Veteran portfolio manager Lawrence Ullman is bucking the trend of wealth-management industry consolidation, opening a new firm with an eye on preparing clients for an eventual downturn in equity markets.
With the newly formed Ullman Wealth Management Inc. (UWM), Mr. Ullman is targeting a small, but rich, group of investors with the promise of specialized services that will better prepare their portfolios for the time when the bull market ends. The firm will also draw on an advisory model that has gained traction in the U.S.
"What we've tried to do is create a more interesting and flexible model for the client that's based purely on fee for advice," said Mr. Ullman. "There's no hidden fees. There's no complicated fee structures. There's no investment banking, so no conflicts of interest. There's no products to sell, purely solutions."
The financial-advice business is in the midst of an evolution as advisers fight for clients that are also being aggressively courted by new do-it-yourself technologies and passive vehicles such as exchange-traded funds. But Mr. Ullman is reaching above the average Canadian client, betting there's a growing number of ultra-high-net-worth investors that want more attentive and personalized service.
UWM will target clients such as foundations, corporations, charities and family offices, with at least $5-million in liquid, investable assets. These clients "want to know they are unique," Mr. Ullman said. Within five years, he envisions managing between $3-billion and $5-billion for about 50 clients.
The firm collects fees as a percentage of assets under management. They will also oversee client's total portfolio and assess risk for a flat fee. This latter function aims to address the needs of clients who may have money spread across a variety of platforms based on relationships built throughout the financial industry, such as friends managing some money, investments in a hedge fund operated by a family member, or other funds invested through a more traditional, commissioned broker channel.
Mr. Ullman said these investments are often more correlated than they appear, which can become an issue when markets hit a downturn. His firm will provide the service of assessing the overall risk parameters of these various investments to ensure proper diversification – a function he said clients are increasingly asking for.
"We're in the seventh year of a bull market and it's probably not going to last forever. Clients are starting to think more about risk and volatility," he said. "Clients want to have a set of eyes on the portfolio, whether it's held on-book with the adviser, or off-book in other places as well."
In forming the business, Mr. Ullman drew on the success of the U.S. independent registered investment advisors, or RIAs, which have continued to attract clients from full-commission brokers and other channels. RIAs have a fiduciary duty to their clients, obligating them to act in their clients' best interests, and have risen in prominence in the years since the financial crisis. Mr. Ullman said that demand for this type of service is slowly coming to Canada, although the Canadian market is smaller.
Mr. Ullman was most recently a portfolio manager at another Canadian wealth-management firm that markets itself as an independent alternative to the big banks – Richardson GMP Ltd. Mr. Ullman worked at RGMP for 11 years and, along with his team, managed client portfolios with close to $600-million in assets under management and $800-million in assets under advisement. He says the decision to leave was based on wanting to pursue the new investment model and client need that he'd observed had become increasingly successful in the U.S.