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:

Refusing to take ‘downturn’ as an obstacle

A profile feature for Canada’s Best Managed Companies.

View the original article online | View a PDF of the article 

Nicola Wealth Management
Location: Vancouver, Toronto, Kelowna, Richmond
Sector: Wealth management
Market: National
Size: 137 employees

How do you outperform during a time of falling markets and slow growth? It’s a top-of-mind question for investors and one that Vancouver-based Nicola Wealth Management has been able to successfully address for clients thanks to its innovative cash flow approach to investing and money management.

Founder and CEO John Nicola explains: “If you think about the investment universe, there are tons of sub-categories but really only three major asset classes: debt, real estate and equity. You should receive income in the form of interest, rents or dividends on all three and, when well diversified, it will
reduce volatility in a portfolio.  In 2008, when most markets dropped 40 percent, our clients were only down 6.5 percent.”

Nicola Wealth Management made the decision about 15 years ago to move to this cash-flow approach, which meant they would include assets that are not
typically part of the typical investor portfolio but, rather, reflect the best practices of institutional investors that are less liquid but generate better rates of return. As a result, Nicola Wealth Management has earned a reputation for performing strongly in weak markets.

Nicola began his career in finance in 1974 as an insurance agent for Metropolitan Life. Over the years he became increasingly involved in wealth management and retirement planning, launching Nicola Wealth in 1994.

He decided early on that he wanted advisers to be owners in the firm. “My wife and I started with 100 percent ownership but we realized if we wanted to grow significantly we needed advisers to come on board and take the business forward together. That could only happen if they were owners. We call the concept ‘share the pie’. Today, there are 22 shareholders and my wife and I own 52 percent of the company. That 52 percent is worth more than 50 times
what our initial 100 percent was worth.”

Another early key decision and differentiator: Nicola Wealth Management is focused on serving self-employed professionals, senior executives, and business owners.

“We made that our niche and started with $80 million of assets under management and seven people, which allowed us to grow between eight percent and nine percent each year.”

When advisers became fee-based, licensed portfolio managers providing financial planning to high net-worth individuals, the growth rate jumped to 20
per cent year over year. It was a defining moment and uncommon model that continues to serve the firm and customers well. Assets under management have almost quadrupled to just under $4 billion since 2009. And it’s been primarily driven by organic growth.

“We get about 150 high net-worth families coming to us each year who become clients. More than three quarters come as referrals from existing clients, advisers or from seminars we’ve done.  We do little to no advertising.  We do our job as well as we can.  Our customers are our branding.”

Now, as at the start of the business in 1994, Nicola’s vision long-term, much like U.S.-based Lord Abbett, a partner-owned investment management firm in Boston that has been in business six generations, has US $125.5 billion in assets under management and remains a private company. To meet that goal,
he has started succession planning and the transition to management. With staff expertise serving a growing niche market segment, he sees significant growth potential.