Competing against big hitters is daunting, but exciting

Aligned Capital co-founders tell WP how they're scaling and shaping their new enterprise

Competing against big hitters is daunting, but exciting

Designed Wealth Management may be one of the newest kids on the block, but, given its founders’ history, it’s scaling up quickly to compete against some of the biggest players in the next chapter of financial advising.

“We’ve developed a strategic plan to support advisors and portfolio managers, regardless of their regulatory channel,” Gillian Kunza and Michael Konopaski, its co-founders and directors, told Wealth Professional.

They both left Aligned Capital Partners Inc., where Konopaski was Chief Financial Officer and Kunza was Chief Compliance Officer, after CI Financial Corp. announced it was buying it in late 2020. They then began to shape their new enterprise, which focuses on independence, and launched it last September.

“It is daunting because you’re up against the companies that own the biggest building in Toronto, Vancouver, and Calgary,” said Konopaski. “You’re up against some really sophisticated and smart competition, well-oiled machines. It’s very daunting, but exciting.”

The pair said launching during the pandemic had benefits and challenges. “It was definitely a unique experience,” said Konopaski, who added that it now has almost $600 million of assets under management. “We had at least 100 situations where we were signing a contract or some sort of dealer agreement, and we were doing it all virtually. I think that’s just the nature of the times.

“I think the main advantage is we came in without very much overhead. So, when it comes to the ability to manoeuvre, we’re able to customize an experience for an advisor. We don’t have any legacy platforms or big-league leases, so I think we’re really lean and prepared for the future of modern wealth management.”

Kunza added, “there certainly was an element of efficiency to the process of working with the regulators and setting up our business plan, and even talking to future staff and advisors. Normally, we would be out on the road, meeting face-to-face, which takes a certain amount of time and resources. But we didn’t have to do it that way because of the pandemic and people’s willingness to jump on a Zoom call.”

On the flip side, Konopaski said it was challenging to pull a dozen people together on a Zoom call. Kunza said it’s also been challenging hiring to build the right team to support their business in this labour market as people shift priorities and locations.

One of their businesses, Designed Securities Ltd., received IIROC approval at the end of June, and the pair were actively seeking advisors by fall. It now has 11 advisors, with two more about to join, and $600 million in assets under administration. They would love to double or triple their size, so they’re actively seeking more advisors with clean backgrounds who are interested in a flat fee principal agent business model and want to help their totally independent company grow.

Another one of their businesses, Designed Investments Ltd., was approved by the MFDA in the first week of January. Konopaski noted that, “on the MFDA side, our main competitors are getting rid of their flat fee and moving to a grid.”

Kunza, who is CEO of Designed Securities Ltd., their IIROC firm, said they want to talk to advisors who are looking for a new home to “see how their practice fits what we have to offer”. They want to see how they can address those people’s pain points.

“We take a little more time to say, ‘tell us what you do and don’t like about your current situation because we can be a little bit flexible with you,” she said, noting they can tailor their model to fit different advisors in a way larger firms can’t.

Designed is seeking advisors who work for firms controlled by large financial institutions. But, it’s also interested in attracting and supporting women investment advisors and portfolio managers who are still underrepresented in the industry, especially given the transfer of wealth to women that’s on the horizon. Kunza said she’d like to develop creative ways to support them during their transition times, such as maternity leaves, as well as while building their businesses and careers.

Konopaski added that only 10% Canadian dealers’ CEOS are women and they’re interested in trying to change that landscape.

“We want to be known as open-minded professionals who welcome advisors and portfolio managers in different models,” he said. “So, we’re going out there and explaining our value proposition and how we truly are different to people, and that’s one of our main goals for now.”

When asked how large they’d like to grow, Konopaski said, “that’s a loaded question because we’ve both done this before, so there’s a certain size that’s optimal for an investment dealer. As long as we’re able to transition advisors with good clean compliance backgrounds who are willing and open-minded to grow their practice, there really is no ceiling on the upside. We believe we have a very compelling business model, so we have big plans and we’ve set our sights fairly high.”

This article was amended to remove the reference to Mr Konopaski and Ms Kunza leaving Aligned "two weeks" after CI announced it was buying the company. Aligned disputes this and says Mr Konopaski left nearly three months after and Ms Kunza just over three months after.