The lifespan of the successful independent brokerage in Canada is short. A group of guys get together, found a business, expand it by using their entrepreneurial guile to steal business that the slower-moving big banks view as their birthright, and grow rich. Whether it be greed, egos, pride or bad luck, few big independent securities firms in Canada survive more than one generation these days. Gordon Capital, the firm on which GMP was in many ways modelled, was sold, ending up part of HSBC. First Marathon, where two of GMP’s key partners came from, was gobbled up by National Bank of Canada. Newcrest Capital disappeared into Toronto-Dominion Bank.
GMP’s plan is to grow its way out of that syndrome, using Goldman Sachs as a model: the big independent that can go toe-to-toe with the banks. In fact, GMP is already a curious blend of its former and future selves. The firm still sees itself as the aggressive outsider, but it has one foot in the establishment that it once shunned. GMP’s partners in the wealth-management business are the old-money billionaire Richardson family in Winnipeg. Together they have built a network of 109 teams of financial advisers across Canada, overseeing assets of almost $15 billion for clients. And GMP was invited to be a member of the bank-led Maple Consortium that’s looking to acquire TMX Group Inc.—better known as the owner of the Toronto Stock Exchange. Finally, GMP, once a company that dealt mostly in stocks, is branching out to new markets. Fricker’s first big deal was to pay $44 million (U.S.) to acquire Miller Tabak Roberts Securities, a New York-based boutique specializing in bonds. So GMP now has offices in Manhattan as well as in London and Perth, Australia.
The moves abroad aren’t big bets, Fricker argues, but they give the firm leverage because it can offer clients more options. Instead of just selling stock for a client, GMP can now help the company issue bonds.
The power of leverage dawned on Fricker when he was at Oxford University, where he studied economics and philosophy. He arrived as a poor kid from Cape Breton, having grown up in Ingonish, the son of a nurse and a construction worker, believing that you had to sweat for every dollar. Among the spires of Oxford, he saw other kids who believed they deserved big rewards. He liked that better.
“As a blue-collar Catholic kid, you had to bleed under your armpits in order for one unit of input to create 1.2 units of reward,” Fricker says. “And then I was around kids at Oxford who believed that one unit of input was worth 100 units of output and they had no guilt.”
He came home and landed in finance, in no small part to pay the school bills. His first job was at Bank of Nova Scotia, working with an assistant to the CEO. He did stints at various firms on Bay Street, logging experience in bonds and derivatives, as well as trading and investment banking, before heading to Silicon Valley during the tech bubble. He and his partners sold their company in 2002, and he came back to Canada and joined GMP—which had long been an ambition, he says.
When he got there, he focused on the dirty businesses. Chemicals. And steel. There was a fascination with steel dating back to seeing his dad carry it on the job. How was it made? Who made money from it? Certainly not the guy humping it around the building site.
Fricker also foresaw a global boom and consolidation in the industry, driven by emerging markets. He got to know the players, and when it came to pass, he was the go-to banker. He helped finance Algoma Steel, and sell companies such as Harris Steel and Atlas Tube.
It was an epic run. Fricker’s father may not have made much money dealing with steel, but Fricker and GMP did. It also left Fricker in a funny spot. “One of the downsides is we were so successful in the steel industry that we sold all our damn clients. There was no one to talk to.”