Nicola Wealth Presents Share the Pie: The Art of Building a Winning Culture

Nicola Wealth Presents Share the Pie: The Art of Building a Winning Culture

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  Share the Pie
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  Exit Options Why waituntil you are ready to leave? Does retaining some equity make sense? How would these questions look if you had Shared the Pie?
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  What are Sinek’scomponents of a Just Cause ?  It is for vs. against something. Affirmative and positive in nature.  It is Inclusive - open to all who would like to contribute.  It is service oriented – that is for the primary benefit of others.  It is resilient –able to endure the political, technological and cultural changes over time  Idealistic – thinking big and bold while realizing that there is no end game or finish. There is playing the game better.
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  Collaboration vs. Silos GreatCompetition Create and Innovate Learn from great leaders
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  Whoops • Market drops35% in 6 weeks • All asset classes fall • Interest rates near zero • Unemployment and Deficits soar • We have to work remotely How’s it going? • Revenue down 10% profit down 23% • Onboarding new clients higher than 2019 • AUM YTD up 10% (about 10% above our industry - $7.6B end of 2020) • Added 50 new staff virtually • Situation may stay this way through 2021
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  Covid Reality TheBrutal Facts What is our Stockdale Paradox? This is part of our culture Next generation planning Focus on people’s dreams
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  If we getthis right the whole will be greater than the sum of these parts As of June /2021. • 43% increase in new clients and revenue over any other year • Just passed $10Billion of AUM • High levels of productivity and engagement
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  Share the Pie ProfitSharing • All staff • Since before we started the company • Equal to 10% of profits after ROI on capital ( about 8.5% of NOI ) • Material impact on annual income Equity • Shares and options ( since 2010 ) • Allocated to those who can build the business ( about 20% of all staff ) • Merit based • Options vested immediately and last 10 years • Must be funded with cash when exercised
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  Profit Sharing. Expenseor Investment ? 0% 5% 10% 15% 20% 25% 30% 35% 40% 2005 2010 2020 2021 YTD 8% 15% 25% 40% 37% 35% 30% 26% Profit sharing as % of Wages Expense Ratio If profit sharing is an expense this ratio should rise
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  Our History NWM starts 1shareholder 2 senior staff Buy 10% of shares David Sung merges Waterstreet Into NWM 4 others acquire shares ( 7 shareholders own 26% of NWM ) 3 new shareholders Shares sold at 25% discount to buy sell 5 new shareholders ( total is 15) . First year we use options Non JN shareholders now 25 . Own 36% of NWM 200 people Nicola to pass $7B AUM NEW GOAL: $15.0B 40 shareholders own 42% of shares 1994 1997 2003 2007 2011 2016 2019 2021 Pass $10 B in AUM in May ( 10 x 2009 ) Other shareholders =59 Own 51% of NWM 250 x growth in 26 years ( 24%/yr.) What might it have been if I still owned 100%?
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  AUM Growth 1994-2021 0 2000 4000 6000 8000 10000 12000 $80$105$140$160$185$203$210$214$242$273$342$465$643$728$763 $1,012 $1,220 $1,675 $2,000 $2,500 $3,000 $3,700 $4,514 $5,393 $5,900 $6,900 $7,600 $11,000 20%/year growth
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  $0 $5 $10 $15 $20 $25 $30 $35 $40 2010 2012 20142016 2018 2020 $7.12 $7.86 $9.45 $12.40 $16.74 $18.46 $23.46 $26.26 $30.95 $31.00 $38.00 Share price 2010-2020 What drives share price? • Operating margin (like EBITDA) • Growth rate (historical and expected) • Level vs. one-time income • WACC (primarily interest rates) • Relative size • Market transactions We get an [professional valuation completed Every year
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  465000450750 479500 573960581801 603284614687 72500 149000 195782 344630 424346 477888 614687 0 100000 200000 300000 400000 500000 600000 700000 2013201420152016201720182019 Options issued UnexercisedOptions • About 1.5M options exercised between 2013 and 2019 • New Capital = $25M • No Tax until shares sold then taxed as a capital gain • Equal to 6-7% of outstanding shares • Dilutive if growth less than new options issued
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  Pay It Forward How •Support organizations that need our help • Staff to champion causes • Share the Pie –donate 3% of Pre-tax income • Encourage our clients to be generous and build legacies How many people in your life paid it forward for you?
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  What can gowrong? • Stop Innovating • Stop continuous improvement (kaizen) • Believe we are as good as we can be • Loss aversion • Give up when we fail • Lose our curiosity
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  On the otherhand!!! • Execute as per plan. 2021 as best year ever • Achieve BHAG by beginning 2025 (Hard but not impossible) notwithstanding BHAG we play the Infinite Game • Perfect integration of external firms and advisors • Get both the asset mix and tactical asset allocation right • Internalize much more of private asset management Our Purpose- Share the Pie (clients, staff, community and shareholders)