Everyone knows these are tough economic times for Bermuda. Some businesses have shut down, others have cut jobs and many more are struggling. So you might not think it’s the best time to start up a business. But two former HSBC investment managers who set up their own firm during the recession would tell you otherwise.Dominic Powell and Ryan Kromer launched Granaway Wealth Management Ltd. two and a half years ago — just as the recession was starting to hit Bermuda pretty hard. They started up in June 2010 — by September, they had $21 million in assets under management and by Christmas that year, they had $54 million. Now, two and a half years later, they’re managing $100 million worth of assets.The pair, who worked together at HSBC’s Private Bank Investment Group says through the global financial crisis of 2008-2009, they were watching the markets and saw a need for an independent, secure and bespoke portfolio management service in Bermuda.“At that particular point, Bermuda was just starting its recession but not right in it,” Mr Powell said. “Things seemed relatively under control. We saw the opportunity of offering independent investment advice to people. We saw a niche.“The key thing was providing security of the clients’ assets because we had seen a lot of financial turmoil. So, marrying that with being independent and providing good service, we thought here’s a great opportunity to grow a company,” Mr Powell said.Granaway targets high net worth clients and has a minimum in place of $1 million for a complete, discretionary and customised portfolio. Both Mr Powell and Mr Kromer are Chartered Financial Analysts with proven track records.Mr Powell has nearly 20 years of experience managing individual client portfolios and performing hedge fund analysis working for the Bank of Bermuda, First Bermuda Securities, Schroders (Bermuda, Tewksbury Capital Management and HSBC Private Bank.Mr Kromer has more than 15 years experience in portfolio modelling and reporting, trading, and portfolio management. He previously worked for Butterfield Asset Management and HSBC Private Bank.The duo says timing was everything and that the recession brought a need for a firm run by Bermudians that wouldn’t experience the high turnover rates and rigidity of the one-size-fits all models of their competitors.They say the key to starting a successful business also comes down to having that entrepreneurial spirit, finding a niche, and working really hard.“A lot has gone on in the past two and a half years, especially here in Bermuda. You’ve seen the consolidation of companies, you’ve seen recession, you’ve seen the unemployment rate go up,” Mr Powell said.“With all the consolidation, there were fewer and fewer independent managers and so, what’s remaining are the larger institutions and with a lot of them, it’s a cookie-cutter approach — one size fits all,” Mr Powell said. “They force you into their house mutual funds so there are all these unnecessary layers of fees and that becomes a hurdle for performance in the portfolio. So that’s why we decided to launch this. We said, OK, the need here, or the niche is for an independent player that doesn’t have to push in-house funds.”“It’s taken a lot of work and a lot of effort, but in this type of environment, if you’re willing to put in the work, and you have a good idea and you can satisfy the clients and establish a trusting relationship, you can succeed.”“We thought it was a prime time to strike coming out of the Great Recession of 2008-2009,” Mr Kromer said. “It was a one-in-100 years event, so for us, really you want to open up a new company when you’re potentially going into a bull market and that was our view at that time.”“A lot of people at that time, they might’ve looked at us and said, ‘that’s a very risky move,’ but we looked at it as that’s our business in terms of where the markets go and where we see it can recover, so you don’t want to launch when you’re at a peak. You want to do it when you’re coming into a recovery phase,” Mr Kromer said.“Similar to managing portfolios, if markets come up like they have now, you don’t want to start your business now, you’d say, ‘oh man, I should’ve started it six months ago!’” Mr Powell said.“It’s all about timing,” Mr Kromer added. “And it’s all about the entrepreneurial spirit. If you’re passionate about something and see a niche in the market where you can really tailor to the client and focus on customer service, then you can launch a business that can become successful.”Mr Kromer says it’s been a “baptism of fire” over the last couple of year since they launched the business, but that the performance has been “stellar”.“In terms of parlaying that into others it’s really about if you can find that niche and tailor to your clients needs with bespoke solutions. For us, we actually tailor to their requirements and mandates,” Mr Kromer added.With just 30 clients, the pair says they’re managing a fraction of the portfolios they used to mange at HSBC, allowing them to focus more on research, portfolio management and customer service.“We managed about 150 portfolios between the two of us, about $750 million in assets, at HSBC,” Mr Powell said.“That just shows the capacity that we have because now we only have 30 between the two of us,” Mr Kromer said. “It’s fantastic. We still have a great deal of capacity and could still keep it focused on the client and focused on the market, which is the way it should be.”Focusing solely on portfolio management and outsourcing the custody services enables Granaway to concentrate on performance and returns.“Over the past two years, we have outperformed our benchmarks, we have outperformed our peers, quite handsomely, and generated these returns,” Mr Powell said.“Our balanced mandate returned 11 percent, which outperformed the 10 percent return of the Dow Jones with only half the risk,” Mr Kromer said. “By effectively outsourcing the custody function and the associated administration, we are able to focus on our core competency, which is research and portfolio management. This allows us to employ a very nimble, dynamic approach, which has enabled us to add value and outperform benchmarks and peers since inception.”“For us, it’s a matter of keeping the overall number of accounts manageable so it’s a tailored service — we tailor-make every single portfolio — and it’s really high-end service,” Mr Kromer said. “With our pure focus on research and portfolio management, we’re able to be very dynamic, nimble and tactical — that’s how you add value and how you outperform benchmarks and peers.”Mr Powell and Mr Kromer say the predominant use of mutual funds by the larger institutions adds layers of unnecessary fees — something they work to minimise by building portfolios utilising individual securities.“Where we were, there was a one percent wrap fee which was supposed to cover everything, but then underlying that, there would still be small executions charged. They would have their execution costs just like we do and then they have their in-house funds, which charge management fees,” Mr Powell said.“It’s fees on top of fees,” Mr Kromer said. “When you add up those layers, you’re probably close to 1.5 percent, but we charge them 0.70 percent. You can strip out close to one percent and in this low-interest rate environment, it’s critical. Close to one percent is a big deal.”Operating out of a no-frills office in the Boyle Building on Queen Street, the duo says keeping their overhead low has enabled them to offer clients a competitive fee structure. They say for them, the focus has been on building a client base and rapport.“In terms of the clients we’re working with, they’re all high net worth clients, but we’re also now working with six trust companies on the Island — the largest players out there,” Mr Kromer said.“But again, it’s about building the relationships and building trust with the various clients and clients agents,” Mr Powell added.“Our track record from HSBC, which was very strong through the crisis, that’s not transportable when you leave,” Mr Kromer said. “It takes time just to get that traction.”“We’ve had this baptism of fire, but we figure if we can out perform in these extremely difficult markets, then as the financial world starts to normalise, we should be in good shape.”For more information about Granaway Wealth Management Ltd., e-mail Dominic Powell at dpowell@granaway.bm or Ryan Kromer at rkromer@granaway.bm.