Holistic Team Approach is Key to Vancouver Firm’s Success


By Clare O’Hara

Source: Investment Executive

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Nicola Wealth Management’s fee-based model focusing on self-employed professionals, business owners and executives leads to $1-billion in AUM
 

At a time during which many financial services firms are still licking their wounds from the impact of the recent recession, Vancouver-based Nicola Wealth Management has much to celebrate. The firm recently hit $1 billion in assets under management, brought in 90 new client families and is also discussing the creation of a new independent investment advisor platform.

“We have a really great business model with a strong group of advisors,” says David Sung, president of Nicola Wealth Management. “This, along with the leadership of John Nicola, has allowed us to push ahead and grow the firm as best as we can.”

The firm — which has two offices, one in Vancouver and one in Kelowna, B.C. — runs on a fee-based business model that focuses solely on the needs of self-employed professionals, business owners and executives. It is home to 11 financial advisors, four portfolio managers and approximately 40 staff members who together manage more than $1 billion in AUM for 600 client families.

“We believe we have one of the best professional advisor-to-client family ratios in the industry,” says Sung. “And we remain committed to maintaining a high level of personalized service and achieving excellent results for our clients.”

The firm attributes much of its recent growth to client satisfaction, with almost 75% of new business coming through referrals from existing clients and third-party relationships with clients’ accountants and lawyers.

“We are very actively engaged with our clients’ advisors, tax professionals and lawyers because it is all part of their financial plan,” says Sung. “Over the years, we have found that we receive additional referrals from those other professionals, and we have also been able to refer back to these professionals, so it is a strong relationship that we continue to maintain.”

The firm was first launched in 1994 by John Nicola, chairman and CEO of Nicola Wealth Management, who began his career in 1974, when he joined Metropolitan Life Insurance Co. as an advisor. Within six months, he had left Metropolitan Life and gone into business independently, having realized he didn’t want to be tied to a single product supplier.

“Over the next 10 years,” Nicola says, “I morphed into a pretty good-sized independent practice and was much more focused on investment and retirement planning, and not just strictly insurance. It became much more like a financial planning firm, and that was where I wanted to go.”

In 1984, Jim Rogers, founder and chairman of Vancouver-based Rogers Group Financial Ltd., approached Nicola, asking him to join the firm, at which Nicola would later became a partner and president. A decade later, Nicola realized he wanted to take his career a step further and decided to launch a firm that would deal exclusively with business owners, professionals and executives.

“I understood the financial and tax planning needs of those kinds of clients,” Nico-la says. “And I knew I could look at investment strategies that would fit well with their profile.”

With his new firm well on its way to becoming established, Nicola wanted to expand the range of products and services available to his business clients, so he applied to the B.C. Securities Commission for portfolio-management status in 1999. Nicola Wealth Management moved onto the investment-counsel and portfolio-management platform and switched to a fee-based compensation model. In addition to this compensation, the firm’s advisors are also offered the option to become shareholders in the firm.

“When we were only on the [Mutual Fund Dealers Association of Canada] platform, we were limited in the scope of our offering,” says Nicola. “We couldn’t sell securities or exempt products, which we realized were going to be important to our clients. So, we simply needed to go beyond our ability to provide to clients, from a licensing perspective.”

In 2003, Nicola merged his firm with Vancouver-based Waterstreet Wealth Management, which was owned and operated by Sung. This not only expanded the business and increased number of advi-sors, but also brought Sung in as president. Now, there is a management team of seven, along with Nicola and Sung, who work closely with both advisors and clients.

Nicola stresses the importance of keeping a holistic, team-based approach at the firm: “We don’t want a number of smaller, discrete teams, where each of them is running a mini-practice within a firm. We try to create some kind of cross-pollination in the firm, where everyone is working off each other.”

Every client has two licensed advisors working on his or her portfolio: a senior and junior advisor combination. With both Nicola and Sung coming from the insurance world, there is a plethora of industry knowledge for advisors to tap into. In addition, there are advisors who hold the chartered accountant designation and provide support in the tax-planning department. But despite the insurance and tax expertise within the firm, Sung is quick to say that they are not there to replace a client’s accountant or lawyer and that the firm maintains close relationships with their clients’ other service professionals.

Although Nicola Wealth Man-age-ment isn’t looking to expand rapidly any time soon, it is in the early stages of looking at an alternative platform, which will be offered to independent advi-sors. “We have been approached by a number of advisors who are independents and have similar backgrounds to David and me,” says Nicola. “They want their clients to be able to access something better than the platform that they are on. They currently have the challenge to be comprehensive advi-sors; to deal with the compliance; to know the right investments for clients; and to do the financial planning and manage the client relationships — all in an office of three or four people. And that is extraordinarily difficult.”

Nicola Wealth Man-age-ment is looking to set up a partnership arrangement in which independent advisors will be able to leverage Nicola Wealth Management’s platform but still maintain their individual office and marketing brands — something many independents do not want to give up, says Sung: “It is very difficult for the independent financial advisor. And having built a structure here to serve our clients in the greatest capacity, we feel that perhaps our structure might be leveragable to the extent that we could set up an additional structure that those advisors would be able to work off.”