Alliance with PPI Financial will help support Financial Management’s national expansion

By Donna Glasgow | March 26 2010 06:20PM

PPI Financial Group (PPI) and the Financial Management Group of Companies (FM) announced in February that they have formed an alliance aimed at both supporting FM's expansion plans and enriching PPI's access to insurance suppliers.

As part of this agreement, PPI has bought a 50% equity interest in FM. The overall intent of the agreement is to continue running the two organizations separately, says Kevin Wark, Senior Vice President, Business Development at PPI.

Jim Virtue, FM's President and CEO says the deal will benefit his MGA by providing it with the resources to further its national expansion. FM which was founded in Calgary 30 years ago, embarked on a national expansion seven years ago. The Financial Management Group of Companies operates under different branding across the country: Financial Management in B.C. and Alberta; Burns Financial in Manitoba; Simon Jackson Insurance in Ontario; and AMC Brokerage in Atlantic Canada.

Now one of FM's top priorities is to widen its geographic footprint in Ontario and expand into the Quebec market. "We're looking at acquiring or building a business in Quebec," says Mr. Virtue. "This is very high on our priority list...If you want to be a national organization I think that you need to operate in Quebec."

As part of its national expansion, FM also expects to move toward a common branding for its group. As mentioned above, its companies operate under various names. This mixed  branding is not giving the organization recognition as a national distributor, Mr. Virtue says.

Another advantage for FM of making this alliance with PPI is that its advisor network will gain access to PPI Financial's online sales tools, such as marketing concepts and sales illustrations, enabling FM's advisors to make better sales presentations, says Mr. Virtue.

Mr. Wark says the company invests a great deal in its online resources. It has 20 technology staff members working on various services.

For FM, the alliance with PPI is aimed at taking the organization "to the next level," says Mr. Virtue. "It can accelerate our development by 10 years overnight," he adds.

PPI's advisor network will also benefit by the deal. "Financial Management brings access to pretty much every insurance company in Canada...One of the benefits here is that PPI can leverage off FM's relationships when needed," explains Mr. Wark, adding that PPI has five insurance company relationships whereas FM has 14 contracts with all the major insurers. If a PPI client wants a specific product offered by an insurer outside its five relationships, the advisor can now go through FM, adds Mr. Wark.

Presently, when taken together, FM and PPI represent 10% to 12% of distribution in the Canadian individual market based on insurance premium written, says Mr. Virtue.

FM has 100 full time employees and works with 1500 active brokers. PPI has 200 employees and does business with 100 to 150 advisors working in the high net worth and business markets.

The two organizations are a complementary fit with their respective strengths, says Mr. Wark. FM is in the broad-based insurance market whereas PPI is much more specialized in the high end.