His due diligence strategy is an ethical checklist that ALIB calls a 7+1. The “seven” represents asking questions covering factors like investment structure, a company’s track record, security and transparency, and business plan. The “plus one” is more visceral. “After all the due diligence we do, and after all the due diligence our clients do, it also comes down to whether we like who these people are, their values. Do we trust that they are going to do what they say they are going to do, and if anything goes off track, are they going to follow through with communication?” explains Jim Sicotte, one of ALIB’s 32 consultants.
ALIB trades in trust, with every opportunity ultimately vetted by Zurfluh. If ALIB can convince investors of its integrity, there is a substantial market waiting. Investors are looking for something with higher returns, even if it means sacrificing liquidity. “The downturn made people question traditional investments,” says Pete Wardell, another ALIB consultant. “People are disillusioned with normal investment plans.”
So far ALIB has been able to convince people unimpressed with the public market to be a bit bolder, despite the fact that private investments can come with a higher level of risk. “We have to tell people that they risk losing every dollar,” says Edna Keep, who is one of ALIB’s pioneer representatives in Saskatchewan.
This is why Zurfluh puts such a premium on education. The average investor has been taught the basics of mutual funds for years. But the exempt market, while growing in popularity, is less understood. To counter that, ALIB holds weekend educational seminars about the products it offers, which, truth be told, double as a sales pitch from companies seeking investors. Still, the effort represents a commitment to transparency.
Recently, the government has also stepped in. The Alberta Securities Commission is wading into the private market, adding regulations to the notoriously lax system, which Zurfluh agrees is a good thing. The new regulations, romantically titled NI 31-103, require exempt market dealers to register with the ASC. Registration will, it’s hoped, “protect investors from unfair, improper or fraudulent practices and enhance capital market integrity and efficiency,” according to Tamera Van Brunt, director of communications and investor education at the ASC. Exempt market dealers will have to meet requirements based on proficiency, solvency and integrity.
The new regulations open up a significant opportunity for Alberta Land & Investment Brokers. Since it meets the requirements, it stands to gain from some of its competition getting driven from the marketplace, says Zurfluh. In addition, the firm not only has the system in place to easily comply with new regulations; it has the business savvy to make that its clear message. Planned or not, it’s what almost all of their consultants list as their main reason for joining the company.
Parker also says that a company’s ability to match products with investors is essential. “These are some of the concepts that have always been in the mutual fund market,” he concedes.
Fortunately for ALIB, they seem to have that cornered as well. Alberta Land & Investment Brokers draws in consultants from across the financial spectrum, from financial planners, to former real estate agents. Working solely on commission, they are able to bring a wide variety of experiences to the table, which not only helps when they educate their clients, but also when they pass along potential investments to Zurfluh and Mack.
In the application package that all companies in the Fast Growth 50 complete, Alberta Land & Investment Brokers identified a potential obstacle to continued growth as “Dealing with perceived negatives in the exempt market industry.” And for some casual investors, the risk of the private market may be too much, or maybe because of the American housing crisis anything starting with “asset-backed” seems sketchy.
But talking to Zurfluh and Mack, those potential obstacles seem easily dealt with, as if they’ve seen them from a long way off, and already have a solid plan in place to deal with them. They’ll be happy to tell you about it.
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