Serving the suddenly high-net-worth

By Alisha Hiyate | June 30, 2025 | Last updated on July 2, 2025
6 min read
Advisor meeting with clients
iStock / Pekic

Not everyone who comes into money is a financial expert. Financial literacy is a common stumbling block for clients with new wealth. That includes entrepreneurs who build great wealth but came from modest backgrounds.

When wealth comes suddenly, as the result of a business sale, inheritance, insurance payout or severance package, financial advisors can play a hands-on role to help these clients come to grips with their new situation. There are a range of urgent and long-term priorities.

Kathy McMillan, a senior wealth advisor and portfolio manger with McMillan Wealth Solutions in Calgary, part of Richardson Wealth, recently onboarded a client in Alberta with a net worth of close to $10 million after selling his trucking business.

The 53-year-old married father of two found himself stuck with a “humungous” tax bill owing to the types of assets he had chosen to keep in his corporation. They included rental properties, for which he had paid cash, plus about $5 million in GICs.

On top of that, he had accumulated $10,000 in penalties for overcontributions to his TFSA through haphazard deposits, even though he hadn’t come close to tapping out his overall contribution room.

“After we reviewed the tax return together with [the McMillan team’s] chartered accountant, we identified all the interest income and the horrendous amount of tax he was paying,” as a well as a sub-par rate of return.

He also wanted to treat his corporation as a multi-generational asset that would support his kids and grandkids. So, McMillan introduced him to a mortgage broker who’s helping him leverage out of existing property to buy new property. “So now we have some debt that’s tax deductible.”

By getting to know the client and what’s most important to him, as well as his overall financial situation, McMillan is working to ensure his financial plan, investments and the investment vehicles they’re held in support his larger goals and values for him and his family.

“He wanted to raise two great boys. He wanted to take care of his father. He wanted to [work with]horses,” McMillan said. But he still thought he should get a job. “I suggested that he already had a job, which was raising two boys, helping his dad on [his] farm, and helping his community, and that I would supply his paycheque.”

While the client is a conservative investor, he now has more of his wealth in blue-chip equities like bank stocks, providing tax-preferred income through dividends. And because the GICs are laddered, McMillan has been able to bring the cash over incrementally as they mature, using dollar-cost averaging to invest.

“We didn’t scare him. We added in a touch of tech and a little dash of nuclear energy,” McMillan said, adding they have performed very well. “He thanks us all the time.”

Traumatic events

Other times, a windfall is associated with a loss of some sort — a divorce, severance package, or an inheritance or insurance policy payout after the death of a loved one.

“All these events are traumatizing. So, if you have financial literacy or not, you’re full of cortisol and you’re not thinking. This is where a lot of mistakes are made,” said McMillan, who holds Certified Financial Transitionist and Financial Divorce Specialist designations. “You must deal with the trauma around the money first, or you’re going to have to undo everything that’s been done.”

One client had considerable assets after her marriage of nearly 50 years ended — dividing household assets of $30 million, including three homes in several countries. But she was completely new to investing. She chose McMillan out of three financial planners she interviewed.

When McMillan asked why, about a year after the woman became a client, she said, “You were the only one that asked about my well-being.”

In these cases, advisors must be prepared to listen, be patient and put the person before the investment plan. As basic as it sounds, that can win both new clients and referrals.

McMillan is also careful not to hand a big to-do list to an overwhelmed client, instead helping them prioritize what’s most important right now.

For example, one client who was packaged out of a job after many years of service, was overly focused on a detail that wasn’t urgent — her dental plan. Instead, McMillan helped her refocus on something that was: consulting with a lawyer to gauge if the offer was fair.

Building trust

Whatever the origin of a client’s cash infusion, establishing trust is paramount, according to Vanessa Flockton, president, private wealth with Vancouver-based Nicola Wealth.

Many incorporated professionals or business owners haven’t worked closely with financial advisors. “They may have an advisor, it might have been somebody at the bank or a broker, but it’s a small amount of their money, and their lives are so busy that they don’t pay a lot of attention,” said Flockton, who also works directly with clients.

These relationships are often shallow, and conversations may focus purely on investments rather than the client’s overall financial big picture, planning and goals.

These clients need a partner they can rely on to help guide them, Flockton said. “This is a new world for them to navigate.”

For advisors hoping to serve these clients, like McMillan, Flockton said the focus should be on getting to know the person. “Build a relationship, understand what’s important to them and help them achieve it. The investments should be helping them achieve their goals, not be [just] about investing money and gaining returns in isolation.”

Clients who have or had ultimate control in their own business may be wary of entrusting their financial well-being to another person, said Andrew Dimock, an investment counsellor with Guardian Partners Inc.

“Sometimes they’ll look at it from a skeptical lens, like who is this person that’s trying to help me? Do they have my best interest in mind?” Dimock said, adding they also want to know their advisor understands their goals and objectives. That’s where experienced advisors who are fiduciaries have an advantage.

Diversification and risk tolerance

It’s common for business owners to be under-diversified or — counterintuitively — overly conservative.

Some have taken risk in building their business and investing in an area where they’re a subject matter expert that they feel more comfortable holding cash, GICs or Treasury bills when they have a liquidity event, Dimock said.

Risk tolerance has two components ­­— the ability to take on risk and the willingness to do so, and the latter is influenced by a person’s background and upbringing.

“In most cases, when people come into a significant amount of money, the ability to take risk is there. But sometimes the willingness is not,” Dimock said.

Getting to know a client at the outset, understanding their risk tolerance and educating them on the benefits of investing for the long term is key to setting the right asset mix, he added.

Other clients have no interest in diversification and instead want to continue to take risks in the area they know best.

“I work with a lot of clients who made money in a certain way — say it’s tech, health care or retail, whatever they’re comfortable with,” said Micha Choi, a client portfolio manager with Guardian Capital Advisors. They’ll point to the $20 million they made in retail and say: “‘I’m going to put it back in retail, because I trust it, I know it, I love it,’” she said.

“It is a bias, but who are we to say, ‘no, you’re wrong’?”

Wherever a client stands on the risk spectrum, it’s important for advisors to present options based on their overall financial plan and educate the client. But they also need to listen to them and respect their wishes, Choi said.

“These clients who come to us, they didn’t diversify. You can’t build $25 million from nothing by diversifying,” she said. “Concentration builds wealth. Diversification keeps it.”

For those clients, she will offer to safeguard and grow a portion of their wealth and ensure it’s not eroded away over time by inflation.

“If you want to protect $5 million, $10 million, $20 million ­— [we can help you with] that. Outside of that, you do whatever you want or need to do.”

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Alisha Hiyate

Alisha Hiyate is managing editor with Investment Executive and Advisor.ca. She has 19 years of journalism experience covering mining and markets. Email her at alisha.h@newcom.ca.