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:

Share the Pie: How Nicola Wealth’s culture of giving back has helped the company grow

In the mid-1980s, when John Nicola and Murray Neilson managed a small team of wealth managers at Rogers Group, towards year-end they decided to reward team members in the form of $2,000 cash bonuses. For this, Nicola recalls, they got some blowback from other partners in the organization, who were embarrassed and feared their own team members would be resentful. Their practice was to give every employee a Christmas hamper, not profit sharing.

“We’re not the problem here. The problem is in giving a $75 hamper to somebody who’s been working for you so effectively for the last 12 months,” responded Nicola, who would go on to found Nicola Wealth in 1994. (Neilson was one of his first hires.) From the start, he wanted to instil an ethic of sharing the pie, both with employees and the broader community, in the organization’s DNA. Building out the infrastructure to do that in a meaningful way has been a journey that continues to this day.

There’s a common misperception that, in spreading the wealth it generates, a company and its shareholders have to give something up, Nicola says. True, from an accounting perspective, things like profit sharing and charitable giving look like expenses. “It looks like a zero-sum game,” he says.

It isn’t. One illustration of that is the equity in Nicola Wealth that Nicola began offering to senior managers in 1997. Today, 59 employees own shares or options in the company, amounting to 51 per cent of total equity, and rising.

“My 49 per cent today is now worth 250 times what my 100 per cent was worth 26 years ago,” Nicola attests. “I don’t believe for a second that this would have been possible if I still owned 100 per cent of the company. This was the best way to build wealth and capital in the business, instead of trying to hold onto the entire pie.” It helped secure key employees’ commitment to the firm, spurred them to do their utmost to grow the organization and granted them a tax-efficient form of compensation to boot.

In addition to employee share ownership, all 300 Nicola Wealth employees participate in profit sharing. The company sets aside 10 per cent of pretax profits for distribution to employees based on their salary. Consultation with employees at the time the plan was set up indicated they felt this, and not an equal or performance-based bonus, was the fairest way to share the rewards of a good year. In this exercise, Nicola says he learned to trust his team to ensure that everybody was pulling their weight. The growth of the company, from $80 million in assets under management in 1994 to more than $10 billion now, is clear evidence that they still are.

Then in 2013 Nicola had an “epiphany,” he says. He wanted to know how much the company gave to the various charities it had worked with on an ad hoc basis. The total came to around $10,000 – a “ridiculously small” contribution, he felt, given how large the firm was becoming. With the support of other shareholders, he made a commitment to direct half a percentage point of pretax income to charitable giving the next year, with an eye to raising that threshold to 3 per cent.

Last year that amounted to $1.2 million, overseen by a staff volunteer committee. Most of the recipients are charities based in the communities Nicola operates in: Vancouver, Toronto and Kelowna. But there are also international charities. Many were hit by a drop-off in donations in 2020 due to the impact of COVID-19, and the sustained support from Nicola Wealth was crucial to their ongoing operations.

Now the firm is extending that giving spirit to clients and other organizations, enabling them to contribute to their own donor-advised funds through the Nicola Wealth Private Giving Foundation with no administration fees – 100 cents on every dollar donated goes to the charities of their choice. “We’ll take care of the paperwork,” Nicola says.

Again, does giving mean giving up something? Consider that even as the share of Nicola Wealth’s labour costs going to profit sharing increased, the organization’s expense ratio (expenses as a share of pretax income) declined – from 37 per cent in 2005 to 30 per cent in 2020 (and 26 per cent so far in 2021). “If profit sharing is an expense, your expense ratio should rise,” Nicola says. “The opposite is the case.”

Beyond helping a business grow, the sharing mentality can solve other problems such as succession planning. Though Nicola has no personal intention of retiring, he takes satisfaction in the fact 59 employees collectively now have a bigger stake in the firm than he has. “If people ask me personally what’s my succession plan, these 59 people are my succession plan,” he says. “We have no plan to get bought by anyone else or go public.” As the first generation of company leadership, he adds, he doesn’t have to worry about what happens once he decides to step back. “Generation two is already in place.”