Performance figures for each account are calculated using time weighted rate of returns on a daily basis. The Composite returns are calculated based on the asset-weighted monthly composite constituents based on beginning of month asset mix and include the reinvestment of all earnings as of the payment date. Composite returns are as follows:

David Sung of Nicola Wealth Management shares secrets on competing

By Sandy Huang

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Since 1994, Nicola Wealth Management (NWM) has been specializing in providing financial planning services to entrepreneurs and business owners. Despite focusing on a relatively small niche of a highly competitive industry in challenging economic times, NWM has been thriving. As a business consultant, I’m always intrigued by success stories like these, so I contacted President David Sung to see whether he’d share some insight.

Nicola Wealth Management’s path to success
How has NWM been so successful in a very competitive field? Sung begins his explanation by quoting former GE CEO Jack Welch: “If you don’t have a competitive advantage, don’t compete.”

So what does Sung see as NWM’s competitive advantage?

1. Focused expertise. Rather than coming from a broad spectrum of client types, the majority (over 80 per cent) of NWM clients are business owners. This enables NWM to more effectively service their clients because all resources are directed towards understanding the specifics of that sector.

2. Strong track record. Sung estimates that over the last decade, NWM’s investments have outperformed those of the standard “balanced approach” providers by about 50 per cent.

3. Personalized service. “Every client receives a comprehensive financial plan that quantifies the advantages and measurable tax savings that will come as a result of following our plan.”

4. Real estate investment options. “When an individual has money to invest, how many financial planners suggest investing in real estate? Not many. But hundreds of years of history has proved that real estate can be a very good long-term investment.

“We use the collective wealth of our clients to invest in real estate, including commercial shopping centres, a mini storage locker portfolio, and some industrial properties.”

5. Private equity investment options. “Canada Pension Plan bought 15 per cent of Skype in 2009 for $300 million. In April of 2011, they sold for $990 million. Private equity has been historically proven to provide greater return potential than publicly traded stocks and we offer clients the opportunity to invest in private equity in a way that is similar to large institutions.”

Importance of specialization
Focussing on a specific niche within a competitive industry almost seems limiting and counterproductive. So why did Nicola Wealth Management choose this path? “We recognized that many entrepreneurs and business owners were receiving poor advice from financial planners”, Sung explains. “Advice that may make sense for an individual who is an employee doesn’t always make sense for a business owner.”

He is quick to provide some quick examples. “Every year around January or February we get reminders to make RRSP contributions. But compared to other options for accumulating wealth, RRSPs aren’t necessarily the most effective investment choice for entrepreneurs. There are also other elements like risk management and insurance. For example, many business owners own their disability insurance themselves, but this should really be owned corporately.”

Sung strongly believes in the value of becoming intimately familiar with a specific market, and focusing the bulk of your efforts on that audience. “Choose a market to pursue and build a strong knowledge base so that you can demonstrate how you benefit that client sector. For example, if you decide to focus on university professors, then make sure you understand their situation better than anyone else. You need to understand how their pension plan works and what their options are so that you are in a position to provide better advice than your competitors.”

Power of word-of-mouth marketing
As any entrepreneur will tell you, referrals can be a very powerful source of business. In NWM’s case, their outstanding resilience during the economic crisis and their dedication to client service have been keys to success.

“The way we position and diversify portfolios in non-correlating assets helped protect our clients’ capital to a great degree. In 2008, our clients, on average, experienced a 6-6.5% decline, as compared to the 30-40 per cent decline experienced by the market as a whole,” he said.

He noted that four-fifths of his company’s new business over the last four years were a result of referrals from clients who were impressed with our performance during the financial crisis.

“Our annual client investment outlook seminars regularly draw hundreds of clients, many of whom bring friends. Also, every client receives a financial plan with recommendations that have to be agreed to by their other professional advisors (ie. accountant, tax advisor, lawyer). Advisors who see the quality of our work often become a source of referrals too.”

Setting clear, measurable goals
When it comes to corporate goal setting, Sung has more advice.
“Every individual must be aware of the goals and their role in helping the organization realize that outcome. The organizational, administrative, and investment objectives must be measurable and have clear timelines. For example, NWM’s five-year goal is broken into a series of 12-month and 18-month goals, each with individual deadlines.”