Crafting a wealth plan? Think of your kids, not yourself

Elke Rubach managed to summarize her entire approach to wealth management in seven simple words. “Money is a means,” the CEO of Rubach Wealth said in an interview last month, “not an end.”

Rubach, a former lawyer born in Mexico, lets her clients know in no uncertain terms that she’s ultimately crafting a wealth plan for their kids, not them. A financial plan, in her view, needs to reflect a family’s future as well as its values. Ensuring the next generation does not need to untangle tight knots of financial hardship is a priority for her. Rubach learned that the hard way.

The best-laid plans can go awry. But in Rubach’s view, many people — including those with wealth and assets — go through life without any plans at all. At a time when inflation has world markets bracing for recession and COVID-19’s latest variants are spreading across the globe, financial stewardship remains in style.

Rubach spoke to the Star about her thoughts on inflation and wealth management, talking to kids about family wealth, and clients she won’t work with:

What’s the most frightening experience you’ve ever had with money?

In Mexico, the public education system is not that strong, so you have to go to private school. I remember, once, we were taken out of class because my mom hadn’t paid tuition — and tuition in Mexico is not cheap. It was Branksome Hall-type tuition with Mexican purchasing power. That was scary when you were little.

Your father died unexpectedly when he was 50. You and your mother had to handle all the financial details yourself. Having gone through that, what made you decide you wanted to handle money professionally?

There’s a bit more. It was my mom and four kids in tow. It’s a long journey that got me to where I am. I studied law — a phenomenal base for whatever you want to do going forward. From there, I moved to Scotiabank. When I was dealing with clients directly, it was clear to me that people make financial decisions without having a plan. Most people buy things or invest in things because it sounds great at the time — because somebody did a great job presenting the product or service. But there’s an extra step that’s missing. Why exactly did you buy this? How does it fit into your overall plan?

The idea behind Rubach Wealth is stopping and thinking about what people are doing before continuing to add complexity to their lives. Adding common sense to financial planning and financial management, understanding there’s absolutely zero financial literacy in school — and you’re thrown to the lions once you become a professional. Very few people have a tax plan. They don’t want to pay for a financial planner. But then, when things don’t work, they regret not having a financial plan — and financial advisers need to be compensated for their time. I’m not going to tell you that what I do is going to solve world poverty, but it at least gives a family a fair chance of getting ahead.

Do you find yourself becoming a life coach or a therapist to your clients?

I’m not a certified life coach, but my job is not to deliver only good news. We do ask the tough questions. One of the questions we ask is: Is there any point in time where your money could become a problem? The most affluent ones first say absolutely not. I’ll ask the question again. Is this amount of money going to create a problem? Are your kids aware? Are they prepared? More often than not, the answer is no, because they’ve never talked about it. They assume the next generation knows.

My job is to get rid of assumptions. They can come with a lot of problems. Wait until the next generation is married. Then you have a complete new set of competing forces. If you want to give your next generation a shot, you have to talk about not only creating wealth, but what you do with it.

When people unfamiliar with financial planning see the words “wealth management,” they probably think your clients are all wealthy. Is that the case, generally?

Compared to whom? Do I help people who live in shelters and are in bankruptcy? Not really. For people who are living paycheck to paycheck, here’s your plan: Live within your means. Don’t do impulse shopping. Pay your expensive debt first. And then start saving for retirement. Also, teach your kids about your financial situation.

That’s the financial plan for the average Canadian. But when they start having more disposable income, wealth management is not just growing assets. It’s understanding what happens to those assets and where they’re going. I would strongly recommend that you don’t do wealth management yourself unless you have a CFA or an actuary degree, because if something goes wrong, you probably don’t know concepts like concentration, suitability or risk tolerance. We should all play to our strengths and understand when we don’t know something.

Are there certain red flags where you realize you’ve got to have a long conversation with a client?

I avoid … the arrogant (ones). Those, I can’t deal with. The ones who believe they hold the truth and nothing but the truth — you can’t help them. They don’t listen. To me, we’re trying to co-create solutions, not just impart wisdom. A lot of people say they’ve sued their financial advisers before. I’m going to take a pass (on them).

People who don’t open up, too. It’s like showing up at the emergency room and asking for the doctors to operate, then not telling them what is hurting. You could get brain surgery when what you really need is a Band-Aid for your toe. It’s a trust business.

In the first year of the pandemic, there was a run on wills. Did that dynamic show up in your business as well?

Although I’m a lawyer, I don’t practice law anymore. But I think once people saw mortality, they pulled their wills out. When neighbors get sick, when a cousin dies, when a marriage breaks up — that’s what usually makes people think about their mortality. We also had a million calls about whether life insurance covered COVID, so we had to reassure people.

That opened up the opportunity for us to actually walk people who had randomly bought life insurance through the process. That’s been really rewarding. When I started, I did talk to people about their insurance and their asset management and so on. But I was not as focused on coming up with a plan to help clients live from now until they die — and how much money they’d be leaving behind if they were to pass now. Of course, nobody wants to die. But nobody can guarantee they’re not going to die, or guarantee they’re not going to get sick or have a disability.

I’m sure you’ve gotten a million calls from reporters asking about inflation. What happens when a client asks about it? What are your thoughts?

It depends on how long they’ve been my clients. Generally speaking, I say: You’re not the central bank. You’re not that powerful. Sit down, go back to basics, understand your cash flow. If you bought a $2-million house with an $80,000 income when interest was at 1.3 percent, you could totally afford it. But you failed to realize nobody pays off their house in five years. A large number of people will be really squished in two years unless the government pulls off a genius move and controls rates and inflation. I’m not that optimistic, unfortunately.

With all the rumors of a recession coming up, are you dealing with a lot of panic among your clients right now?

Not among my clients, but among people who are approaching us. We’re going to put together a webinar to help people understand the economy and figure out whether it’s time to sit down and dust off those financial plans. Getting in front of the problem. And if nothing happens, wonderful. I’d rather under-promise and over-deliver than tell people they have to find a job at the tender age of 93.

Are you expecting to handle the same level of chaos you saw during the 2008 recession?

I’m hoping it’ll be fine for my business because we do have a close relationship with our clients. We send those who aren’t interested in having a close relationship elsewhere because those are the ones who are going to freak out or do something random. Some people’s business model is having a lot of clients. Mine is having really deep relationships and planning for the next generation and giving really unbiased advice.

This interview has been edited for length and clarity

Brennan Doherty is a former staff reporter for Star Calgary and the Star’s 24-hour radio room in Toronto. He is now a freelance contributor.


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