It’s been more than a year since John Hanrahan established Citadel Securities Inc. in Halifax, and the seasoned securities firm executive says that the company, while small, is continuing to expand, with an eye to developing eventually into a national firm specializing in junior and mid-market companies.
Citadel now has a second office in Charlottetown, has more than doubled its employees to 10 from four and is developing products in the area of socially responsible investing.
Hanrahan says that the firm’s forward drive is fuelled by three main elements. One is its decision to mine the opportunities created by what he calls the “New Atlantic” — the increasing sophistication and wealth of the area, with its growing revenue from energy and the influx of financial services businesses from regions such as Bermuda.
“There are a great many people who come to the region,” Hanrahan says. “We want to marry traditional values with a world vision.”
In particular, that means linking up with new and growing companies, with a special emphasis on companies with a fresh, more youthful take on business.
“There is a new entrepreneurial spirit on the East Coast,” he says. “This appeals to many advisors.”
Citadel has enhanced that appeal in the second element of its growth strategy: to attract and retain advisors and other key employees, the company has designed a compensation package to entice outstanding candidates from across the country.
“Citadel has developed the most competitive compensation package in the marketplace,” says Hanrahan. “We are generous and flexible.
“Being an independent,” he adds, “we know that we have to offer a compensation program that attracts and maintains quality investment advisors.”
For its third strategic element, Citadel also offers products and services that are comparable to those offered by much larger firms. It has partnered with Provisus Wealth Management Ltd. of Toronto to provide the Transcend managed account program, which allows individual investors to have separately managed accounts in addition to pooled and mutual funds. Typically, investors who use SMAs are more affluent and are looking for the tax benefits that such accounts provide. “It is a complete, separately managed account program,” notes Hanrahan. “Clients will benefit from wealth-enhancement, risk-management strategies that are traditionally only available to multimillion-dollar institutional investors.”
But advisors at Citadel who offer managed products using pooled assets can choose to sell SMAs or not, as they prefer. Many of Citadel’s competitors do not permit advi-sors to offer both types of products. “Most banks operate on a grid system that rewards working with managed products,” says Hanrahan. “We disregard whether it’s managed products or otherwise.”
As well, every employee of Citadel has an ownership stake in the firm. “While ownership may be available in any of the national firms,” he says, “the early ownership in a growing company such as Citadel gives a much greater upside potential to our shareholders.”
This multi-faceted approach appears to be working, given Citadel’s growth in the past year. The approach is also influencing where that growth will occur. Take, for example, the firm’s new branch on Prince Edward Island. For many firms, Canada’s smallest province would not have been the choice for an initial expansion. That was part of the appeal, admits Hanrahan: “We felt the market really did have more opportunities, simply because it wasn’t intuitive. It’s not the next biggest market.”
The new office is being headed by James Wood, a chartered financial analyst. “He started on Bay Street,” notes Beste Alpargun, Citadel’s vice president of equity research, “and has been in the business for a couple of decades.”
Citadel, licensed by the Invest-ment Dealers Association of Canada this past June, is also licensed as a portfolio-management firm, which requires separate accreditation and enables Citadel to manage money for clients on a discretionary, not advisory basis.
“We thought there was value added to our clients in offering this,” says Hanrahan. “There are very few boutiques across the country offering this.”
Citadel is also focusing its attention on SRI. “Investors require a certain level of social responsibility,” says Alpargun. “Socially responsible investments are competitive with conventional companies. People recognize the value of this.”
Research is another selling feature for advisors and investors. “Through our partnership with National Bank Correspondents Network,” says Hanrahan, “we have online access to research reports and direct phone and e-mail access to the analysts.
@page_break@“Additionally,” he notes, “we have partnered with Credit Suisse First Boston for full analysis of the U.S. market. Each investment advisor has a full personal online subscription to Value Line for quick and timely synopsis of thousands of companies in North America.”
Citadel also invests in finding things out for itself. “We cover a broad selection of junior and intermediate companies,” Hanrahan says. “Our analysts provide an in-depth and unique perspective, allowing clients to be introduced to these opportunities earlier than they appear on the radar of most national firms.”
Hanrahan and his team are now looking ahead. “We expect further growth; we expect more sub-branches,” he says. “We expect the second year to be even better.” IE
Independent Citadel keeps its eye on the prize
Atlantic-based securities dealer hopes to build a national firm
- By: donalee Moulton
- March 3, 2008 March 3, 2008
- 15:49