Michael Konopaski's unwavering commitment drives his pursuit of total independence and tailored solutions for both clients and advisors
This article is sponsored by Designed Securities
At the helm of Designed Securities, Michael Konopaski and Gillian Kunza exemplify a unique commitment in the financial advisory industry. Their journey took them to rural areas of provinces like Newfoundland and Saskatchewan to meet prospective advisors. This dedication is symbolic of their company's ethos: going above and beyond to meet the needs of advisors, even in often overlooked areas.
Such efforts highlight the firm’s focus on relationship-building over sheer scale, a philosophy that's increasingly rare in an industry leaning towards automation. Konopaski, co-founder of Designed Securities, recalls the company's inception in the middle of COVID-19, at the end of 2021. Despite the challenging economic climate and the daunting task of establishing themselves in a saturated market, they ended 2022, their first year, with a remarkable $750 million in assets under administration. Further, they will exceed $3 billion in assets under administration in the next few months. Konopaski acknowledges their small stature in the vast financial ocean but emphasizes their solid start and potential for growth.
Konopaski shares the difficulties of being a "minnow in a huge ocean" of investment dealers. The initial years were marked by significant startup investment and the daunting task of establishing credibility in a saturated marketplace. Yet, Designed Securities has distinguished itself by gaining a foothold in a competitive landscape dominated by giants.
The hummingbird and the elephant
The core philosophy that guides Konopaski and co-founder Gillian Kunza, was the unwavering belief in the value of independence for a dealer. In 2020, as the Chief Financial Officer and Chief Compliance Officer of another investment dealer, Konopaski and Kunza faced a pivotal moment when the decision was made to sell the company to a large mutual fund company.
He says, “We disagreed with the sale, holding a firm belief in the importance of a dealer's independence. Our launch timing wasn't ideal, but it was driven by our belief system and there's no 'right' time to act on your convictions. With a lifetime in the dealer business, collectively we brought significant expertise despite being a new entity.”
One of the most notable achievements has been Designed Securities’ ability to attract advisors from over 25 different dealers. This feat is significant because it demonstrates the broad appeal of their business model. They didn't just draw talent from a specific niche, but from a wide spectrum that includes big and small dealers, banks, and non-banks.
“Typically, November and December are not ideal times for advisors to switch dealers due to RRIF payments, holidays, and various events. However, our situation is unique, with over 25 advisors joining us from November to January. This is a stark contrast to most dealers who might be winding down for the year. We're preparing to open 10,000 accounts in the next two months, a historically slow time for a dealer,” highlights Konopaski.
This influx indicates a significant level of dissatisfaction among advisors with their current dealers. It's a major undertaking for these advisors to upend their investment practices and communicate these changes to their clients during the holiday season, yet they are doing so because of their discontent.
The firm's approach contrasts sharply with industry trends of scaling and automation. In an era where many firms prioritize technology over personal interaction, Designed Securities remains committed to a people-first approach, maintaining that relationships are critical to success. This strategy is not only about retaining a human touch in services but also about providing customizable and flexible solutions for advisors, something the larger, standardized models often lack.
Pushing for growth amidst industry challenges
As Designed Securities aims for $7 billion in assets under management by the end of 2024, Konopaski points out the dissatisfaction among advisors and clients with current market trends, such as the push towards AI and turnkey asset management platforms, which he believes are still in their infancy.
Konopaski emphasizes that Designed Securities has simplified its business model for both clients and advisors, focusing on great technology while remaining people-centric. This approach contrasts with the industry trend of scaling, outsourcing, and reducing human interaction in favor of automation. This serves advisors and clients less than it does shareholders.
In large publicly owned dealers, customization is often seen as costly. For example, accommodating 75 advisors with 75 different models is less profitable. These advisors often face restrictions – they might want to build a unique website, start a podcast, engage in social media, or use specific products, but are frequently denied.
Konopaski underscores, “This lack of flexibility underscores why independence is crucial for firms like ours. Imagine being an advisor with creative ideas and a desire to do things differently but finding limited options in the market. We face little real competition because few are willing to offer customization and flexible platforms to advisors. This is our value proposition.”
Ambitious goals, leveraging decades of experience
Looking ahead, Konopaski has no fears from the growth DIY-investing platforms are displaying, saying, “A very small percentage of investors prefer to manage their investments independently. It's like choosing to fix the brakes on your car yourself versus taking it to a professional. Platforms that cater to this DIY market, often manage smaller investments, like saving $200 a month. However, I don't see this segment significantly expanding. When it comes to substantial investments, like managing a $1 million or $10 million portfolio, most people would not opt for a DIY approach, regardless of their intelligence or expertise.”
The bulk of managed money still resides with professional advisors, who provide personalized services.
For 2024, Konopaski and Kunza’s primary goal is ensuring the firm has the right personnel to sustain its rapid growth. They believe that while technology is crucial, the human aspect of the business is vital for providing quality service to both advisors and clients. He also highlights the firm's focus on serving smaller and rural communities, which are often overlooked by larger dealers.
Their deep-rooted experience, gained from years of working alongside each other, has meant their people-first mindset is creating a new era for the advisor-dealer relationship. Their approach is a powerful reminder of the enduring value of human connection in the world of financial advisory.
