Investment giant CI Financial Corp. is continuing its growth into the United States with the purchase of a majority stake in California-based One Capital, an investment-advisory company with a division serving professional athletes and entertainers.
One Capital, which manages US$1.6-billion in client assets, is the second U.S. registered investment adviser (RIA) that CI has acquired in recent weeks. Founded by Donald MacDonald – a Canadian who was also a founding member of Loring Ward Investment Counsel (Canada), which later become Assante Wealth Management – One Capital specializes in managing money for high-net-worth individuals and families.
The deal falls in line with CI’s plan, recently announced by new chief executive Kurt MacAlpine, to build a presence in the RIA market.
In late November, CI agreed to purchase a majority stake in Surevest Wealth Management, a Phoenix-based investment advisory business that manages US$335.6-million in assets.
Terms of the two deals were not disclosed, but both acquisitions are expected to close in the first quarter of 2020.
Mr. MacAlpine, who joined the company in September, announced CI’s future plans during a quarterly conference call in September to “globalize the company” – which currently has about $130-billion in assets under management. CI’s expansion into the United States is part of the company’s attempt to modernize its asset-management business and put a greater focus on growing its wealth-management businesses.
“I firmly believe that the role of the financial adviser is more important today than ever before, given the changes in pension systems, combined with extended longevity and increasing complexity throughout retirement,” Mr. MacAlpine said in a statement on Wednesday.
“CI Financial, through its existing businesses in Canada and its new businesses in the U.S., is well-positioned to capitalize on this opportunity.”
In the U.S., an RIA company typically follows an independent business model – meaning it is not part of a larger brokerage – and advisers have a legal fiduciary obligation to act in the best interests of clients. The U.S. RIA market has more than 17,000 companies but has seen a wave of consolidation in recent years.
Patrick Bowen, president of One Capital, said partnering with CI will provide the company with “financial strength" and "capabilities in operations and technology.”
CI Financial, which in recent years has seen its stock-market value fall from $10-billion in 2014 to about $4.7-billion today, is now looking to pivot from investments into a greater focus on wealth management.
In Canada, CI runs two large wealth-management businesses through Assante Wealth Management (Canada) Ltd. and CI Private Counsel LP. Combined, the two adviser channels have $48-billion in assets under advisement as of Oct. 31. During the quarterly analyst call, Mr. MacAlpine explained his interest in the RIA market as he saw a number of similarities between how CI runs the Canadian platforms and what they see in the U.S. RIA business. Both have a heavy focus on client services, financial planning and investment management.
Now, with majority stakes in two RIA offices, Mr. MacAlpine is looking to develop cross-border capabilities for both U.S. and Canadian clients across both platforms. While the two deals are smaller acquisitions, research analysts say moving into the RIA market could help boost future profits through shared services, such as payroll and human-resources departments.
Clare O’Hara