As the daughter of a Toronto financial advisor, Sharon Watkins had a dream to carve out her own niche in the investment industry.

But that was no small task, particularly for a woman in a male-dominated domain.

Snubbed by many firms, Watkins broke into the industry as a stockbroker in the 1980s, eventually working as a partner at the Calgary office of Gordon Private Client and co-founding McLean & Partners Wealth Management with Brent McLean in 1999.

Yet her dream never really came to fruition until last year, when she left McLean & Partners to form Sandstone Asset Management, a Calgary-based wealth management firm that now counts McLean & Partners as its main competition. Today, the licensed portfolio manager is one of only a handful of Canadian women in influential positions in the investment industry.

Larry MacDougal, Business Edge
Sandstone Asset Management president and CEO Sharon Watkins directed clients away from buying Bre-X stock.

How does the upbeat 51-year-old feel about this new lease on life as president and CEO of Sandstone Asset Management?

"I'm getting younger every day," quips Watkins. 1. At what stage in your life did you become interested in investing?

"My father (the late Jack Watkins) was in the investment world so it was kind of always all around me. I used to work summers in my father's office (at J.P. Cannon, now defunct) in Toronto and what I liked best about it is that they worked 10-3, bankers' hours. The people were very different. They had the eccentricities that are inherent in this business and almost necessary. I hate to say this, but my biggest memory was of all the jewelers coming in at Christmas time so the (firm's) clients could pick out gifts for their families. It seemed very fast-paced to me, and it was all male. There were no females doing what I do now."

2. What was the first stock you ever bought?

"It was called Jubilee Resources, on the Vancouver Stock Exchange. I was about 17 or 18 years old then. My sister and I invested in it on margin. In fact, I didn't even tell my father we did it because we were just in there to gamble, and that's not what I do at all anymore. This thing had gone up and it was going up and up, yet there was nothing behind it. It was junk. It was actually delisted. Not only did we lose everything we put in, but we had to pay our bills because we'd borrowed against it."

3. How difficult was it for you to break into such a male-oriented investment business?

"It was very difficult. Initially, in the early 1980s, I thought I wanted to work on the floor of the Toronto Stock Exchange. You can't say that women were not allowed to work there because that would have been discriminatory. But they (women) were all run off within about a month. The investment business was very blue blood, but also very male oriented. I was turned down and turned down and turned down. So finally I asked my father to help me just get in the door with a firm. My father helped me get my first job as a stockbroker with McLeod Young Weir (a now defunct Toronto firm)."

4. What kind of obstacles did you encounter in those early years as a stockbroker?

"When I moved out to Calgary to work with Merrill Lynch, I remember we all had to be in the office at 6 a.m. on budget day. The day before budget day, the manager of the office, who will go unnamed, said that when everyone came to work the next day we would all go for breakfast at the Pete (Petroleum) Club. I looked at him and said, 'I'm not allowed there.' They didn't allow women there then. He handed me his credit card and said, 'Go buy yourself breakfast.' I thought, 'Holy cow!' But I think those things only affect you if you allow it to. I never really considered whether being a female was negative or positive because there are just as many positives as negatives."

5. Why do you think there are so few women in Canada in influential positions or working as fund managers in the investment industry?

"In the larger firms, you still have a bit of the old boys' club. It really hasn't changed very much over the years. There may be two or three women in Canada who run their own firms."

6. Did you invest in the Bre-X Minerals scam or recommend that stock to clients as a broker?

"No, I did not. As a matter of fact, I told people that I thought they were villains. I actually did. I had clients coming back to me and saying, 'But everybody's saying it's so great.' I mean, I don't know why anybody wouldn't know that they were villains. I had clients upset at me over that and maybe that's what marks my career. Actually, when I feel that something's junk, I'll tell them. I thought that was junk and I avoided it completely."

7. Why did you leave the brokerage business in 1996?

"Very early on I hated the idea of working on a commission. It's counter to what we should have been doing, and does not take everyone's interests to heart. I wanted to get into more of a fee-based arrangement. At the big firms, they did not want you managing the money. They wanted you selling and they would tell you what to buy. I wanted more independence from that, so in 1996 I met Brent McLean (of the Gordon Private Client investment firm). But then that company was being bought by HSBC. We were offered positions (with HSBC) but we wanted the independence and the fee-based business. So we reincorporated under McLean & Partners in 1999. And it was great. But again I found myself in a position of building the company in ways that I didn't want. My love is portfolio management and there were certain things I wanted to do. It was a million-dollar education on how to start a firm from scratch and know every aspect of how it runs. That allowed me the freedom last year to go out and start my own firm. We were licensed last June and it's been great."

8. What was your role at McLean & Partners and why did you leave?

"I was the CFO (chief financial officer), a director, supervisor of managed accounts and the chief compliance officer, plus I also had my own group of clients. It was too tough to hold that many roles but it was a great learning experience.

You each have a different dream and you have two very strong people (she and Brent McLean). If your dream is different, then you should be able to pursue the dream you have.

"He's pursuing his dream and my dream is somewhat different. I'm not an employee. I'm not even a great corporate politicker. There are certain people who have to control what they're doing, I suppose. When you've got a strong personality and have a passion, you get out and do it. It's stressful to make that decision but, once that decision is made, it's like a cloud lifts. I mean life is lived on variable terrain, right?" 9. What's it like being in competition now with McLean & Partners?

"They're my No. 1 competitor and they're great. I mean, they do great things. But it's always nice to have something to look at and say, 'I'm going to be better than that.' I do think they (McLean & Partners) do a good job at what they do, but we can disagree and that's what makes a good market."

10. What's your outlook for the financial markets this year?

"There's a huge global rebalancing that has to take place and the simplest way to put that is that the U.S. no longer has the ability to be the buyer of the world. Someone else has to pick up that ball. It's obviously Asia, but it takes time before the world adjusts to a new order. Basically, you're looking at a hard asset world rather than a financial asset world."

11. Can you be more specific about what stocks or what sectors you favour for 2005?

"I hate to do that. I think sectors are going to be very important. Let's put it this way. I can tell you the areas that we're not in. We're not in U.S. financials. What I will say is that we are into and continue to hold the metals through a metals trust out of London (U.K.) We do want to build our positions in energy, but we're not building them willy-nilly. I think there is going to be a time mid-year that you're going to get a better opportunity in that sector. I think oil and gas is a 10-year story. Overall, we expect the (North American) markets to be flat this year. The U.S. would be my least-favoured market. Probably my favourite markets are Japan and India."

12. Do you anticipate the weakness in the U.S. dollar to continue?

"We will likely have a little bit of a rally in the U.S. dollar, but it has to decline further. It has to decline for the competitive edge and the U.S. administration also wants it to decline. I think it will fall further and, as long as it's orderly, I don't think it will have that much effect. As we see the dollar drop later in 2005, we will probably go back into the great industrial stories in the U.S. With a cheap (U.S.) dollar, you've got some excellent companies to invest in there. But, as a Canadian, it's very difficult to invest in U.S. companies at this point in case of another 10-per-cent decline in the U.S. dollar."

13. What's your outlook for the price of gold?

"For the first time in my career, we bought gold (for clients) a year and a half to two years ago. Initially, we invested in gold stocks but we sold out of gold stocks in the spring and moved our money into gold bullion certificates this fall. To us, gold is a hedge. We're looking at gold strictly as a way to hedge our bets and as a way to reduce risk in our portfolios."

14. What are the three most important things you need to know about a company before you invest in it?

"I think management is No. 1. That's extremely important. You've got to be able to trust the management. Obviously, you also want to know what the catalysts are for their business and you want a sound balance sheet with a lot of cash flow. Free cash flow is extremely important to us."

15. What do you think your strengths are as an investor?

"Instinct. I think I have good instincts and a passion for (investing). I have people who are extremely good at crunching the numbers and coming up with ideas and things like that.

The history (she was a history major in university) is very important. I know cycles. I can tell people things that happened a hundred years ago in the market. And I think I have almost a photographic mind for numbers and facts."

16. Do you spend a lot of time with technical analysis of the markets?

"I'd love to know more about it. I don't sit and read charts but I do understand sentiment, which is a technical aspect of the market. There are people here in the firm who are great at certain things and the best thing is not to think you are great at everything. I know what they're good at and I know what I'm good at. They keep me safe. I can talk about the knowledge that I've gleaned over a great many years in making decisions, but they can come up and say, 'Well, there's this aspect and there's that aspect.' That's the greatest thing about having people who are actually very smart and a lot younger than I am."

17. What's the advantage of investing in a wealth management firm such as yours, as opposed to investing with a fund management company?

"I think that one of the most important factors for success in investing is strong communication. We deal with people, not just money. We deal with people we like, because there are always going to be difficult issues. There are always going to be times when hands need to be held. We know everything about our clients. We get to know their families and we get to know their feelings on things. And that makes it a much more comfortable experience for them. When you're with a fund manager, all you're getting is something that tells you what you own. You're not getting a feeling that this has been set up for you. We can establish what it is our clients really need and want. One of the biggest things I've really learned is to deal with people you like because you can't help people you don't like."

18. How has the environment changed for investors in the years you've been in this industry?

"I think that on a broad basis we (investment professionals) used to be better educated about what we do, and not in the sales process. There's been too much selling and not enough knowledge. You are seeing more small firms and seeing people who have been in the industry a long time starting a firm. That's the kind of thing that helps. I don't think you can protect anybody against themselves."

19. What's your vision for Sandstone Asset Management?

"My vision, I suppose, is that I become redundant. Then I will know it's been successful - that we've got great people who have really come along and can run this thing with their eyes closed and have learned enough so that they can teach others. I think we want to be known as the best money management firm in the country, but we also want to be known for our sense of community. As a firm, we're annually bringing in people who are not investment people to speak to our clients. These people will be mainly Canadian and mainly humanitarians with a global perspective. On a local level, we want to put a lot back in.

For our clients, we want to give them value by making them think. I want to be known for that and I hope this firm gets known for its forethought, integrity and good money management skills."

20. Beyond business, what do you see in your life's crystal ball?

"I see myself doing this probably until they toss me out. I see grandchildren, lots of grandchildren. I see myself becoming more and more involved in global issues. The world's a very scary place and I want to make sure people don't lose perspective. My husband (Alan Kane) and I are involved in a number of things in town from a non-profit standpoint. And I'll never stop learning. You stop learning, you die.”

IN PROFILE: SHARON WATKINS

* Title: President/CEO, Sandstone Asset Management Inc.

* Born/Raised/Age: Toronto, 51.

* Education: University of Toronto (history major), licensed portfolio manager.

* Family: Husband Alan Kane, four children.

* Career: Watkins began her career as a stockbroker in the early 1980s and in recent years has been a co-founder of two wealth management firms, the Calgary office of Gordon Private Client Corp. and McLean & Partners Wealth Management, prior to founding Sandstone Asset Management in June of 2004.

* Investing Role Models: Marc Faber, Warren Buffett, Benjamin Graham.

* Moonlighting: Watkins is a board member of the Calgary Centre for Non-profit Management, a sponsor of Alberta Ballet's artistic director Jean Grand-Maître during the 2004/05 season and also involved with the Calgary Drop-In Centre.

* Passions: Gardening, gourmet cooking, skiing.


THE COMPANY: SANDSTONE ASSET MANAGEMENT

* Brass: Sharon Watkins, president/CEO; Brent Pickerl, managing partner/director; Cameron Webster, managing partner/research; Susan Scullion, chief financial officer.

* Profile: Sandstone, founded in June of 2004, is a wealth management firm serving high net-worth individuals and foundations with $1 million in investable assets. The company has seven employees.

* Main Event: Sandstone will be host to Lt.-Gen. (Ret.) Romeo Dallaire at the Rozsa Centre at the University of Calgary on Feb. 1. He will speak on Canada's humanitarian role in world affairs.

* Website: www.sandstoneam.com

* Address: 115-101 6 St. S.W., Calgary, Alta., T2P 5K7.

* Phone/Fax: (403) 218-6125, toll free 866-318-6140/(403) 263-2270.

(Gyle Konotopetz can be reached at gyle@businessedge.ca)