An Ottawa investment broker has acquired a controlling interest in a booming boutique wealth-management firm whose high-powered client roster includes local tech glitterati such as Shopify’s Tobi Lütke and Harley Finkelstein.
Cameron Passmore, a longtime partner and portfolio manager in the Ottawa office of PWL Capital, announced earlier this month he is now the firm’s majority shareholder after purchasing co-founder Anthony Layton’s stake in the company. Passmore will also take over as executive chairman from Layton, who is retiring.
Financial terms of the transaction, which closed on May 1, were not disclosed.
Founded in 1996 and originally based in Montreal, PWL Capital has carved out a lucrative niche as something of an investment broker to the stars in the National Capital Region. The firm has built a particularly loyal following among movers and shakers in Ottawa’s close-knit tech community, where it has gained popularity for its use of passive index investing that promises low fees.
Its 50-plus-person team now manages more than $5 billion in assets, up from $450 million five years ago. The firm’s client list has more than doubled over that time and now numbers in excess of 1,000.
Shopify employees make up “a significant part” of that base, Passmore says, confirming that Finkelstein is among them. Lütke told the Globe and Mail in 2016 he was also one of Passmore’s clients.
As a who’s-who of tech magnates flock to use its services, the firm is also attracting a wave of interest from investment specialists eager to join the growing operation.
PWL’s headcount has risen 25 per cent in the past year, Passmore says, adding he expects that trajectory to continue over the next 12 months.
The firm now employs people from Whitehorse to Toronto, and its last eight hires connected with Passmore and his team after hearing about PWL through social media channels or listening to his podcast. The company also has affiliated operations in other cities, including Toronto, Waterloo and Montreal, which are independent firms that pay PWL fees to use its investment platform.
“We’re finding talent, finding clients without any kind of traditional advertising,” Passmore says. “We’re in that sweet spot right now. People are looking for this kind of advice … and employees want to be in this kind of environment where there’s lots of opportunity.”
The graduate of McGill University started selling mutual funds three decades ago and joined PWL in 1997. The firm was quick to embrace exchange-traded funds, which are programmed to pick stocks, bonds and other investments by tracking and closely replicating financial indexes such as the S&P 500, often with the help of algorithms.
This type of “passive” investing helps keep fees down because it doesn’t require as much human intervention, Passmore says. PWL negotiates fees with clients based on the size of their portfolios, which are generally lower than the fees charged by big mutual fund managers.
Passmore says there’s plenty of evidence that shows actively managed funds don’t deliver any better returns in the long run even though they cost more.
“The data is overwhelming,” he says. “The markets are so competitive, it’s not likely that you … are going to find someone who’s going to pick stocks and consistently beat the market.”
The longtime broker says tech entrepreneurs are a natural fit for such a system, which favours a data-driven, analytical approach to investing rather than relying on human beings to actively manage their money.
"Any one of these people – you could name 100 of them in this town – they could have 100 brokers at their doorstep within 24 hours."
“They embrace the investment philosophy,” he says of Finkelstein and other high-profile tech clients, adding that referrals and word of mouth have fuelled much of the firm’s growth.
“With these kinds of people, trust is a big deal. Any one of these people – you could name 100 of them in this town – they could have 100 brokers at their doorstep within 24 hours.”
Still, Passmore and his advisers do more than simply spew numbers out of a computer. The company provides a full range of tax, retirement and succession planning expertise, for example, and he believes there is still plenty of room for growth in the business.
DIY firms such as Wealthsimple are “fabulous” for people who like to manage their own portfolio and don’t want or need advice, he says. “But once you get into larger dollars, there’s complexities,” he adds.
Conceding there are still plenty of skeptics who dismiss the more automated, big-data approach to investing, Passmore says he’s not losing any sleep over it.
“We don’t try to change people’s minds,” he says. “Enough people are reaching out to us. That’s fine.”