Nicola Wealth Management

Building Your Business

by Kanu Vashisht

The transition from a successful advisor to a successful businessperson is a difficult one; experts share tips on how to make it.

Source: Advisor's Edge Report

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Building a business is a bit like working a jigsaw puzzle. Before you spread out all the pieces, you need to look at the big picture on the box. Then you separate the edge pieces—build the structure first—and categorize all the other pieces by shape, size and colour. After considerable trial and error, you slot them where they belong without forcing circles into squares. As the picture grows, so does your understanding of the game.

But much like jigsaw puzzles, constructing a business is not for everyone. Only a few have the tenacity, patience and drive to piece together a legacy. So, the very first step to building a business is to determine whether you even want one.

“The transition from a successful advisor to a successful businessperson is a difficult one,” says Rowland Tipper, founder of Tipper Financial Services. “It’s a totally different mentality of learning to delegate and letting go of things.”

Adds John Nicola, partner and financial advisor at Nicola Wealth Management, there’s nothing wrong with being a siloed sole proprietor if you don’t want to develop a team.

To help those who do, we spoke with successful advisors who’ve built their own businesses client by client and asked them to share the successes, failures, mistakes, and strategies that helped them evolve as team leaders.

PERSISTENCE PAYS
Nicola first tried his hand at finance in the early ’70s when he applied to be a sales trainee at Metropolitan Life, partly because the lead singer of his rock band already worked there.

He was 22, single and skeptical, and the money offered—$600 a month—went a long way back then. But he failed the aptitude test. Undaunted, he approached Manulife. Failed again. Finally, he took his last $50 to a career-counselling company in Vancouver and ferociously tackled a slew of aptitude tests. After an intense eight-hour session, the counsellor told him he was uniquely well suited for insurance sales.

Nicola took the results back to Metropolitan Life and got the job—“Anybody persistent enough to spend their last $50 on an aptitude test deserved this position in the first place,” the hiring manager explained.

Six months later, Nicola was top salesman in a branch of 26 people. Eventually, though, he realized the branch system wouldn’t work for him. “In those days, you had to work for a single company and weren’t allowed to sell products of other companies. You couldn’t be multi-licensed; there was no such thing as a brokerage, and there were a bunch of limitations to the distribution of insurance products,” he recalls.

After a year, Nicola found a successful advisor and spent the next five months convincing him to become his mentor. He won out and it was this new mentor who taught Nicola about running a business without being in a branch-protected environment, and finding his own clients. “He even figured out a way to technically skirt the rules, and a team of four [of us], each licensed with a different company, was able to cross-sell and offer four different products to our clients. It worked very well.”

After a successful 10-year stint as partner at The Rogers Group, Nicola finally established his own planning and wealth management firm in Vancouver. Nicola Wealth Management started with $90 million of assets under management in 1994, and just surpassed the $1 billion mark on its 16th anniversary, with $12 million in revenue.

Brian Ogilvie, partner at Ogilvie Daugherty Financial Services, also had a rather bumpy start when he joined the industry in 1980. He was a struggling alcoholic who became sober on December 11, 1987—a date he marks as the changing point in his life.

Ogilvie was able to make a fresh start in the industry with his father’s help, but the first company he approached turned him down because of his history. Finally, Great-West Life allowed him to make a comeback.

He later joined Journal Insurance Brokerage, where his father, David Ogilvie, was vice-president. Then, in 1997, Ogilvie bought the life and investment division from the brokerage firm.

He largely credits his success to his father and the fact that he consciously surrounded himself with good people. “I sought advice, and was willing to listen.” He also sought to give back by getting involved with charities, his church and the industry.

YOU CAN'T DO IT ALONE
Involvement with community is one of the mainstays of Rowland Tipper’s investment philosophy. Tipper Financial is based in Belleville, Ont., a small city of 50,000. The firm has about 700 clients, with $45 million in investment contracts.

Tipper’s been involved with his local association of gift planners, the Queen’s Geological College in Kingston, and his local church, and is on the board of an endowment fund. He also writes and produces music.

“If you’re active in your community, it gives you an opportunity to step outside the day-to-day routine of your business and interact with like-minded people who want to know a little about what you do for a living. It can evolve into a professional relationship, a long-term friendship,” Tipper says.

His wife, Linda, a playwright who’s also a manager at his firm, uses murder mysteries that she writes to stay in front of clients. She invites them to a multi-course dinner and enactment of her plays. After each course, the audience gets to guess who the murderer is. After dessert, and many lively conjectures, the plot is revealed. Linda Tipper is now a household name in certain segments of the community because of her plays.

The Tippers believe in thanking their clients in many ingenious ways. They host periodic client events such as buying blocks of tickets to a musical or theatre event. As amateur actors, they have friends involved in theatre guilds and they commonly host receptions following a play. They’ve also been playing, coaching and sponsoring minor sports teams (house-league level): hockey, soccer, fastball and rowing. “We’ve made a lot of social contacts that led to a number of client relationships,” Tipper says.

Nicola, meanwhile, is a member of TEC, a leadership organization for the personal and professional development of chief executives with 11,000 to 12,000 businesses as members. “Business owners from different disciplines all help me, we discuss issues related to human resources, branding, and marketing. If you’re going to run a business you have to decide it’s going to be a lifelong learning process that you really enjoy.”

Ogilvie, on the other hand, has made it a point to give back by staying involved with alcoholism prevention groups, both inside and outside the industry. Understandably, he has won friends and clients among them. “I have learned to care for other people, be generous with my time, and not make sales the most important part of the transaction. It’s more about listening and understanding people’s individual circumstances.”

Brian Hall, president of Waypoint Financial Group Inc., swears by the MDRT. “The MDRT has been the single most productive thing I’ve ever done. The first year I attended was in 1993. I got some excellent tips from my seniors. A year later my income doubled. I’ve been afraid not to go back since.”

While Hall agrees community and industry involvement are a surefire way of winning clients, he notes building business one client at a time isn’t necessarily the best thing to do today. “Partnering with other like-minded people is also a great way to go and sometimes buying a book of business might make more sense than trying to build it more organically.”

INVESTMENT PHILOSOPHY
When it comes to growing his business, Nicola has religiously followed the Japanese Kaizen philosophy: “Add a little bit of improvement every year to what you’ve built as a base— with solid foundations and the right principles the compound effect is amazing,” he explains.

Nicola also believes in the tenets of reverse engineering. When setting goals for his firm, he and his team set a target, and then reverse-engineer to what they’d need going forward— systems, level of advisors, marketing, branding, and so forth.

And once he’s achieved a set of goals he considers it imperative to move on to another. Nicola quotes Dan Sullivan’s concept of the “ceiling of complexity,” which states when you continue to do something well you might be able to do it for many years, but you get to a point where no matter how hard you work, you aren’t making any progress.

Nicola breaks the ceiling by constantly renewing himself and training his team. “The more you want things to stay the same, the more you have to change. The world around you is shifting and everyone is looking for competitive advantage. So you have to make a continuous effort to improve what you’re doing,” he says.

Tipper agrees. “In my 32 years, there have been distinct five-to-six-year periods. The business I’m in right now isn’t the business I was in six years ago. It won’t be the same business I’ll be in six years from now. It’s constantly evolving.”

SUCCESSION PLANNING
As businesses grow bigger, many advisors turn to family.

Tipper’s wife has been actively involved in his business. “She’s my landlord, we own the building we run the practice out of, and we jokingly refer to her as the office goddess.”

Tipper’s older son, Adam, also joined the practice three and a half years ago.

“We’re a family-run business and family values are absolutely critical to us. But there’s a fine line and you have to be careful about not getting too cozy at work. It’s one of the most artful things to do. In the daytime Linda and I work together, at the end of the day we’re husband and wife. Similarly with father and son, Adam and I.”

This structure has also worked well for Tipper. Adam has been able to make the book much younger, and the Tippers are able to project a strong succession plan to their clients.

“About five years ago we had clients starting to ask, ‘When are you retiring?’ They never directly voiced it but they wanted to know what would happen to them once I wasn’t around (see “How to Succeed Your Business,” page 27). As soon as Adam came on board we noticed the relief at there being a plan in place was quite palpable. We don’t do a lot of corporate work, we’re mostly dealing with families—and generations of families—and they appreciate the fact we have two generations of our own family running this business.”

Tipper has already planned his transition. “We formed a corporation a year and a half ago. Adam’s buying the business from me through sweat equity. I don’t plan to have a price tag to the business. I’ll transition it to my son and continue to work in it as long as my health allows.”

Hall embraced succession planning the hard way. “One of our associates was killed in a car accident six years ago. When we took over her practice, we didn’t have any formal succession plan and learned how difficult it is to integrate another practice, especially when you don’t have the same focus or process.”

Hall is currently in the midst of a merger with an advisor who’s 20 years his junior. “Chris would be in a position to take over if something were to happen to me,” Hall says. “We have another advisor even younger than Chris, and we’re trying to get him introduced to the children of our clients so we can have the multigenerational relationship. When my clients pass, he’ll be strategically placed to take on their kids. Chris will do that to some degree as well,” he says.

To facilitate succession planning and team growth, all files at Nicola Wealth Management Ltd. have at least two associates assigned to them. “We encourage sharing of files,” Nicola says. “Experienced advisors constantly move files to junior people, giving up part of the revenue on that file intentionally.”

The whole premise of this file-release strategy, Nicola explains, is an underlying belief that the best way to grow your income is to give it up to grow the pie. “I have been doing this since the day I started in the business. I always pay bigger bonuses to support staff; I’m always willing to do joint work. By growing the pie, I’m not earning less money, but it gradually becomes less and less as a total of the company revenue, and that’s exactly how it should be.”

BUILDING TEAMS
One of the biggest determinants of how big a business will grow is the kind of team you build.

Ogilvie learned this precious lesson when he was still a struggling advisor in 1995. His mentor told him he needed to hire a staff person. “I said I couldn’t afford to hire anybody. He said I couldn’t afford not to hire anybody. So I took a risk and hired someone part-time. In six months this person came on board full-time, and that probably turned out to be the most significant step I took in growing my business.”

Within the first year of hiring, his business increased between 75% and 100% and kept growing dramatically thereafter.

Hall too admits one of the biggest mistakes he made was not hire staff soon enough. “If you don’t hire staff, you end up doing the $20 an hour jobs as opposed to spending time on the $200 an hour jobs.”

Hall’s firm manages about $90 million in client assets.

In recruiting to his team, Nicola slots advisors into finders and closers, minders and grinders—and balances good interpersonal skills against good technical skills. “These skills aren’t mutually exclusive but most people tend to gravitate toward one or the other. That means we can still hire people who may not be the best at finding clients but are extremely good at keeping them.”

And when it comes to building a book, all four are quite unanimous that existing clients have been by far their best sources of new business.

As Hall puts it: “Too often business is driven by how I can produce the most revenue. In building a business, you have to really figure out a way of putting your clients in a position where they see the value of what you have to offer. If that happens the revenue will come, but if you focus on the revenue, it creates a barrier between you and your clients.”