The Steadyhand Diaries

Globe Investor Magazine, May 22, 2008

March 2, 2006

This morning I closed the door on the chance to lead a smaller Toronto firm. I want to focus on getting a new mutual-fund company off the ground. Enough dreaming about it. We’ll burn through some serious cash and I’ll offend a few industry friends along the way, but if we do it right and get a little luck, we can have a real impact.

Steadyhand, as I’ve called it, will sell its funds directly to the investor. Our fees will be low—no commissions or trailers. Clients will get simple, straight-ahead service. The lineup will be limited to areas where we can add value—probably three to six funds—and we’ll partner with outside managers. And the key—those experts will run the funds the way we want our money managed.

Building a company to serve my own purposes goes against everything they teach in marketing class, but it makes sense in this context. Too often, the investment professionals who design and manage products don’t have their own money at risk. Alignment between the professional and the client is more important than any marketing nuance.

April 24, 2006

I’m in Toronto to test the Steadyhand concept. I started with Chuck Winograd, who hired me into the business 23 years ago when he was research director at Richardson Greenshields. He now runs the capital-markets side of Royal Bank. As usual, Chuck got right to the point. Can we get the managers we need? How do we differentiate ourselves from a gazillion other fund companies? How much money will it take? His parting words: “Tom, you know this is a long shot.”

As a hard-nosed mentor and a friend, Chuck would rather see me get a real job—“while you’re still a somebody.”

April 28, 2006

While gathering feedback, I keep hearing that Steadyhand will require deep pockets and lots of patience. “It’s great you’re doing this” is quickly followed by “It’s going to be tough. How will you sell the funds?”

As everyone has rightly noted, it’s hard to woo investors directly when all roads lead to the financial adviser. These gatekeepers control the bulk of the industry’s assets. Like Bob Hager used to say, “Mutual funds are sold, not bought.”

June 6, 2006

Neil Jensen has signed up with Steadyhand until Labour Day. We’ll know if it’s a “go” or “no-go” by then. I’m pumped—I’ve always wanted to work with Neil.

Neil is a serial entrepreneur who co-founded Habañero, a successful IT consulting firm in Vancouver. When he consulted to us at PH&N, he always seemed to know more about our business than we did. We’ll make an interesting combination—boring investment guy and entrepreneurial techie. Technology and the Web are critical to reaching our target client: the do-it-yourself investor.

June 8, 2006

Lori, Neil and I brainstormed with Bernie Hadley-Beauregard and his wife, Pauline, tonight. Bernie is a friend and the marketing guru of B.C. wine. He’s shaken up his industry, so we asked him how to build awareness for Steadyhand in ours.

No brilliant ideas came out of the wine, but we got Bernie’s message loud and clear—“If what you’re doing doesn’t make you squirm a little, then you haven’t gone far enough.” No middle of the road for Steadyhand.

June 22, 2006

The regulatory reality just hit home. Because we’re selling direct, we have to join the Mutual Fund Dealers Association, the watchdog for fund dealers. We also have to be licensed, as a firm and individually, with the securities commissions of each province and territory where we want to do business. As a result, regulatory and legal costs for a direct seller make it uneconomic for us to offer our funds in the smaller provinces.

June 28, 2006

Neil has set up a Steadyhand blog. This is new to me, but I love it. I get to spout off about things whenever I want. It’s an experiment, but Neil thinks it will be the way we communicate with investors.