Had it not been for a conversation with a prospective client back in 1974, John Nicola might have become one of the professionals he now provides wealth management services to.
As a fresh University of British Columbia (UBC) graduate with a degree in physics and mathematics in hand, Nicola was still trying to figure out what he wanted to do in the next stage of his life. Until then, he had paid his way through university as a bass guitarist in a local rock band started with a few friends when he was 16.
"That was our job. That's how we lived," Nicola recalled. "Back then, every place in Vancouver had live music, so if you were a rock musician like we were you could get local work."
After graduating, however, he realized being a rock star wasn't in his cards.
"I was a competent bassist but not a talented musician or songwriter or anything like that. I realized I should be doing something where I would be working my strengths."
After getting some career counselling, Nicola decided to become a lawyer and was accepted into UBC's law program. To help pay his way he started selling insurance, after being convinced by the lead guitarist of the band to join him in the sales venture.
"I thought the idea of selling insurance was just disastrous," Nicola said. "But he convinced me that I should try it because they guaranteed you a wage of $650 a month.
"That was a lot of money back then, and I needed a job to go to school anyway, so that'd work out."
But he didn't end up going to law school. Three months before the semester was to start, a conversation with a successful lawyer changed Nicola's mind.
"He said to me 'I want you to be sure you understand one thing: if you think you're going to earn more money or get more respect in law than you are selling insurance, you're wrong. You have to love law,'" Nicola recalled. "My image of law was different than reality, so I decided not to go in September ."
Staying in the insurance industry, Nicola gained some early success before joining Jim Rogers at Rogers Group Financial in 1984, where he eventually became president in 1989. While there, Nicola increasingly focused on financial and estate planning for business owners and professionals.
"That was much more interesting [than just insurance], because the work is much more complex. You had to learn enough to read a balance sheet; you had to have some accounting, some legal skills on what to look for in shareholder agreements or in an estate plan or a will."
By 1993, a desire by Rogers to again become a majority shareholder of the company led Nicola to sell his share in the business and start his own firm. Nicola Financial Group (now Nicola Wealth Management) was founded by the end of the year with seven staff and $80 million in assets under management.
By the late 1990s, he had increased the company's assets to more than $200 million, but Nicola soon determined that his company needed to become a fee-based wealth management business with an expanded range of investments to service B.C.'s growing market of successful self-employed professionals and high-net-worth individuals.
The firm became a portfolio manager business in 1999 and continued to diversify its investment offerings, which now include revenue-generating real estate assets in the U.S. and Western Canada, mortgages, private equity funds, public equities and bonds. Nicola is continually looking for new investment vehicles ranging from royalty trusts to long-term infrastructure investments to generate cash flow for his clients.
Nicola credits the evolution of his company's investment asset allocation mix and its strong management team for the company's significant growth over the past decade. From its portfolio of roughly $200 million in managed assets at the turn of the millennium, Nicola Financial is on track to manage more than $2 billion by next year.
"Our assets will probably grow $300 million this year," said Nicola. "About $100 million will be investment growth and the other $200 million will be money from new and existing clients. We bring in about 130 to 140 new families a year."
The company's broad asset mix has helped its clients avoid many of the losses that public market investors have suffered over the past five years. Back in October 2008, when markets dropped as much as 40%, Nicola's average client loss was 6.5%.
The firm's growth has gained attention in recent years. In May, Mike Taylor, the firm's CFO, won Business in Vancouver newspaper's BC CFO of the Year award in the small private company category (issue 1175; May 1-7).
And last year, Nicola was named Ernst and Young's Pacific-region Entrepreneur of the Year in the professional and financial services category.
A keen sense of understanding the heart of a business or investment issue is one of Nicola's strengths, according to Bob Sinclair, chairman of a TEC Canada executive group Nicola has been a part of for seven years.
"He gets it as far as business is concerned. He seems to nail the issues that are important, in terms of building great morale in the firm and what counts to his clients," said Sinclair. "[In our group], we had a company that was going through very difficult financial times, and John was able to go through the balance sheet exceptionally fast, identified the issues that were causing some of the problems and came up with some terrific ideas on how to address it."
While the company has averaged an 18% growth rate since 2000, Nicola is aiming to continue annual growth of between 10% and 15%.
While much of that will come from securing new clients and additional assets from existing clients, some of the growth will also be generated by the increased company productivity that will come from providing advisers with the technology to make them more efficient in preparing for client meetings.
"Our objective is to increase our productivity by 50% over the next five years. We think that's doable with technology."
At 61, Nicola doesn't have any plans to retire completely from the firm.
While he hopes to delegate more of the day-to-day operations to his management team over the next few years, he still enjoys sitting with clients, writing and giving presentations and strategizing about new investment opportunities, particularly in today's challenging investment environment.
In a market where investment returns are expected to be lower than they have been historically, Nicola noted that the costs for clients have remained high. That has eroded their returns.
"The industry is still too expensive. In an environment where the reasonable assumption is somewhat below normal rates of return on a number of investment classes, the cost of running those assets has to go down."
He also believes the financial planning industry should become a designated profession that's on par with accounting or law.
"Technically, it is licensed, but it still doesn't have the standards of due care and diligence and training. Eventually, I hope we see us get there."