Sometimes a little luck’s all you need to find your niche. And, in 2011, luck found Alexandra Horwood.
“We had a few mining executive clients and they mentioned they’d be attending the Prospectors & Developers Association of Canada (PDAC) annual convention. They invited me to join,” says the investment advisor with Richardson GMP’s The Horwood Team in Toronto.
PDAC’s four-day, Toronto-based event is the largest mining convention in the world. This year saw more than 25,000 attendees from 126 countries, with northward of 1,000 exhibitors.
Since that initial invite, Horwood’s made the event a centrepiece of her prospecting efforts. As a result, more than half of her book consists of mining execs. Most reside in Toronto, though some hail from Calgary, Montreal and Vancouver. In 2013 alone, these clients brought her $30 million in assets.
For 2014, Horwood took her presence at PDAC up a notch with an exhibitor’s booth.
“It turned out to be the best money I could ever spend,” she says. Good thing, because it wasn’t cheap: this year’s bill was about $4,000.
“The booth’s part of my service model. It gives me an opportunity to meet with clients who come to Toronto specifically for the event.”
And it’s a pivot point for prospecting. “It’s really about client attraction. The booth is a hub where people can find me; it gives me a fixed point of connection.” She’s there with her associate, Ghinel Bozek, from 10 a.m. to 5 p.m. all four days. That’s a lot of time away from the office, but she still keeps in touch with clients, and her dozen colleagues can handle urgent matters.
Horwood says 20 to 30 people came by the booth every hour; about five to 10 of those were potential prospects, resulting in more than 150 follow-up conversations. “I connect with all prospective clients within 48 hours of meeting them at the conference, to identify their needs and assess a potential fit.”
Her booth is all business. No rock samples, hard hats or other props. “We keep it clean and professional,” she says. “Gimmicks aren’t necessary. We’re the only non-mining provider with a booth, and we offer attendees a specialized service. That’s enough to interest many of the executives.”
Those who come by get a one-page document titled “A Golden Opportunity,” which includes her key planning solutions for mining executives. Advising this group is challenging because they work in a volatile, cyclical industry; they travel a lot, often to remote and politically unstable regions; and they earn high incomes in multiple jurisdictions. “It was clear from attending PDAC this year that their circumstances have changed dramatically,” says Horwood. “We’re at the bottom of a cycle, which stresses the need for my services.”
Upon initial review, she finds prospects’ portfolios, inevitably, are highly correlated to the volatile mining sector. “The first thing we do is divide them into two separate portions,” she says.
One is company stock, or stocks of companies they’re involved with. The other counterbalances the first portion.
“A lot of the investments we use have absolutely no mining exposure,” notes Horwood. “The only ones that [do] are certain flow-through shares we offer, and these are primarily for reducing their marginal tax rates.”
Mining executives also need more insurance than many businesspeople because they often travel to dangerous countries.
“We put together a custom insurance and benefits plan.” (See “Insurance for mining executives,” below.)
Insurance for mining executives
Toronto advisor Alexandra Horwood illustrates the insurance needs of a 45-year-old mining executive married to a 40-year-old self-employed professional. The couple has two children.
Laddered term insurance
Income replacement and debt repayment in the event of death.
$1 million of Term 10 and $1 million of Term 20 on both the husband and wife.
Being self-employed, the executive’s wife has no corporate disability coverage.
Private policy provides monthly benefit of $6,000.
Critical illness insurance
Tax-free lump sum in the event the insured is diagnosed with one of 22 conditions, including cancer, heart attack or stroke.
Used as income protection for both spouses. For example, if the husband gets sick, his wife’s disability insurance does not cover her if she takes time off to care for him. And if there are no claims in 15 years, 100% of the premiums can be returned. For some couples, those returned funds are enough to pay off the last piece of their mortgage.
$200,000 of coverage on both the husband and wife.
Uses pre-tax corporate dollars to fund healthcare expenses. It covers $6,000 per annum, and includes catastrophic stop-loss coverage, which provides traditional insurance coverage for drug expenses beyond $5,000 and full coverage for out-of-country medical expenses.