Not for sale: Designed Securities’ 15-year promise

CEO explains firm's commitment to independence and compensation model for advisors

Not for sale: Designed Securities’ 15-year promise

This article was provided by Designed Securities.

As usual, 2022 was a year that many small and independent investment and mutual fund dealers were sold.

As many of their competitors have recently been sold to large financial giants or private equity firms, and with several other dealers more focused on their business valuation than focusing on their clients, Gillian Kunza isn’t shy about declaring the long-term plans and big aspirations for her firm and the industry. “Our commitment is to remain truly independent for at least 15 years,” says the CEO of Designed Securities.

The 15-year promise originates back to 2021 when Designed had no advisors, and no assets under management. In an industry where long-term planning and investing needs of clients often span decades, it only seemed right that the vision be influenced by similar timelines. Designed wanted to focus its business plan on what it would achieve in the long run, and that meant making a real commitment now.  Their 15-year promise guarantees that there shall be no change in control of Designed Securities Ltd.

Designed recognizes the importance of giving advisors stability to grow their practice. “There’s nothing worse than moving your practice to a new dealer, only to be met with significant changes a year or two later. 15 years gives advisors a chance to develop their practice on stable ground.” Within the 15-year promise comes assurances that the flat-fee compensation model stays intact. That means, their advisors and portfolio managers won’t be on a grid, so they reap the benefits of growing their practice, not the head office.

Kunza also shared other aspirations Designed is bringing to the forefront. “Our advisors share in the decision-making of the firm, it’s not about ‘Designed’, it’s about them.” says Kunza. “Our advisors have a voice and know that our focus is on what they need to be successful”. Rather than focus on setting business value targets for the firm, Designed evaluates the definitions of success based on what their advisors want. “Our advisors are ecstatic at our growth, and it’s exciting for them to be part of it.” she says. Designed has reached approximately $1 billion in assets in less than 18 months, “but simply stating we want to grow our assets undermines critical success factors that are valuable to our advisors.”

2022 will be remembered as the year Designed gained credibility and legitimacy as a dealer. But it was also a year of monumental milestones for Designed, which is now in the process of transitioning advisors from 10 different dealers. “When you aren’t constrained by the short-term financial goals of external shareholders, you can focus on planning for the distant future” says Michael Konopaski, the CFO of Designed.

Konopaski, whose PhD thesis focused on entrepreneurial businesses that were intended for the long run says, “Designed has developed a unique view of what the industry is about. We are not just thinking about the near future, but we are also thinking about the distant future and how the business might look beyond 15 years.” Planning for the distant future requires significant learning and mentoring regarding innovation, technological change, etc. As a result, Designed has already started planning for leadership roles for internal employees 10 years and beyond. “When you introduce all levels of staff to the big picture and explain to them what they need to do to flourish in the long run, they can focus on what they need to develop into future leaders of the business.”

Keeping in mind the 15-year promise is a minimum guarantee, and it has a significant impact on Designed’s core values, organizational culture and impact on our advisors’ long-term well being. “When your mindset shifts away from cashing out, everything you do as a dealer is for the right reason” says Konopaski. “We like to think of ourselves as ambitious, humble and transparent. If you ask us a question, you get a straight answer. If the owners of a dealer haven’t laid out a clear plan for the future, advisors, clients and staff of that dealer should be worried. Further, if the dealer talks about valuation, you can bet a sale to a large financial giant is coming.”