Leaders in Private Market Investing
Market-driven investments that focus on privately-raised capital from small and medium-sized enterprises have the potential to create significant wealth opportunities through investments across a number of industries including real estate, private equity, insurance, cannabis, mortgages and industrial projects. The difficulty for people wanting to invest in these opportunities is determining the optimal direction to take – and that’s where Pinnacle Wealth Brokers Inc. (“Pinnacle”) of Calgary comes in. With roots dating back to 2006 the company continues to be led by its founder Darvin Zurfluh who also serves as Chairman and CEO .
A fundamental mandate of Pinnacle is to research the very best private investment opportunities for its registered dealing representatives, who in turn pass on those recommendations to their clients and determine which investments are suitable for their situation. The portfolio includes a mix of income, tax savings, and/or growth equity offerings in order to compliment an investor’s investment portfolio with public market securities through a holistic approach.
The Canadian Business Journal (“CBJ”) recently spoke with Mr. Zurfluh about the continued success Pinnacle enjoys in the financial services market in Canada.
Just after CBJ’s last discussion with Mr. Zurfluh in August 2015, Pinnacle was in the process of launching its own proprietary fund designed to service small-business owners for such things as bridge financing. Pinnacle built up the fund before successfully selling to a current issuer on its product shelf with the fund having had an impeccable performance. Mr. Zurfluh says Pinnacle learned a great deal about what it’s like to be an issuer, in addition to being an exempt market dealer, and the challenges and opportunities that involves. Mr. Zurfluh and his Executive team believe this first-hand knowledge and experience helps Pinnacle understand and best support the issuers whose securities it distributes through its field force of dealing representatives located throughout Canada.
“Our shelf will hold about 20 different issuers at any given time,” states Zurfluh. “We decided to sell the fund because we wanted to re-focus on our distribution network which is the lifeblood of capital raising at Pinnacle.”
The broad reach of Pinnacle now has representatives strategically positioned across nine provinces. The company is known as one of Canada’s preeminent Exempt Market Dealers.
“We’re still an Investment Fund Manager and Portfolio Manager. We originally obtained these registration under Canadian securities law for our proprietary fund which we have since sold, but now we are looking at offering businesses our Portfolio Management Services for third-party funds” explains Mr. Zurfluh.
Pinnacle helps issuers who are looking to structure an investment opportunity but do not have access to capital and are too small to work with the large Canadian investment banks. Pinnacle can help work with a company’s management team to structure and bring an offering to market, then raise the capital, and provide ongoing post-capital raising services to help business owners deal with their investors and related services, so as business owners, they can focus on what they do best. “We need the private companies we engage with to focus on their business to and be successful in order for us to succeed. It is truly a synergistic relationship. Our clients invest in a portfolio of privates and, if that portfolio doesn’t outperform their public portfolio, they may not to reinvest, so it is important that we get the right private-public mix for our investors.” He adds.
“I believe Pinnacle is a preeminent leader for Canada’s private markets in structuring deals and bringing them to market. The marketplace knows that the Pinnacle’s Corporate Finance Team are serious and savvy deal makers and, if a deal is approved by Pinnacle for distribution, it has undergone an in-depth due diligence process that aligns investor interests with the capital raising needs of our issuer partners. That’s the Pinnacle way,” says Zurfluh.
Due to the complexities of the financial services industry, including regulatory requirements and legal obligations, Zurfluh has built an experienced leadership team that is able to cover all of the bases including Brian Koscak, Internal Legal Counsel; Dan Brodeur, Director of Operations; Deborah Workman, Chief Compliance Officer; and Tom Wach, Head of Corporate Finance.
“It’s a very complex, regulatory world, which is why we brought on Brian Koscak who is a past Chair and currently an Executive Member and Director of the Private Capital Markets Association of Canada. Brian is also on the Alberta Securities Commission’s Exempt Market Dealer Advisory Committee and was recently appointed as a member of the Expert Advisory Committee of the Ontario Government’s Capital Markets Modernization Task Force”” says Zurfluh.
Initiatives
Zurfluh says that Pinnacle’s investment philosophy is ‘globally diversified publics and expertly selected privates’ with a number of different referral relationships with public portfolio managers.
“We select the public portfolio managers that are experts in what they do, and our focus is in our niche, which is selecting top tier private investment opportunities, and bringing them to market,” he says.
The Canadian Securities Administrators (“CSA”) (an umbrella group of all Canadian provincial and territorial securities regulators) who regulate all advisors and dealers and Canada, have recently implemented what are called the ‘Client Focused Reforms’ that seek to strike the right balance between investor protection and fair and efficient capital markets. “Pinnacle looks forward to implementing these new requirements which better protect investors while allowing us to work with our issuer partners in capital raising so we can continue to provide investors with a different risk-reward option than offered in the public markets,” says Zurfluh.
Zurfluh states that Pinnacle motto is ‘to continually seek unique opportunities to increase wealth’ for its investors. As Zurfluh further remarks, “Pinnacle has never deviated from our focus and I have no reason to believe we ever will, other than to add innovative enhancements to make our capital raising platform more efficient for issuers and our clients.”
One of Pinnacle’s 2020 initiatives will be focusing on corporate finance services to small and medium-sized private businesses and offering advisory services on how a company can best obtain the financing it requires in order to expand upon its business opportunities. These initiatives will include sourcing institutional debt and equity, and mergers & acquisitions.
“Sometimes it’s a combination of debt and equity. Pinnacle can help a company access debt at a lower cost, but there are certain things they need to do first, in order for a financial institution to do so, and we might need to raise equity in order to get a company the financing they need” Zurfluh replies.
Another 2020 Pinnacle initiative, states Zurfluh, is that “Pinnacle will be ramping up its recruitment of financial advisors who want to offer private market investment opportunities to their investors. With a recruiting campaign to start in March 2020, Pinnacle seeks to attract sophisticated advisors that have big books of business and who want to start diversifying their clients into privates market investment opportunities,” notes Zurfluh.
“We will be onboarding IIROC and Mutual Fund books of business. In order to onboard their clients, Pinnacle will require contracts with custodians, dedicated Portfolio Manager(s) and onboarding administration personnel,” says Zurfluh.
Technology
“The exempt market industry is still relatively new in the financial services world and there have been limited options for technology to efficiently support our business, although there have been multiple players that wanted to be the one to take the lead,” says Zurfluh.
The process of finding the optimal solution was somewhat of an arduous exercise for Pinnacle. Following a contract period with one established and reputable company, it was determined that their particular system didn’t fully and properly support the exempt market very well and accordingly, Pinnacle’s corporate decision was made to form a new alliance with Exempt Edge, an enterprise owned by Olympia Trust Company.
Exempt Edge is a back-end administration software ecosystem that allows issuers, exempt market dealers, investors, trust companies and dealing representatives to connect securely with each other, and their clients, to facilitate the seamless transfer of data in order to reduce the amount of manual data entry, paperwork and human error.
“We understated Exempt Edge holds more private-market accounts than any other trust company,” says Zurfluh. “They’re putting together an ecosystem of issuers, dealers and of course direct client accounts. Making the change to Exempt Edge will allow Pinnacle to provide more accurate reporting because our back-office system will tie right into the ‘EdgeLink’, which is an important software connection between issuers and dealers. The other back-end software systems in the marketplace for dealers, do not have that luxury,” remarks Zurfluh.
Pinnacle 20/20 Foundation – Giving Back
At the time of our discussion, Zurfluh was preparing to leave for a two-day due diligence trip to Dallas and following that he was heading to Honduras. The trip to Central America is part of an ongoing global humanitarian effort by the Pinnacle 2020 Foundation (the “Foundation”), a registered charity formed by Zurfluh and Pinnacle Branch Manager Darwin Gerber in 2013 which invests in the fundamental necessities of life needed to help elevate people who are most in need and living in some of the poorest regions of the world. Zurfluh is very passionate about giving back and help those less fortunate. Zurfluh states that “The Foundation is very important to us. Annually, Pinnacle donates 2.5% of all profits to the Foundation, which is a registered charity in Canada.”
“We just finished our January 2020 Annual Pinnacle Conference recently and we raised a substantial sum of money. Dan Brodeur, Pinnacle’s Director and Operations, and I shaved our beards on stage to try and get the donations coming in. We were able to raise $30,000 from our issuer partners, dealing representatives and other supporters, which speaks volumes about the kind of people that are working with Pinnacle,” Zurfluh proudly states.
The Foundation sponsors lunch programs in rural Honduran schools, in regions of the country that the government has totally abandoned. Lunch programs began at the schools along a road, which have been in existence for less than 20 years. Now Zurfluh, and the Foundation, are looking to provide an even greater level of support where it’s most urgently required.
“We’re expanding our offerings to another three schools that have limited access by road, and where the only way into one school, for example, located in Mal Paso, is by horseback,” says Zurfluh. “We’re providing uniforms, school supplies and helping with repairs such as leaky roofs. We provide lunches three days a week. Fridays are half days and we also rely on volunteers to deliver the food and prepare the meals. We have added another 75 students for the new school year, which began on February 1, 2020.”
The Foundation has been involved in multiple other initiatives in Honduras including, building a school as well as agricultural and rainforest preservation projects. Without the Foundation’s generous involvement, a significant percentage of the young children in these communities would not have the opportunity to attend school, with the likelihood they would be tasked with having to help farm the family’s plot of land.
Zurfluh says the Foundation is also providing much-needed learning tools as well. “We’re taking down more laptops with English tutorials to help the children learn,” he says. “The first school we built was an English school. It gives the children a big leg up if they know a second language.”
Looking to the future – 2020 and Beyond
Zurfluh says the primary focus at Pinnacle is straightforward; continuing to provide more corporate finance services to private businesses to help them grow, while providing excellent investment opportunities for our clients.
“One goal, three years from now, would be to have successfully arranged $500 million in new financing for small and medium-sized businesses which by extension will create more jobs in Canada and provide investors with excellent investment opportunities,” concludes Zurfluh.
“The faster we can arrange financing for those issuers, the faster we can put more issuers on our product shelf for distribution and sale. Ideally, I’d like to get to the point where we help 60 different businesses every year,” says Zurfluh
Zurfluh says he encourages companies interested in raising capital to contact him personally, or any member of Pinnacle’s Executive Team, to start a conversation to see if and how Pinnacle can help. It all starts with an e-mail or phone call.
For more information about Pinnacle and how it can help you raise capital or its philanthropy, through the Pinnacle 2020 Foundation, readers are encouraged to access the links below.
- pinnaclewealth.ca
- pinnacle2020foundation.com
