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Monday, October 26, 2009 4:14 PM

CI Financial still loves distribution

Andrew Willis

CI Financial no longer employs stockbrokers, but that doesn’t mean the mutual fund company has lost interest in owning a sales force.

CI Financial, one of Canada’s largest money managers, sold 130 stockbrokers at its Blackmont Capital unit on Monday to investment bank Macquarie Group for $92-million.

However, CI Financial CIX-T continues to field one of the largest networks of financial advisors in the country, with more than 800 professionals advising clients in its Assante Wealth Management division.

“We continue to believe in the distribution business, and we remain totally committed to Assante,” said CI Financial chief executive officer William Holland, noting that Assante is the largest player in its sector. The veteran financial services executive said: “We simply could not get the scale we needed in the brokerage business.”

Assante advisors watched over $19.5-billion in client assets at the end of the company’s most recent quarter, while Blackmont’s stockbrokers had $7.1-billion of assets.

A number of investment banks with large retail operations approached CI Financial with offers for Blackmont after GMP Capital merged its private client division with Richardson Partners Financial in July. Mr. Holland said Macquarie made the most compelling offer, and the one that made the most sense for Blackmont’s stockbrokers.

CI Financial purchased Blackmont early in 2007 for $251-million as part of an acquisition that also gave the mutual fund company ownership of institutional money manager KBSH Capital Management. Mr. Holland said with hindsight, it’s clear that his firm bought into brokerage business near the top of the market, and that recruiting additional stockbrokers to Blackmont became increasingly difficult, as rivals stepped up retention programs. CI Financial looked at a number of acquistions and mergers in the investment dealer sector over the past two years, but the numbers never worked for Mr. Holland and his team.

There are still 60 capital markets employees working for CI Financial at Blackmont Capital, and Mr. Holland said over time, this team will take a “significant equity interest in the company.”

“The capital market business is profitable, so it’s not an issue for CI, but the right model for the boutique brokerage business is to have the employees as partners in the firm,” said Mr. Holland.

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Streetwise Contributors

Andrew Willis

Andrew Willis joined The Globe and Mail in September of 1995. His career has included stints at a number of publications, including The Financial Post, The Financial Times of Canada, Dow Jones/Wall Street Journal, and MacLean's magazine. He also did freelance writing for Investment Executive magazine. He appears on television for BNN TV and CBC Newsworld.

Andrew has co-written a book, The Bre-X Fraud, with business journalist Douglas Goold.

Read Streetwise Tuesday through Friday in the pages of Report on Business.

 
Boyd Erman

Boyd Erman

Boyd Erman is a long-time business journalist who has worked at Dow Jones, Bloomberg, and the National Post before joining the Globe and Mail. Over the years, his areas of coverage have included economics, monetary policy, debt markets and corporate finance.

In addition, he is a regular commentator and guest host on Business News Network.

 

Steve Ladurantaye

Steve Ladurantaye wrote about technology companies in Ottawa before reporting for the Peterborough Examiner and Kingston Whig-Standard, where he won a National Newspaper Award for explanatory journalism. After joining the Globe and Mail in 2007, his work has regularly appeared in Report On Business and Globe Investor Magazine.

 
Globe and Mail reporter Tara Perkins

Tara Perkins

Tara Perkins has been a business reporter since 2004, following a brief stint as overnight editor of globeandmail.com. She has been writing for the Globe's business section since the spring of 2007, covering the banking sector during the course of the financial crisis. Prior to that, she worked for the Toronto Star. Tara has a Bachelor of Journalism from Ryerson University and a Bachelor of Commerce from the University of Guelph.

 
 

Jacquie McNish

Jacquie McNish has been a business writer with The Globe and Mail since 1988. Prior to that she was a reporter with The Wall Street Journal.

During her time at The Globe and Mail, she has served as the paper's New York correspondent and won three National Newspaper Awards. She is the author of The Big Score: Robert Friedland and The Voisey's Bay Hustle and Wrong Way: The Fall of Conrad Black, for which she and co-author Sinclair Stewart won the National Business Book Award. She is a co-host of Market Morning on the Business News Network.