Desjardins is acquiring between 25% and 40% of Qtrade, in a deal expected to close sometime in Q2 2013.
Denis Berthiaume, a senior vice president at Desjardins Group, says, “We’ll keep the operations separate, though down the road we’ll be able to share best practices. But the key objective is generating growth.”
Read: Desjardins invests in Qtrade Financial Group
He adds that the deal, which he says strengthens the co-operative movement, is good news for Canadians who look to credit unions as an alternative to the big banks.
Qtrade is known for its online brokerage service. But the other part of its business, which founder and CEO Scott Gibner says is equally important, involves providing services to the more than 180 financial institutions it’s partnered with, most of them credit unions.
“Qtrade is essentially the wealth management division of many credit unions. We provide the dealer infrastructure, the training, support, and everything else associated with wealth management.”
Big banks have this capability in-house, as does Desjardins.
“[Desjardins] is not like our other credit union partnerships, where we’re the wealth management backbone. So there’s no cross-pollination in this area,” Gibner notes.
While Qtrade has long served the credit union space, Gibner says people were concerned about the fact that Qtrade wasn’t owned by the credit union system.
He also notes the line between the DIY and advice channels is starting to blur. BMO recently received IIROC’s approval for a new advice-centered platform for online investors.
Read: BMO InvestorLine launches online advice centre
“We’re watching to see how it unfolds. There are some regulatory issues, and there are also issues with advisors. How deep do advisors want the online brokerage channel to go in providing advice? It competes with them.
“We don’t have any plans to announce along the lines of the BMO model for our online brokerage platform in the near future, but we’re certainly watching what BMO is doing,” Gibner adds.
He questions whether there’s enough demand for this kind of service.
“We’re not entirely certain this segment warrants the additional complexity of going to the regulator, because people who want that kind of advice already have an advisor. The fact that you haven’t seen all the major players in the industry follow BMO’s lead suggests they’re all wondering how much of a market there is.”