Spreading the wealth

John Nicola, chairman and CEO of Nicola Wealth, is a big believer in sharing the pie. To build and grow a business, Nicola says, you need others who are committed to your vision. That’s why as his firm grows, so does his staff’s share of the pie through profit sharing. That’s just one of the many elements that has made Nicola Wealth unique and successful over the past 25 years.

A career in financial services wasn’t Nicola’s first choice. In the late 1960s and 1970s, he was playing in a rock band that experienced moderate success, but Nicola realized this might be as far as he could go with music. He left the band and started looking for something else; another band member encouraged him to apply at MetLife.

“I said, ‘Are you serious – life insurance?’ It was the worst job I could imagine,” Nicola recalls. “But he said he was being paid twice as much as we made in the band. Because the pay was decent, I decided to apply, but I was rejected three times.”

Nicola didn’t take no for an answer, even going as far as taking an aptitude test to prove to the manager that he could handle the role. That dedication landed him the job, and it wasn’t long before he was the top salesperson at his branch.

Yet Nicola didn’t remain at MetLife long. After feeling restricted in his ability to service all of his clients’ needs, he moved to an independent firm and was eventually recruited to join the Rogers Group, where he began to round out his services beyond.  

“A friend and I created a subset called the business and estate planning group,” he says. “Our focus was working with business owners, doing financial and estate planning.”

That would lay the foundation for Nicola’s focus down the line. He evolved from insurance to retirement planning, to stocks and mutual funds. Yet, after a decade in the business, during which he rose to become president of the Rogers Group, one thing he noticed was the lack of cohesion in the industry.

“No matter how big the organization – they can have hundreds of advisors – basically they are all individual silos,” he says. “They are all working under this compliance umbrella, independent of each other, not a single entity. Rogers Group was the same – everyone had their own clients and practices. We basically shared expenses.”

A new model
When he decided to strike out on his own and create Nicola Wealth in 1994, Nicola did away with those silos.

“I wanted to create a model where the clients of the firm were owned by the firm and the people working at the firm were shareholders, but not owners of clients,” he explains. “That’s what we built at Nicola, and it’s still a rare model in the industry. Most advisors will say they own their book of business; they can take it and put it under someone else’s umbrella. Here, you can leave and sell your shares, but clients remain owned by the company. It’s a model that has worked for us.”

The uniqueness of the model doesn’t end there. Nicola Wealth currently has 42 licensed advisors and 22 asset managers. The advisors are dedicated to the clients, while the asset managers, who specialize in three areas (real estate, public and private assets), create portfolios to meet the needs advisors identify when working with clients.

“There is a high respect among the asset managers for what everyone else brings,” Nicola says. “They meet on a regular basis with advisors. Managers are focused on the best mix for the portfolios we are trying to build. Even though many of the advisors are licensed as portfolio managers, my view has been that the best thing they can do for clients is the planning and servicing.”

Planning has been at the heart of Nicola’s approach since his days with the Rogers Group. “Our thinking is almost a little mechanical,” he says. “When we sit down with clients, the first thing we do is planning. We gather information; we understand their tax situation, corporate structure, net worth, objectives, retirement goals, legacy and children. We do all of that before making any investment or insurance recommendations. We have a significant amount of knowledge about them and their objectives. Then everything on the investment side is made to fit the plan. That plan is reviewed and updated on a regular basis – that is the primary job of the advisors.”

Ahead of the curve
One of Nicola’s biggest challenges and successes in his 46-year career came in 1999, when he made the decision to transition the business to a fee-based model. It was something quite rare at the time, but it paid off in spades.

“Making the transition was a jump into the unknown,” Nicola says. “Only a few firms had done it; there was no model to look at. In hindsight, it was the best decision and drove our growth.”

Nicola notes that in the firm’s first five years, it was growing between 7% and 8% annually. After the transition, that number jumped to 20%. Even recouping the losses from commissions didn’t take as long as Nicola thought. He planned for a three-year period, but the firm made them up in just 18 months.

Today, he looks back on the transition with great fondness, as it has led to 25 successful years. Nicola Wealth continues to grow – its AUM recently surpassed $7 billion, and it now has offices in Vancouver, Richmond, Kelowna and Toronto as it tries to spread its model across the country.

“We think this is a better model to deal with the marketplace,” Nicola says. “Our view with other growth areas is that if we can get the right people on the ground, we believe our model will attract a reasonable share of the marketplace.”