Credential Financial Inc. is making another move to build its securities business through the addition of brokerage services that connect credit unions with independent asset managers.
The Vancouver-based wealth management company, which provides services to to more than 225 credit unions and independent wealth businesses, said Tuesday it will open Credential Correspondent Partners to offer clients trading services.
"In the wealth management industry, the importance of scale continues to increase on an annual basis," said Doce Tomic, Credential chief executive officer.
At a time many brokerage firms are trying to reduce costs, this is the second time this year that Credential has expanded. In January the firm added 25 back-office employees to help tackle its submission, clearance settlement and record keeping services. This makes it a "self-clearing" securities firm.
The addition of the clearing capabilities allows it to do that processing for another firm.
Since the company doesn't have its own distribution, or manufacture its own products, Mr. Tomic says the move will help Credential gain new business without threatening clients with competing services. "It was a niche that we could go into and offer something very unique, but not be competitive with [portfolio management firms]," Mr. Tomic said.
The business's assets are growing: Four years ago it had $8.5-billion under administration and today it has $14.7-billion. More than $700-million of that growth has come this year. The firm aims to hit $20-billion within the next three years.
To get the Correspondent Partners business off the ground, credential hired a senior vice-president and a vice-president who had previously worked for a firm that also provided independent correspondent clearing services in Canada. Both Kevin Vanderheyden and Chris Chen are former employees of Penson Financial Services Canada Inc., which closed its business at the start of the year.
Credential has signed 10 portfolio management firms ahead of the launch date.
One of the big draws to opening this business has been the opportunity to tap into the growing market of high-net-worth clients looking for wealth management services.
Volatile markets are driving the need for advice, transparency and clarity in the wealth management business, Mr. Tomic said. He thinks more people will switch to fee-based accounts as a result. "I do see, as this continues to evolve, that there will be more discretionary portfolio managers and advisers that will compete in this space. So for us to get a foothold into this space now, and offer a strong alternative… I think that will bode well for the next 10 years."
(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)
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