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8 | INVESTMENT EXECUTIVE
NEWS January 2021
An independent alternative for
doctors
Winner of Top Under 40 guided physicians’ portfolios safely through the pandemic
NEWSMAKER
BY MELISSA SHIN
joseph bakish began his
career as a financial advisor in 2005 as a fresh graduate of Montreal’s McGill University, sporting braces, a $200 suit and scuffed shoes.
“I still have the suit and shoes, but lost the braces,” joked Bakish, who is now portfolio manager and director of wealth manage- ment with Bakish Wealth (a unit of Richardson Wealth Ltd.) in Pointe-Claire, Que.
Bakish, 38, received the 2020 Top Under 40 Award from the Investment Industry Association of Canada in December after being nomin- ated for the accolade in each of the three preceding years. (Investment Executive sponsors the Top Under 40 award.)
Bakish’s first advisor job was at Investors Group Inc., where his older brother, Nick — who was nominated for the Top Under 40 award in 2015 and 2016 — was a branch manager. The brothers teamed up in 2010 and moved their practice to Richardson Wealth in 2015. Bakish acquired his elder brother’s book in 2020, and Nick became Bakish Wealth’s relationship manager.
Nick said his younger brother is “better suited” to be the prac- tice’s leader and portfolio man- ager. “I’m very good at coming up with ideas, but he’s the one who has the patience to implement them,” Nick said, adding that “nothing’s better than when your student surpasses you.”
Joseph Bakish’s book boasts $200 million in assets under management (AUM) across 490 households, as well as a “large insurance component.” He said his average household size belies his clients’ wealth: “A lot of monthly savings are going toward insurance cash values, which aren’t reflected in the average AUM.”
Most of his clients are 40 to 60 years old, and many are research- oriented physicians, medical researchers and university pro- fessors. His clients also include high-net-worth business owners and high-potential young pro- fessionals. For prospects with established careers, Bakish’s minimum investment is $1 million.
The practice’s medical focus was born out of necessity. Bakish and his brother, whose parents and grandfather also attended McGill, “had no family money, so we cold-called university profes- sors” to build up their practices, Bakish said. “Because McGill has a medical school, that’s what let us into the medical community.”
To make further inroads, Bakish Wealth established its From Resident to Retiree pro- gram for medical residents and dentistry students five years ago.
“We sign up clients who have negative net worth and no assets, but we’ll get them started on a simple monthly plan,” Bakish said. That plan involves monthly deposits into “a low-cost, risk- appropriate [index] portfolio that manages their short-term object- ives.” The firm waives the par- ticipants’ transaction fees.
Bakish works with these cli- ents to map out their goals for the next five years and to edu- cate them on investing princi- ples. The program’s retention rate is about 95%.
“Within two years once [residents and dentists] start practising, we have data showing we’re able to get them to six-[or] seven-figure portfolios — and that’s before they get to their peak saving years,” Bakish said. This is possible because of cli- ents’ high salaries and good tax planning, such as incorporating.
ADVICE DURING A PANDEMIC
The Covid-19 pandemic made 2020 a challenging year for Bakish’s clients, particularly the physicians. For them, he took special care to focus on basics.
“The last thing you want to do is to bother people when they’re stressed. That’s kind of an art when dealing with doctors any- way,” Bakish said.
Conducting meetings vir- tually instead of at hospitals allowed doctors to fit him into their schedules, he said. “It was me reaching out to say, ‘I’ve got this under control. While you guys handle the health crisis, I’m handling the wealth crisis.’ [I explained that] the steps we put in place before were designed to deal with a large, exogenous shock, like a pandemic.”
Clients were receptive. “They all take the mantra of ‘Think long-term and ignore the dips,’” Bakish said, and he didn’t get many panicked calls.
In fact, Bakish retained all his clients in 2020 — and added households with above-average AUM. That growth came from referrals and his past efforts with prospects, he said, explain- ing that “the correction in March [2020] made people focus on their wealth.”
Doctors have always been an attractive market for finan- cial advisors. In recent years, bank-owned brokerages have redoubled their efforts to
Joseph Bakish, portfolio manager with Bakish Wealth, takes on medical residents with negative net worth. Once those clients begin practising, their portfolios can reach seven figures within two years.
“Residents are pitched from Day 1. Until they’re ready to make the leap to investing, you’re essentially not heard.”
recruit physician clients, seem- ingly spurred on by Bank of Nova Scotia’s 2018 purchase of Toronto-based MD Financial Management Inc.
Still, Bakish said, there’s room for advisors to break into the physician community — as long as those advisors put in the time.
“There’s a lot of potential for independents, and even bank teams, to [develop] a niche and a reputation,” Bakish said, not- ing that even 100 physician cli- ents can make a robust book. “That said, to get in is extremely hard. Residents are pitched from Day 1. They’re almost immune to it; they’re numb to all the key words. Until they’re ready to make the leap [to investing], you’re essentially not heard.”
Bakish attributed his suc- cess to persistence and patience, noting that strategic partner- ships such as his residents pro- gram take time. “You need to get to know the people and depart- ments so they’re willing to give you a shot to present to their groups,” he said. “That’s the real key to making a sustainable brand in any niche — but in the medical community, for sure.”
FOCUS ON ALTERNATIVES
A quarter of Bakish’s business comes from managing what he calls “unique opportunities” on a deal-by-deal basis for accredited investors and ultra-high-net- worth clients — alternative investments (a.k.a. alts) such as private equity, real estate, ven- ture capital and private debt.
While he recognizes the value of liquid alts, “a true alternative
[has] illiquidity, and [therefore a] illiquidity premium.”
One alternative structure Bakish uses is feeder funds, which, he said, have become more accessible thanks to finan- cial innovation. Feeder funds often are limited partnerships with defined lockup periods; these funds “feed” investment into a so-called “master” fund.
Feeder funds allow inves- tors to access alternative invest- ments, such as real estate, directly. “Imagine going from buying a public REIT to being a direct owner of a building in a niche segment,” Bakish said.
Using feeder funds allows Bakish’s clients to meet the min- imums required by the master fund. He also uses Canadian- dollar feeder funds to access certain U.S. investments, a strat- egy that helps to mitigate cross- border tax reporting obligations.
Bakish praised companies that have dramatically lowered the minimums for investing in venture capital through the use of limited partnership funds, add- ing that he’s particularly inter- ested in Israeli venture capital.
Bakish makes sure clients’ alternative allocations are diversified. “You need a couple of [portfolio] managers to diversify the idiosyncratic manager risk,” he said, noting that discretion- ary managed accounts facilitate this diversification. “A simple non-discretionary account would be prohibitive because of all the subscription agreements and documents you’d have to sign.”
Bakish also brings alts to the medical community. He said
the financial education provided by his residents program allows those clients to make quick deci- sions about alts once they reach the appropriate asset threshold.
These clients begin early and learn about investments “that sometimes take 20 years to understand, and they have the confidence to go into [alts], with a base portfolio that’s already well-diversified and built up,” Bakish said.
Sometimes the investment minimum for an alt means it constitutes a disproportionately large part of a doctor’s portfolio. Bakish will allow that overweight if the client’s cash flow dictates that their portfolio will return to model allocations within a year, he said, noting that he includes a doctor’s “human capital” — their earning potential — as part of their balance sheet. A client who invests large sums regularly, as Bakish’s are trained to do, will “dilute that overweight to go back to the proper balance.”
Since the portfolio’s core is a low-cost, diversified index ETF, unique opportunities are “real satellites,” he added.
Bakish Wealth truly is a family business. Connie Gallant, Bakish’s wife, manages business development; his brother-in- law, Gord Kennedy, joined the practice in 2020 as an associate investment advisor.
Bakish and Gallant have three young children — includ- ing twins. Bakish recently gave up his volunteer work in finance and youth sports to focus on his family. However, philanthropy remains close to his heart: his two favourite causes are the Jewish National Foundation’s Climate Solutions Prize and the McGill University Health Centre’s Dream Big campaign, which raises money for research into solving antibiotic resistance and curing infectious diseases. IE
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