CI Financial Corp., Canada’s biggest independent fund manager, is hiring an outsider as its new chief executive and promising a “re-positioning” of the firm amid rapid industry change.
Kurt MacAlpine, a Canadian with experience in management consulting and exchange-traded funds (ETFs), will take over CI on Sept. 1. He succeeds current CEO Peter Anderson, who announced his retirement in April.
“This is a generational hand-off,” CI chair and former CEO Bill Holland said in an interview. “My era is now gone.”
Mr. Holland and his close-knit circle of friends – including Steve MacPhail, who succeeded Mr. Holland as CEO from 2010 to 2016, and Mr. Anderson – are widely credited with CI’s once-explosive growth. But the asset management business has come under intense pressure and CI has suffered, with its shares dropping 45 per cent since peaking in May, 2014.
The Big Six banks have been elbowing their way deeper into the wealth management business for years, but some observers have said CI is the independent firm with the best odds of taking them on, with $130-billion in assets under management. Lately, however, CI has fallen into net redemptions, which means investors are pulling more money from its funds each quarter than they are putting in. Over the past four fiscal quarters, CI has averaged net redemptions of $2.6-billion.
The company is also navigating a fast-changing industry. Low-cost ETFs have developed a robust following, and robo-advisers have made some clients question the value of professional financial advisers. Facing this new competition, as well as pressure from regulators, some investment managers have been cutting fees to try to prevent investors from moving their money.
Amid all this change, the fund sales and marketing strength that defined Mr. Holland’s era has become less effective. The big Canadian banks have large branch networks that serve as massive distribution channels for their own in-house funds.
“We were getting a very strong sense from shareholders that we should consider an outside candidate,” he said of the CEO search.
By settling on an outsider, CI is replicating a strategy used by rival Canadian fund companies in recent years. Both AGF Management Ltd. and IGM Financial Inc., which runs Investors Group and Mackenzie Financial, have made external hires in order to shake up the status quo at their companies.
At the moment, very little is known about Mr. MacAlpine’s vision, and he was not available for an interview Tuesday. Mr. Holland said: “There’s going to be a full re-positioning of this company,” adding that the new CEO would elaborate in the near future. “This industry will look completely and utterly different."
One major question is how much leeway Mr. MacAlpine will have to implement his strategy. Even though Mr. Holland stepped down as CEO in 2010, he has played a pivotal role in determining the company’s strategy since.
Going forward, Mr. Holland says his involvement will be different. “I will be a board member,” he said, adding that he’ll do little else. “If asked, I’ll give an opinion.”
CI has already shown signs it will change direction. Over the past two years, the company has bulked up its digital operations by acquiring a majority stake in robo-adviser Wealthbar Financial Services Inc. and also by purchasing BBS Securities Inc., which specializes in digital back-office functions to help streamline operations.
In June, the company also appointed Darie Urbanky as its new president and chief operating officer, and he has a background in technology and operations.
Mr. MacAlpine joins CI from New York-based Wisdom Tree Investments Inc., which creates and markets ETFs. He served as executive vice-president and head of global distribution. Before that, he ran McKinsey & Co.’s North American asset management practice.
At Wisdom Tree, Mr. MacAlpine largely oversaw the company’s international expansion since 2015, which included launching in Canada. But like CI, Wisdom Tree has struggled in the past few years, with its stock dropping 78 per cent since peaking in 2015.
Although he is an outsider to CI, the news did not catch analysts by surprise. “Similar to other Canadian asset manager leadership changes in recent years, we thought CI would likely look for a new CEO with significant experience in the asset management industry outside of Canada and Mr. MacAlpine’s credentials fit this criteria," RBC Dominion Securities analyst Geoffrey Kwan wrote in a research note Tuesday.
Retiring CEO Mr. Anderson will remain with CI “in the short term” to help with the transition to a new leader, the company said in a statement.
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