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What you can learn about building and managing a successful investment firm from Steadyhand’s Tom Bradley

Building and managing a successful financial investment firm is easier said than done, but today’s guest has the experience and actionable tips to help you do it. Tom Bradley, president and co-founder of Steadyhand Investment Funds, joins the podcast today to tell us how his firm differentiates itself among other investment management firms by committing to radical transparency and always working in the best interest of the client.

In addition to being President and Co-founder, Tom is a director and shareholder of the firm. He holds a Bachelor of Commerce degree from the University of Manitoba and an MBA from the Richard Ivey School of Business. Prior to founding Steadyhand, Tom worked first as an equity analyst at Richardson Greenshields, then at Phillips, Hager & North as a research analyst and institutional portfolio manager. While at Phillips, Hager & North, Tom eventually became the COO and later president and CEO before resigning in 2005. All told, he has more than 30 years of experience in the investment industry. Listen to today’s episode to hear why Steadyhand’s long-term clients see their fees decrease over the years, why Steadyhand is so transparent about co-investing, and how his firm helps clients who need financial planning.

What You’ll Learn in This Episode:

  • What prompted Tom to resign as the leader of one of the largest asset management firms in Canada to start Steadyhand (5:00)
  • Tom’s investment philosophy of undexing (6:20)
  • Steadyhand’s unusual pricing model ‒ why long-term clients pay less (8:40)
  • Gaining trust through transparency and co-investing (13:05)
  • How Steadyhand partners with financial planners… and whether you’re a good fit to work with them (14:45)
  • What investors misunderstand about the market and how you can help manage their behaviour (20:45)
  • How Steadyhand differentiates itself in a world where banks are king (26:10)

Links and Resources:

Steadyhand

10 Years Wiser

Quotes by Tom:

“I really do believe that behavior – investor behavior – is the most important variable in returns.”

“As much as I was well-known in the institutional world ‒ I had more of a brand there ‒ I just felt that there was such an opportunity to make a difference.”

“I’m sure many of your listeners think it’s heresy, but the reality is, a client that’s been with us five years does not cost us as much to service, and we tell them that up front.”

An experienced, successful and well-respected voice in the financial services industry, Tom Bradley has important and unexpected tips for running your business. Today, he’s sharing his thoughts on partnering with financial planners, managing investor behaviour, and more.

Below, we’ll take you through three key ideas from the show:

  • Gaining trust through transparency and co-investing
  • Steadyhand’s unusual pricing model ‒ why long-term clients pay less
  • How Steadyhand partners with financial planners

For the rest of the episode, find the podcast on iTunes or Stitcher, or hit the link above.

Gaining trust through transparency around co-investing

Tom describes his firm as “obscenely transparent” ‒ and he couldn’t be prouder.

One example of this is that every year, Steadyhand publishes the rate of co-investment at their firm ‒ the average percentage of their teams’ financial assets that are invested in Steadyhand funds. As of June 2018, that number was at an astounding 88% ‒ over $30 million invested in Steadyhand portfolios by employees and their families.

Understandably, clients love knowing that their fund managers have their own money invested in the same funds as them. They know that the Steadyhand team is gaining ‒ and losing ‒ money right alongside them, which makes them confident to put their money in those funds, too.

Hint: For more on walking your talk and how that builds trust with your clients, listen to Episode 22 of our podcast where we chat with Diane Dekanic about practicing what you preach as a financial planner.

Steadyhand’s unusual pricing model ‒ why long-term clients pay less

In general, Steadyhand’s pricing is fairly standard and based on a management expense ratio.

The MER is based on three things:

  • Asset mix
  • Size of assets (every dollar invested over $100,000 is calculated at a reduced rate)
  • How long the client has been with the firm

That last one is where it gets unconventional. Rather than offering bonuses, reduced rates, or iPads to new customers, any client who has been with Steadyhand for five years or more has their rate reduced by 7%. After 10 years, they enjoy a 14% reduction.

Why?

For one thing, Tom wants to reward loyalty. To explain the importance of this, Tom shares a story of his wife renewing his Sports Illustrated subscription ‒ he’d been a subscriber for 40 years ‒ and pointing out that she could go online and get him a lower rate as a ‘new’ subscriber.

You can imagine how surprised and unhappy he was to learn that as a longtime loyal reader, the company valued him less than brand new subscribers. He knew he never wanted his clients to feel the way he did then.

Another reason is that clients who have been with Steadyhand longer are actually easier and less expensive to serve than new clients ‒ and he’s not afraid of being honest about that. Once they know the client well, there’s the occasional life event that might warrant a portfolio restructuring, but otherwise, a lot of the hard work was already done at the outset.

How Steadyhand partners with financial planners

If there’s one thing that Steadyhand excels at ‒ other than exceptional investor service ‒ it’s knowing their limits.

This definitely comes to bear when they decide how much advice they should give their clients. For the majority, investment advice alone is enough.

But for the rest of their clients, those who are looking for a bit more guidance with their finances, they’ve developed a Canada-wide knowledge base of fee-for-service planners that they can recommend when needed.

They like working with planners who have experience and asset sizes between $250,000 and $2 million. Their ideal partnerships are with planners who have some knowledge of investing but who want to refer their clients out for specific investment advice and management.

Steadyhand also has a CFP on staff who vets the plans of the professionals they work with to ensure they’re sound ‒ he doesn’t need to agree with the whole plan, but it has to make sense and be of good quality.

Working with investment managers

Are you a planner looking for an investment manager to collaborate with and refer clients to? Tom has a framework you can use to evaluate and choose the best firm to work with ‒ it’s the same strategy he uses to hire managers and the way he suggests consumers pick their own investment managers, too.

He calls his framework the 7 Ps. They stand for people, parent, philosophy, process, price, performance, and passion. To learn more about each principle, you can read his excellent explanations here.

Hint: If you’re looking for more tips for successfully collaborating with other professionals, go back to our episode with Julia Chung and Sandi Martin of Spring Financial Planning.

We bet you don’t want to miss anything Tom has to share, so make sure you catch the full episode right here on this page or on iTunes or Stitcher ‒ he also shares why he left a great position at a successful firm to start his own business, his “undexing” investment philosophy, and the ins and outs of what his collaborations with financial planners look like.

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