As assets at altamira Investment Services Inc. continue to shrink, many of its former staff who now run their own businesses are riding a tidal wave of success. In a little more than five years, the businesses they run have cumulatively acquired more than three times more assets under management than their former employer, which has seen its assets fall to about $4 billion from more than $17 billion in the mid-1990s.

“Altamira was once a breeding ground for self-motivated employees who were willing to roll up their sleeves to get the job done,” says Francis D’Andrade, founder and CEO of Markham, Ont.-based RGI Financial Services Inc., a rapidly expanding planning firm that focuses on outcome-based investing.

D’Andrade, who spent 15 years at Altamira, led its client services team to winning numerous awards, including the Investor Education Award at the Canadian Mutual Fund Awards Gala and several Dalbar mutual fund service awards. “We were all believers. We were responsible for our actions and we were working for ourselves even though we were part of a larger organization,” he says. “Altamira had one of the best groups of people in the business who came together with a common spirit.”

But many of the individuals responsible for Altamira’s early glory left the company. The exodus followed ownership struggles that began in the mid-1990s, culminating in the company being acquired by National Bank of Canada in 2002.

“The people who left Altamira to set up their own businesses have benefited from the company’s entrepreneurial culture, which prepared them to rise to the challenges of going out on their own,” says Philip Armstrong, Altamira’s founding partner and former president and CEO, who is currently president and CEO of Jovian Capital Corp.,
which he founded in 2001. Jovian is based in Winnipeg and has executive offices in Toronto.

“These individuals are out-of-the-box thinkers who were given the opportunity to challenge the norm,” he says. “They excelled in being innovative. This is the kind of attitude that is necessary to be successful in your own business.”

Armstrong, himself, has these abilities.
Jovian has emerged as one of the fastest-growing financial services franchises in Canada, with more than $8 billion in AUM. A public company listed on the TSX Venture Exchange, Jovian is a holding company with interest in three broad areas: traditional brokerage; wholesaling;
and financial services.

He says Jovian’s strategy is based on a combination of organic growth and acquisitions. To date, it has acquired or invested in more than a dozen companies, including Winnipeg-based Rice Capital Management Plus Inc., Toronto-based T.E.
Financial Inc. and Leon Frazer & Associates Inc.

“We are neither integrators nor consolidators, but are focused on investing in companies that want to maintain their current brands while leveraging the economies of scale that are presented by becoming an affiliate of Jovian,” says Armstrong. “Jovian offers an ownership structure that allows business owners to work in partnership with Jovian and its community of companies.

“I like the Power [Financial Corp.] model that allows a diversified range of brands to co-exist independently.”

Also with the Jovian franchise are Otto Felber and Frances Connelly. Felber, former president and director of Altamira Management Inc., set up Felcom Management Corp. and Felcom Data Services Inc. after leaving Altamira in 1997.
The companies were sold to Jovian in 2003 and Felber remains a member of the asset-management team. Connelly, who was manager of the Altamira Short-Term Bond Fund and co-manager of the Altamira Dividend Fund prior to heading up Altamira’s Private Wealth Division, is currently a portfolio manager with Felcom.

Armstrong attributes his success to being pragmatic. He sees himself as a catalyst who is able to attract successful people with vision. “I look for A-type personalities who can challenge my thinking and execution, not yes-men.” He says there is definitely a place for mid-size companies such as Jovian to excel in an environment where the focus tends to be on larger companies. And, at the rate Jovian is growing, it may well become a large player.

One A-type personality who worked closely with Armstrong at Altamira is Frank Mersch.
Now a partner at Toronto-based Front Street Capital, Mersch earned a national profile as one of the best Canadian equity managers while managing Altamira Equity Fund. He also managed several other equity mandates, including New Altamira Value Fund. He teamed up with another former Altamira manager, Norm Lamarche, in 1999 and has subsequently seen Front Street’s assets grow to more than $1.1 billion. Until 1995, Lamarche managed Altamira’s AltaFund Investment Corp., Altamira Resource Fund and the equity component of Altamira Balanced Fund.

@page_break@Front Street focuses on three areas: the resource sector, hedging strategies and the small capitalization sector.

Enjoying the challenge

“Investment management is the only business I’m good at. I’m comfortable with capital and started out running my own nest-egg after I left Altamira,” says Mersch.
“It’s not about wealth; it’s about what I enjoy doing — the challenge to deliver the best possible returns.”

Mersch says Front Street’s operation differs from what he encountered at Altamira. He has access to more tools to manage volatility; the company’s products are distributed through advisors and are not no-load; and its processes are administratively better. His strengths are complemented by his four partners. “Norm Lamarche is one of the best managers I know but he never really got the credit,” he says.

At the end of the day, Mersch focuses on meeting client expectations. “I always do what I do for the client,” he says. “We continue to challenge the boundaries of new product innovation.”

Marret Asset Management Inc. is another successful Toronto-based company founded by a former Altamira manager.
Barry Allen, president and CEO of Marret, was the lead manager of Altamira High Yield Bond Fund, Altamira Global Bond Fund and Altamira Global Short-Term Income Fund, and co-managed Altamira’s Balanced and Growth and Income funds.

Marret, which has almost $900 million in AUM, began operations in late 2001, focusing on specialty credit-oriented fixed-income management in three areas:
investment-grade corporate bonds; high-yield corporate and emerging-market sovereign debt; and mezzanine finance
products.

Allen says he recognized that the corporate debt area was underpopulated. “I identified a niche in the marketplace where there were few competitors. I saw what was possible,” he says. “There is no greater joy than running your own business.”

Allen says he can better manage the growth of Marret than Altamira did with its own growth. “We plan to grow assets with a more modest profile to avoid volatility,” he says.
“We will focus on asset management and not on distribution.” Like Armstrong and Mersch, he believes in hiring the best people and offering equity ownership. Marret is 100% owned by its employees.

Dorothea Mell is a Marrat portfolio manager who was formerly lead manager of Altamira High Yield Bond Fund and co-manager of Altamira Growth and Income Fund after Allen left Altamira.

Robert Marcus, two-time winner of the fixed-income manager of the year award at the Canadian Mutual Fund Awards Gala and former head of Altamira’s Fixed Income team and lead manager of Altamira Bond Fund, founded Toronto-based Majorica Asset Management a year ago, and is its president and chief investment officer. One of the best fixed-income managers in Canada, who was called “fixed income manager of the decade” in 2000 by financial writer Gordon Pape, Marcus says setting up his own business was a natural progression from what he did at Altamira.

“Altamira was not ready for what we are doing. We plan to change the landscape of fixed-income investing in Canada by creating a variety of innovative products,” he says. “By using the skills of the best people, we’ll be able to create cutting-edge products.” Majorica’s goal is to consistently outperform the applicable fixed-income benchmarks over all time periods, while emphasizing liquidity and capital preservation.

Majorica currently offers pooled funds and manages institutional fixed-income mandates. It has a number of innovative products that are scheduled to be launched later this year. “I want to create what I want in my life,” says Marcus.

He has teamed up with Edward Jong, former Altamira vice president, fixed income, who managed more than $2.5 billion in money-market and bond assets. Jong has won several institutional awards for managing money market funds.

Many other key Altamira staff have either set up their own businesses or work for competitors.

Gordon Cheesbrough, former president and CEO, is a managing partner at Blair Franklin Capital Partners Inc., an independent investment bank that offers business and investment solutions to corporate and high net-worth clients. Peter Zaltz, former portfolio manager, is also at Blair Franklin.

Chris Hodgson, another Altamira CEO, is executive vice president of wealth management at Bank of Nova Scotia. Peter Rizakos, former general counsel and managing director of Altamira, founded Charterhouse Financial Group. Phil Evans, former chief operating officer, is now president and CEO of Lincluden Management Ltd.

Ian Ainsworth, two-time winner of the Fund Manager of the Year award, is senior vice president, investments, at Mackenzie Financial Corp. Former portfolio managers Mark Grammer and Wendy Chua are also at Mackenzie. Chuck Bastyr, former head of international equities, is at BPI Global Asset Management LLP. And Vincent Fernandez, former portfolio manager, international equities, is at RBC Asset Management.

“Altamira needed to change, but had no idea what it wanted to do,” says Armstrong. That was why so many of its employees left for greener pastures. IE