decisions were made, the better everyone feels about their wealth.”

Esposito also is careful to note that a family business doesn’t just include children or other relatives currently working in the business.

“Family business to us is also the support group around the business,” Esposito says. “Businesses don’t succeed without family, in our eyes. We fully acknowledge that, and make that the centre of our practice.”

Regarding the continuity of the Espositos’ own family business, Fred has not set a date to retire, but the firm is participating in its own succession planning to prepare for that day. To that end, Esposito spends about 30% of his day helping his father with large-client families and attending meetings with those clients.

The generational divide within the Esposito team works to the Espositos’ advantage. While Fred continues his relationships with clients, Esposito often is building bridges between the firm and the children of his father’s clients.

Clients appreciate that continuity, Esposito says: “There is never a question of what’s next for their kids. [Clients] know the process is going to be continued; nothing really changes. That’s key.”

Esposito bonds with the next generation in often informal ways. For example, when a client’s son moved to downtown Edmonton, Esposito invited him to an Edmonton Oilers game.

This kind of outing is not based on a sales agenda, Esposito says. Although money sometimes comes up, the focus is on building trust and a relationship with the next generation of clients.

“Building these relationships with the next generation is key because these younger guys don’t want to deal with the advisor their parents dealt with,” Esposito says.

Often, the younger generation has different points of view from those of their parents, Esposito adds, and they don’t approach investment and financial advice in the same way their parents might have done 20 years ago.

Esposito, by building trust between his family firm and high net-worth multigenerational client families, hopes these clients will barely notice the difference when Fred retires and Esposito leads the business.

Esposito has been getting ready for that eventual transition by transferring Fred’s knowledge into a process manual, which he refers to as a “playbook.”

Fred, like many other entrepreneurs, built a successful business without writing down key processes or information. But the younger Esposito has been developing his playbook over time by keeping an eye on how Fred approaches various situations and aspects of the business. Father and son meet regularly to discuss any questions.

Esposito, by documenting his father’s actions, can follow in his footsteps more easily. For example, the team’s business manual now includes a process for “onboarding” new clients.

This playbook is not just a tool to be used when Fred retires, Esposito says. The team can use it any time Fred is away from the office or even as a checklist for following protocol.

Unlike many rookie advisors, Esposito never had to knock on doors or cold-call prospects to survive his first couple of years in the business.

By joining the family firm as his first job in the investment industry, Esposito has benefited from the family team’s referral strategy, which accounts for the majority of their new clients.

However, the team does invest time and energy into client events.

“There’s a small group of clients – or prospective clients – that we want to work with,” Esposito says. “For us, it’s getting to these people through a means of communication they prefer.”

These events often are sessions that feature a speaker. For example, the firm once hired a health-care specialist to speak to a group of clients who were medical professionals. The Esposito team also has hosted trips to the U.S., where clients are introduced to some of the money managers the firm deals with.

One type of event that has been particularly successful is a meet-and-greet with current and past members of the Oilers. These events provide a nostalgic experience for clients and prospective clients, many of whom may have attended games during the Oilers’ glory years, when the hockey team won five Stanley Cups between 1984 and 1990.

Esposito, in his spare time, enjoys playing golf and water sports at his family’s cabin.

PUTTING A FACE TO A NAME

Building trust with a client’s family, particularly with the next generation of clients, is key for ensuring a smooth wealth transfer for that client family, says McKenzie Esposito, investment advisor with National Bank Financial Ltd.’s Esposito Advisory Team in Edmonton. He offers the following tips for developing rapport with your clients’ children:

> Involve family in all events. For starters, Esposito always encourages his clients to get their families involved in client-appreciation or educational events, as well as client meetings. “[Family involvement and intergenerational clients] is about putting that olive branch out and making sure that you’re staying in front of the family,” he says.

> Take advantage of shared interests. Finding common ground in sports or cultural events can be helpful. Just don’t try to force a connection over an interest you don’t really share. “People forget that the younger generation isn’t stupid,” Esposito says. “They can understand when an older advisor is feeling forced or struggling to build a relationship.”

> Start small. You can begin by simply putting a face to a name. For example, Esposito’s firm hosted a “paint night” recently, at which team members were able to meet with their clients’ families and other community members in a relaxed, creative setting. “[That event] was an easy way to connect with [clients’] children I’ve never met before,” Esposito says. “They were having fun and I didn’t need to speak with them the entire time. The opportunity is that I got to shake their hands and see them face to face.”

Go into these interactions as if you are going out on a first date, Esposito says. The objective is to see if you’re able to build a relationship.