There’s a big change in the Quebec advisor market, with PEAK Financial Group purchasing the investment and insurance distribution business of Promutuel Capital Financial Services Firm Inc.
PEAK, a growing independent mutual fund and insurance dealer will further expand its size by 30%, acquiring $1.5 billion in assets from Promutuel’s mutual fund and life and health insurance businesses.
The deal further consolidates PEAK’s market share, as the dealership will now oversee more than $6 billion in assets for more than 135,000 clients.
“Our M&A guys tell us this is the biggest single transaction in the mutual fund dealer’s space this year. These are private transactions — so we don’t know if it is — but it does send a message that independent dealers are not only able to survive but are able to do well right now,” says PEAK CEO Robert Frances.
Frances says his firm will take a slightly different tack with the integration of Promutuel’s advisors. He intends to keep the newly acquired firm completely separate from PEAK. Usually it’s standard procedure to integrate advisors in the same line of businesses.
“The advisors at Promutuel are on a different back office system and they are happy with it so there’s no reason to change that system,” Frances says. “When you do a transition like this, the advisors lose a month’s business because they have to change all the systems over. So running it separately prevents that loss for them.”
Overall it may be slightly costlier to run both businesses separately, but the move also hands an olive branch to independent advisor channel. Frances wants advisors to know their firms are serious about advisor independence.
“Advisors we talked to about this are happy, because they see this as a victory for the independent advisor. Nobody wanted to see yet another dealer fall into the hands of a bank or insurance company that is not developing independent advice,” he says. “Advisors like stability. It costs it a little bit more to run it this way, but over the long term we think this enhances our credibility over the long term for further acquisitions.”
In all, Promutuel will ship over roughly 300 employees to PEAK, although Frances suspects a good portion of those are advisory assistants.
The volume of assets and advisors should create some additional leverage to offer insurance products at a lower price point for the entire PEAK/Promutuel entity.
“On the mutual fund side the file doesn’t make a big difference. We’re not going get any different treatment based on our size,” he says. “On the insurance side we’ll have more volume and so carriers will no doubt be pleased that more volume is concentrated with us and that should give us some leverage with the companies.”
(12/08/09)