iA Private Wealth president and CEO Adam Elliott says his firm has benefited from the attention that’s come with the Richardson Wealth acquisition.Cole Burston/The Globe and Mail
iA Financial Corp. Inc.’s acquisition of Richardson Wealth Ltd. is broadening the firm’s appeal to potential recruits at both independent and bank-owned rivals, says Adam Elliott, president and CEO of iA Private Wealth Inc. (IAPW).
“The strategic reason that we were very interested in acquiring Richardson Wealth is that it’s complementary to what we do,” Mr. Elliott says. “We are essentially going to be agnostic and present the two options to advisors who are thinking of joining us.”
In July, Quebec City-based iA Financial announced it was buying RF Capital, the parent firm of independent brokerage Richardson Wealth. The deal closed on Oct. 31 for $693-million.
iA Financial has indicated it intends to run its three wealth distribution arms – IAPW (with $73-billion in assets under administration), Richardson Wealth ($42-billion in AUA) and mutual fund dealer Investia Financial Services Inc. ($75-billion in AUA) – as separate and distinct entities. Combined, the three firms have $190-billion in AUA.
Both IAPW and Richardson Wealth target the high-net-worth client market.
Under IAPW’s independent platform, advisors are responsible for managing their own business and have access to a higher 80-20 advisor-dealer compensation split. In contrast, Richardson Wealth’s corporate-partnership model provides advisors with greater levels of support, but at a 60-40 split.
Having Richardson Wealth in the iA Financial fold means advisors interested in joining iA Financial but not interested in taking on the responsibilities of running their own business have an alternative.
Typically, IAPW has attracted advisors from other independent firms, rather than from bank-owned brokerages, many of whom are accustomed to having office, staffing and technology needs taken care of by the bank, Mr. Elliott says.
“Some [advisors] are at a stage [of their career] where they simply don’t want to go and have to resolve their own IT issues,” he notes.
The IAPW model is also well-suited for advisors working in suburban centres or smaller cities.
“It’s not that intimidating to own a building or sign a lease in smaller Canadian towns, but I can tell you it is intimidating in downtown Toronto if you’re coming from a firm where you’ve worked in Scotia Plaza or [Brookfield] Place, or a place like that,” Mr. Elliott says.
As Richardson Wealth has branches in every large Canadian city, “we can recruit advisors from firms who are used to being in those kinds of buildings,” he says.
So far, IAPW has benefited from the post-acquisition attention.
This fall, IAPW recruited advisor teams from firms such as IG Wealth Management Inc., CI Assante Wealth Management, and Manulife Wealth, representing more than $1.8-billion in assets under administration, a significant portion of the more than $4-billion of AUA the firm has attracted through acquisition this year.
As of mid-December, IAPW had $73-billion in AUA and 475 advisor teams, up from $62-billion and about 450 teams at the beginning of the year.
“Two or three times a week, on LinkedIn, somebody from another firm connects with me and says, ‘You know, I’m thinking about making a change and I want to hear your story,’” says Mr. Elliott, who is based in Toronto. “The fact that the Richardson Wealth acquisition makes the combined entity the largest independent in Canada has definitely gotten [advisors’] attention.”
Although iA Financial plans to keep IAPW and Richardson Wealth separate, the firm also says it expects to realize significant revenue and cost synergies from aligning the two firms’ back-office and technology.
The process for aligning the two firms’ product shelves has already begun, Mr. Elliott says. Products that are already approved on both firms’ shelves will remain approved, while products that are currently approved for only one firm will either be approved or dropped on both.
However, the alignment of technology tools may have to wait until deals with third-party providers run off.
“We’re not under a great rush to break a contract that’s in place if it’s working well,” he says. “But gradually, as contracts come up, we’ll be looking to leverage the combined scale to negotiate.”
Mr. Elliott says iA Financial has already begun the process of identifying a new name for Richardson Wealth. As part of the acquisition, iA Financial received the right to use the firm’s current name for a period of 30 months only.
“We’re working with the Richardson Wealth advisors on what that name should be and presenting options to them,” Mr. Elliott says. “It’ll be a decision made by their management team in consultation with their advisors.”
Before then, Richardson Wealth is also looking for a new chief executive officer as current president and CEO Dave Kelly plans to leave the firm in June.