Sterling Mutuals scoops up competitor Armstrong & Quaile

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Consolidation among independent wealth managers continues to plague the industry as mutual fund dealer Sterling Mutuals Inc. scooped up competitor Armstrong & Quaile Associates Inc.

Sterling Mutuals, a Windsor, Ont.-based mutual fund dealer, will add more than $1.3-billion in assets under administration (AUA) and approximately 150 independent advisers to its existing platform. The firm will now house just over 300 mutual fund advisers with $3-billion AUA.

"When you are looking to grow, you can either do it organically or by acquisition, and organically can take a really long time in this industry as not many advisers are looking to move," said Nelson Cheng, chief executive officer of Sterling. "The industry is changing and it's harder for advisers to move around to different firms these days."

Armstrong & Quaile was founded in 1991. Over the past couple of years, with rising compliance costs, the firm was looking for a potential buyer and Mr. Cheng jumped at the opportunity. No purchase details of the acquisition were released.

"We were looking to continue our growth plans and this was a great way for us to double in size with quality advisers," Mr. Cheng said.

Mr. Cheng, who started Sterling Mutuals with two advisers in 1996, has managed to survive in an industry that has seen increased regulatory and compliance costs. This is the sixth – and largest – acquisition made by Mr. Cheng, who plans to transition all 35 of the Armstrong & Quaile offices under Sterling's ownership.

Sterling operates in all 10 provinces and is currently looking at expanding into Nunavut.

Ken Armstrong, president of Armstrong & Quaile, will stay on as a financial adviser, while Heather Phillips, CEO of Armstrong & Quaile, will join the Sterling management team as vice-president, business development.

Last year, Armstrong & Quaile was called out by the Ombudsman for Banking Services and Investments when the firm refused OBSI's recommendation to compensate a retired couple in excess of $34,000.

Mr. Cheng said the adviser who was part of the OBSI case is no longer with the firm.

Other small to mid-sized dealers have also felt the squeeze in today's environment. In February, Investment Planning Counsel Inc., a large independent wealth-management firm owned by IGM Financial Inc. (a member of the Power Financial group), acquired yourCFO, a smaller Burlington, Ont.-based securities firm with $750-million in assets under management. IPC also picked up mutual fund dealers Independent Planning Group Inc. and GIC Financial Services Inc.