The announcement that iA Financial Group has acquired PPI, has raised some concerns in the MGA channel about what it means for independent distribution.

This is the latest in a string of acquisitions by iA in the distribution channel, including the purchase of HollisWealth.

Great-West Life also acquired a major MGA,Financial Horizons Group, in 2017.

Terri Botosan, president of Hub Financial says, “carrier ownership of MGAs is certainly becoming a trend and a concerning one, in my opinion. I am just not sure how you can say you value independence and want to provide unbiased advice…and be owned by a carrier.” She emphasizes that this independence is “imperative” for an MGA.

Landscape changing dramatically

Botosan added that with the distribution landscape changing so dramatically, one of Hub’s roles is helping independent advisors “navigate these changes and stay focused on what is important. We will continue that and I think we have ample opportunity to do so.”

Kevin Cott, CEO of managing general agency QFS, sent a message to the company’s network of advisors after the PPI sale was announced. “Yesterday’s announcement of the sale of PPI to IA is one more example of the dramatic changes taking place to the insurance distribution model in Canada. Following in the footsteps of the GWL purchase of Financial Horizons Group, this announcement is further evidence of the changing landscape in which carriers may now view the independent advisor as their property, limiting the advisor’s ability to truly act independently in the interest of their clients,” he wrote.

Further sales seem inevitable

Cott added that it would seem inevitable that other large, national MGA’s, which are not privately owned, “will soon follow suit as their owners look to capitalize on their investment and crystallize their value. Make no mistake, these changes can, and will, have a significant impact on your business in the future,” Cott wrote to advisors. He affirmed that QFS, which is privately-owned, “has no such plans to join this group.”

Just spin

However, Paul Brown, chairman and CEO of IDC Worldsource Insurance Network, says he has no concerns about PPI’s ability to remain independent under iA’s ownership. “I don’t think PPI will become less independent. Why would you buy a company with a 40 year track record and change it? Obviously the industry will spin that they are less independent, but I don’t see it.”

In an interview with The Insurance and Investment Journal, Jim Burton, Executive Chairman and CEO of PPI, affirmed his commitment to advisor independence.

Brown says that he was not surprised by the sale given the relationship between PPI and iA. “A firm of PPI’s size could only be purchased by a large institution or private equity firm.”

Growth opportunity

He added that there certainly will be discussion about IDC WIN’s intentions following the PPI sale. “Obviously there will be speculation about a firm like ours now. We are owned by a public company that has invested in us for growth and sustainable earnings. We are not looking for a liquidity event and in fact see this as an opportunity to expand,” he says.