The FEX factor

Recognizing the importance of family businesses to the fabric of Canada’s communities and economy, two organizations join forces to better support and advise them.

Canadian history is rich with the tales and lore of family enterprises – from the legendary retailer T. Eaton Co. Ltd., to Montreal-based Kruger Inc., a third-generation business that began in pulp and paper but has since expanded to include renewable energy, wines and spirits, recycling services and biomaterials.

By creating this organization, we can build a movement with a national voice that will be recognized by politicians and researchers across the country.
— Jim Burton is chair of the Family Enterprise XChange Foundation

Whether they’re selling clothes or making cardboard boxes, family-controlled enterprises are a major driving force in the country’s economic narrative, employing about six million workers and accounting for an estimated 60 per cent of total GDP. Today, this powerful but often overlooked collective is finally getting the support and recognition it deserves.

With the launch in January 2017 of the Family Enterprise XChange – or FEX for short – family businesses in Canada will have an organization and platform that serves as their voice on the national stage and gives them access to critical resources within a safe, solicitation-free environment.

This new entity, which is the result of a partnership between the Canadian Association of Family Enterprise and the Institute of Family Enterprise Advisors, will bring members into a network that includes other family enterprises, as well as experts and advisers who are well-versed in the unique issues relevant to Canadian business families.

“Family enterprises are so critical to the Canadian economy, and yet we really didn’t tackle the issues that pertain to them in a national way or in a way that specifically addressed the concerns that are unique to a family business,” says Jim Burton, chair of the Family Enterprise XChange

Foundation, a non-profit charity created to help fund FEX activities. “By creating this organization, we can build a movement with a national voice that will be recognized by politicians and researchers across the country, and we can connect members with providers who have the training and experience to work with family enterprises.”

FEX chair Allen Taylor notes that advisers who work with family enterprises typically address only a particular aspect of the business. Consequently, they may fail to consider all the moving parts – such as the family’s brand, community involvement and philanthropic causes – that can affect or be affected by any change or new action.

“We need to start studying how all these elements come together so that any decisions the family makes will have better outcomes,” says Mr. Taylor.

Through FEX, service providers such as financial advisers, accountants and lawyers can earn a

Family Enterprise Advisor (FEA) designation – an educational achievement that indicates their fluency in family enterprise issues. As of last year, only about 225 service providers had the FEA designation. The goal at FEX is to raise this number to 500 over the next three years, says Mr. Burton, who is CEO at Toronto-based PPI, which provides insurance solutions and advisory services.

Collaboration among advisers is key, says Dona Eull-Schultz, president of Leon Frazer & Associates, which manages investment portfolios on behalf of private clients and their families.

“Historically, these professionals have operated in silos and sometimes their advice does not align with the advice provided by another professional – for example, an investment adviser may recommend something that a tax accountant might not agree with,” says Ms. Eull-Schultz. “I think it’s important that all these professionals collaborate to ensure the best results for the client.”
This is particularly critical in complex situations, such as intergenerational transfers of wealth or the merger, purchase or sale of a business, she adds.

As the country’s regulators continue to reform and raise standards for financial advisers, having better access to education and opportunities for accreditation has become a more pressing imperative for the various professionals who work with family enterprises, says Ms. Eull-Schultz.

Mr. Burton says FEX will give family enterprises a platform for sharing information and experiences with their peers. The organization is also working to build a greater understanding of family enterprises in the country, and has partnered recently with the Conference Board of Canada to conduct a major study of family businesses.

“We also intend to create, within the next two years, a centre for family-owned enterprises in Canada,” says Mr. Burton. “The Conference Board has told us they see FEX as the national voice for family enterprises and they want to partner with us on this.”

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