Entrepreneurs may have a knack for turning an idea into gold, but they're not always comfortable managing that money or their business.
That is where Peter Wallace and the members of Newport Partners come in.


After helping to grow Midland Walwyn's market capitalization six-fold in the mid-1990s, Mr. Wallace moved across Bay Street to give Canada Trust's wealth-management arm a boost.

Those years spent as an investment banker made him realize Canada was populated with thousands of entrepreneurs who ran their own companies, but were not big enough to show up on the big players' radar screens.

It's a void that prompted Mr. Wallace and other investment heavyweights, including Aubrey Baillie, former chief operating officer at BMO Nesbitt Burns, and Doug Brown of Connor Clark & Co., to form Newport.

The firm, which opened its door in 2001, is looking to carve out a niche by managing the financial affairs of Canada's entrepreneurs. Many of Newport's clients are people who either own successful private firms or have taken their companies public and are now sitting on a considerable pile of money. Most of Newport's entrepreneur clients run businesses that post sales between $10-million and $250-million a year. The average Canadian entrepreneur earns $250,000 annually with a total net worth of about $6.5-million, according to figures from The Taddingstone Consulting Group.

"A lot of them come to us and say they have a feeling that their lives are complex and they need simplification," says Mr. Brown, now one of Newport's managing partners. "Often they're so focused on running the company, that's the focal point of their attention."

In fact, a client dumping folders filled with financial details on Newport's boardroom table is just another day at the office, according to Mr. Wallace. "Often they'll say, 'This is my life every month -- I don't want to do this any more. Help me.' "

Or as one Newport client put it, making the big bucks doesn't mean one's life is worry free. "Having money doesn't simplify your life, it complicates it,' the client said. "Unfortunately, you don't realize this until you have a lot of money."

It's a big market in which Newport appears to have few direct competitors. Business owners and entrepreneurs account for about one-half of all Canadian millionaires, while about 40,000 Canadian firms generate sales over $5-million annually. But with so much time invested in their day-to-day business, more than 60% lack a contingency plan for their business and succession is often an open question, Mr. Wallace says.

"The entrepreneur is the fastest growing class of the wealthy," says Keith Sjogren, a financial services consultant at Taddingstone. "But the bulk of their worth is usually tied up in illiquid stock, so the trick is finding ways to release that."

For Newport, the task is more than just managing a client's money or preparing their taxes, though. The firm has assembled a 15-person team to advise clients on a host of issues, ranging from legal advice and philanthropy to estate planning and their firm's balance sheet.

Newport's money-management side follows a conservative investment philosophy aimed at preserving capital, the partners say.
By tapping several money managers -- including Vito Maida, former head of Canadian equities at Trimark Investments -- the firm says clients have access to a variety of investing styles.

But one of Newport's most valuable offerings may be its corporate-finance advice, which can be tricky for smaller firms to garner.

"The big boys just don't play in that market unless they see an [initial public offering] coming up," Mr. Sjogren says. "They've got bigger fish to fry. "But these [small] companies are the heart and soul of the Canadian economy, which is why in our view guys like Newport will do well."

As retail brokerages face a sharp drop in trading and big players look at ways to expand their business, competition for entrepreneurs' business may heat up, says Harry Ort, national industry leader for financial services at KPMG. However, Mr. Ort conceded that Newport's range of offerings is rare.
The firm's small size means that volume is not its mantra. In fact, preparing a complete plan for a client could take as long as six or nine months, depending on the situation. Right now, the firm charges an average fee of 1.1% annually on about $400-million worth of client assets and with about 100 families in its client database, handling perhaps double that number would see the firm reach its limit.

"We don't believe that the sky is the limit," Mr. Wallace says. "That is not the kind of thought we want to instill in the group."