Canada’s CI Financial plans to dominate US wealth management

Eleven RIA deals since February are just the start of a cross-border strategy for the Toronto-based firm

The deals continue to mount for Toronto-based CI Financial, which announced its 11th acquisition of a U.S. financial advisory firm since entering the market in February and its second this week.

CI, which oversees more than $60 billion, including more than $14 billion by U.S. registered investment advisers, announced its second deal in three days with the planned acquisition of Doyle Wealth Management, a $1.1 billion RIA based in St. Petersburg, Florida.

If there was any doubt about CI’s intentions after 10-months of aggressive buying, the company also filed to list its common stock on the New York Stock Exchange.

“We’re excited to add such a high-quality adviser team in a strategically important location,” said CI Chief Executive Kurt MacAlpine.

The significance of establishing a base in the Tampa, Florida, area, which MacAlpine refers to as a “hotbed for Canadian snowbirds,” is all part of the larger plan that involves a new cross-border referral program.

“Doyle Wealth Management has established a strong reputation, built great capabilities in financial planning and tax planning, and achieved exceptional growth since its founding,” he said.

The Doyle Wealth Management deal came just two days after CI’s announcement of a majority ownership position in Houston-based Stavis & Cohen Financial, which manages $570 million.

This is what the RIA space has come to expect from CI under MacAlpine’s leadership since he took charge 14 months ago. “Big picture, they’ve been a very aggressive buyer and if they’re not the No. 1 consolidator this year, they’re No. 1,” said Mark Bruno, managing director at Echelon Partners.

“It’s fair to say CI is one of the most active RIA buyers right now,” Bruno said.

But while much of the attention has been on the steady pace of sizable U.S. RIA acquisitions from a company that most Americans hadn’t even heard of a year ago, Bruno said the real gem behind the strategy is the cross-border referral program that could alter the landscape of North American wealth management.

“They’re looking at it as a way to expand the Canadian and the U.S. wealth management markets,” he said. “You now have the ability for an adviser in Toronto to communicate with an adviser in Florida. It’s an interesting play and I don’t think there’s anyone else doing this.”

In a country where most of the wealth management business is handled through banks and insurance companies, it makes sense for CI to head south of the border for growth through acquisitions.

But as MacAlpine explains, CI has 330,000 wealth management clients, many of whom migrate to the U.S. for at least part of the year once they retire. And the wealthiest among those clients typically establish financial relationships with U.S.-based advisers.

The cross-border referral business, combined with an acquisition strategy that doesn’t have an end in sight suddenly makes CI looks like a force to reckoned with on both sides of the border.

“Listing on the NYSE is both a technical and psychological benefit for CI,” said David DeVoe, managing director of DeVoe & Co.

“Familiarity breeds trust, so the move to the NYSE will also remove degrees of psychological friction for some sellers that were not excited about an international buyer,” DeVoe said. “RIA sellers have a rich set of options, as they contemplate an external sale. CI is another example of a sophisticated buyer with a strong value proposition.”

CI has been a publicly traded company listed on the Toronto Stock Exchange since 1995, but the dual listing opens a new avenue to finance RIA acquisitions. Until now, all of CI’s acquisitions have been cash deals, but MacAlpine said the pending NYSE listing will likely mean three of the announced deals that have not yet closed will become cash and stock combinations.

“The speed at which we’ve been able to execute has been remarkable, and we’re going to continue to grow at this pace as long as the market dynamics remain relatively consistent with where they are today,” he said. “So long as high-quality teams keep coming to market we’re going to keep buying.”

In the wake of two deal announcements in less than a week, MacAlpine reluctantly looked ahead to where CI might be in a few years.

“If I look at our momentum relative to the quality of our pipeline and our brand recognition, I think we have the momentum to be the leading wealth management integrator in the U.S.,” he said.