New wealth management firm sets sights on Canada’s big banks

December 28, 2017 Globe and Mail

By: Clare O’Hara

Credential Financial Inc., Qtrade Canada Inc. and NEI Investments have joined forces to launch a new independent wealth management firm in Canada that will be able to compete more aggressively with some of Canada’s largest financial firms, including the Big Five banks.

The new firm – Aviso Wealth – will be led by Bill Packham, current CEO of Qtrade, and will have head offices in Toronto and Vancouver and, upon regulatory approval of the merger, will have more than 500,000 clients across the country with approximately $55-billion in combined client assets under administration and management.

“Each of the three combining companies is successful on its own, but the combined organization will be much stronger, with greater potential for growth, profitability and innovation than the existing companies could achieve on their own,” Mr. Packham said in a statement. “In today’s competitive financial landscape, building a coalition between credit unions and successful wealth partners has become more important than ever.”

Aviso, the Portuguese and Spanish term for “advice,” will be jointly owned by Desjardins Group and a limited partnership comprised of five provincial credit union centrals and CUMIS Group Ltd. Desjardins and the limited partnership will each hold a 50 per cent stake.

CUMIS is owned by Central 1 Credit Union and Co-operators Life Insurance Ltd., while the three merging businesses are currently owned by one or a combination of the Aviso Wealth equity holders. Credential is owned jointly by the credit union centrals and CUMIS, Qtrade is owned by Desjardins and NEI is owned jointly by Desjardins and the credit union centrals.

“Today’s transaction is fully in line with our commitment to strengthening our relationship with Canada’s credit union network and in line with our plans to continue our growth outside of Quebec,” said Guy Cormier, CEO of Desjardins, in an interview with The Globe and Mail.

Mr. Cormier, who became CEO in April, 2016, is doing exactly what he said he wanted to do in terms of the Desjardins Group’s growth strategy. Last spring, he told Bloomberg News that he was looking to acquire insurers, wealth managers and payments firms as a way to expand outside of the Quebec market. At the same time, he also mentioned his interest in pursuing partnerships with other credit unions and co-ops.

“By merging these three companies, it is a signal that we want to continue to be proactive in the wealth management market across all of Canada, as well as create a major Canadian wealth management provider that will, in all aspects, offer credit union members and other clients a strong alternative to the banks and other wealth management companies,” Mr. Cormier said.

“With $55-billion in assets, we feel that we are already quite a player in Canada as a strong wealth management firm that will be able to offer customers a full range of products and services.”

While Credential, Qtrade and NEI are growing and profitable, the merger will create a vertically integrated wealth management organization that will be financially stronger, Mr. Cormier said.

“It will be better positioned to respond to a changing market and the increasing competition in all wealth management segments,” he adds.

The credit union centrals represent approximately 300 credit unions across Canada, and includes the Atlantic Central, Central 1 Credit Union, the Credit Union Central of Manitoba, the Credit Union Central of Saskatchewan and the Credit Union Central of Alberta. The three merging businesses currently have a total of 600 employees and together will be able to provide investors multiple services such as investment management, an online brokerage, mutual funds, asset management and correspondent services.

The deal is expected to close in the first quarter of 2018.

Read the full story here: https://www.theglobeandmail.com/globe-investor/three-credit-union-owned-firms-merge-to-form-aviso-wealth/article37307445/