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After selling off its capital markets division late last year, Richardson GMP Ltd. is aligning with investment bank Cormark Securities Inc. in a move that could help keep advisers from jumping ship as the money manager works on its final stage of a corporate restructure.

The two companies announced a “strategic alliance” that provides Richardson GMP’s advisers and their high-net-worth clients preferential access to Cormark’s research and new investment issues. Cormark’s clients will benefit from having access to Richardson GMP’s network of 165 investment advisers.

"My vision has always been to build an independent coalition of firms where you can all collaborate as partners, and not have to have an allegiance to a single company,” Andrew Marsh, chief executive officer of Richardson GMP, said in an interview. “Now, as an independent distribution network of advisers, we can find multiple partners to serve our clients’ needs.”

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The partnership between Cormark and Richardson GMP comes several months after GMP Capital (Richardson’s parent company) sold its investment banking arm to U.S. brokerage house Stifel Financial Corp.

After that deal, GMP Capital announced plans to purchase the minority stake in Richardson GMP Ltd. that it doesn’t already own, giving it full ownership of the operation and turning itself solely into a wealth management company.

The vote to complete that transaction had been scheduled for April 16, but was halted because of the COVID-19 pandemic. It now will not take place until after Ontario’s state of emergency has been lifted.

The retention of the Richardson advisers plays a key role in closing that deal – specifically in the share price advisers and other shareholders will receive in the new public company, which will be branded Richardson Wealth.

The deal states that shares will be subject to “downward adjustment” if adviser departures over the first year exceed more than 85 per cent of the firm’s assets under management – which is currently about $30-billion.

Now, in addition to the $36-million that Mr. Marsh has set aside for retention bonuses, Cormark offers advisers access to “an attractive pipeline of products, specifically in mid-cap private equities,” says Ian Russell, chief executive officer of the Investment Industry Association of Canada.

“This type of agreement between two major independents in the financial services industry will help them both continue to compete against Canada’s big banks,” Mr. Russell said in an interview. “The Richardson group is a very experienced group of advisers who can open the doors for Cormark to gain more access to high-net-worth clients and family offices,” which include multigenerational family accounts.

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Given the increasing amount of wealth held by family offices and among high-net-worth clients, having direct access to these capital pools is more important than ever for investment bankers, said Alfred Avanessy, managing director of investment banking at Cormark.

“Most of our competitors are the banks, and they have their own retail that’s captive to them," said Mr. Avanessy, who was also the head of investment banking for GMP before departing in 2016.

"If you look at many of the other wealth management channels, including decent-sized ones like Echelon, they have their own capital markets divisions. So it is a very rare situation that you have Canada’s largest non-bank affiliated independent high-net-worth channel that doesn’t have its own capital markets division. "

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