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.
Digging for more
Horwood doesn’t see much value in attending conference sessions, which run the gamut from geochemistry to health and safety best practices.
Instead, she spends her time building relationships with global accounting and legal firms to help clients. These firms host their own events in the evenings after conference sessions wrap up, and usually last three to four hours.
“I hear my partners speak to learn how I can expand my business. They then bring prospective clients to my booth and make introductions.” Session topics include financing options for junior miners, regulatory issues, and risks stemming from corruption in foreign jurisdictions.
She adds that cocktail parties aren’t where real business gets done. “The booth’s much more important and successful for meeting new clients. Social events are an opportunity to say hello to clients and friends.”
The convention’s also a springboard for Horwood’s own events.
“One of the ways I build on the momentum of PDAC is to invite new contacts to my quarterly lunches that feature our subject-matter experts.”
It may be a portfolio manager explaining investment strategies for executives with heavy allocations to mining stocks, or a tax expert showing how incorporation reduces what goes to CRA.
Currently, Horwood hosts these events at her Toronto office because most attendees are local. But, she’s considering additional cities, including Vancouver. The lunches cost Horwood about $50 a head. “They love coming. It’s a great opportunity to learn and enjoy a steak with friends,” she says. And the numbers prove it. Attendees, which average around 40, are evenly split between current clients and prospects. About half the prospects become clients.
Attendance at her most recent lunch, which occurred post-PDAC, almost doubled to 71. She attributes that rise to taking out a booth.
Horwood’s already thinking about next year’s convention. “The only question…is whether I’ll be doing some auxiliary hosting in addition to the booth, such as having one of our lunches during the event or the day after.”
Making small talk
You’re seasoned in the financial services industry, but the niche you’re prospecting is outside your area of expertise. So, it can be tough to approach conference attendees during breaks. Here are three tips to help you in between sessions.
Before attending, learn about the industry and prepare three non-financial talking points. If you’ve read up on the latest trends, news and technology, you’ll have an opportunity to break the ice. For instance, you can say, “I saw an article on [name topic] in [name magazine]. What are your thoughts on that?”
People love to talk about themselves, their families and their businesses. Show genuine interest by paying attention when you’re chatting with a prospect. Use your body language to show you’re sincere. Make eye contact and nod when you’re getting to know the person you’re talking to. After all, it’s easier to carry on a conversation if you’re listening.
Ask open-ended questions. Begin with “How did you feel about […]” or “What are your thoughts on […]?” This allows people to move from an awkward one-word answer to a discussion.
Source: Cole Kachur, wealth advisor at ScotiaMcLeod
50% of her time with clients
20% on compliance
30% on value-added services, such as events and CE