In the fall of 2020, Co-operators Financial Investment Services Inc. opened its doors with zero assets under administration. Today, nearly four years later, that figure has jumped to $1.3-billion and the cooperative’s mutual fund dealer has begun buying books of business from retiring advisors.
The recent acquisition of Roger Ghent Financial Services Inc. is the second in two years for the company. The deal will add just under $36-million to the company’s assets under administration, and Lucilla Nardi, vice president of financial services, sales support with the Co-operators Group, and chief distribution officer of the relatively new mutual fund dealer says it is just the beginning of their efforts to acquire more. “We do have a strategy to acquire books of business,” she told the Insurance Portal in a recent interview. “We’re hoping to do a few more this year.”
A measured approach
Nardi describes a measured approach to the acquisitions, however, saying it takes time to onboard clients properly. In Ghent’s case, Co-operators began working with the advisor 18 months before the deal was finalized in May 2024. Following the completion of the deal, Ghent will work for another 12 to 18 months under contract with the company to transition his clients. His assistant has also joined the firm. “You want to make sure clients have a good experience,” Nardi says. “We want to make sure that we’re handling them appropriately.”
The product model, meanwhile, is something of a departure for the cooperative in that, unlike the company’s insurance strategy where products sold are proprietary, agents in the wealth management company are able to sell products from a much broader shelf of about 1,200 products from 10 of the country’s top manufacturers.
“We could’ve opened up the mutual fund dealer with just proprietary products,” she says, but adds that companies need to look at what is happening in regulation and legislation – advisors need to know their products and their clients and clients need to have the ability to choose from different options. She says roughly 98 per cent of the assets the firm manages are invested with one of the 10 companies Co-operators Financial Investment Services is contracted with. “We definitely look at the fit (when acquiring books of business),” Nardi adds. “I’ve run into very few advisors that are invested outside of those 10 companies. They cover most of the market and give clients a lot of choice without exposing the dealer to a lot of risk.”
How the cooperative does business
When advisors build a business with the Co-operators or sell their books of business to the mutual fund dealer, the book of business belongs to the company. Advisors that the clients are assigned to are generally franchisees, independently contracted and allowed to hire their own staff to sell the company’s proprietary general insurance and life insurance. The mutual funds available from the company come from the comparatively open product shelf.
Co-operators’ franchisees, in turn, receive a retirement payout when they leave. “The book is owned by the company,” Nardi says. “They can’t turn around and sell it on the open market. It doesn’t work that way with us.”
Those interested in selling their books of business to the company, meanwhile, have two options at their disposal: to sell and stay – a strategy where advisors sell their book but stay on with the company for a number of years – or to sell, contract with the company for a transition period, and then retire, usually within two years. “Sell and stay is interesting because we are getting advisors that aren’t ready for retirement but maybe want to monetize their book sooner and have a place (for their clients) when they do decide to retire,” Nardi says.
Training and growth
To keep agents and to attract new agents to the business, Nardi adds that the company invests in education and mentoring. Where others work on commission, she says base salaries with some opportunity to earn commissions are typical. “Quite a few advisors have brought their own kids into the agencies out of university,” she says. The company itself is also bringing in graduates who want to be part of the industry in a way that isn’t entirely commission-based.
As for growth, Nardi says when the firm began working with Ghent in 2022 to complete the most recent acquisition, it had $300-million in assets under management. It has since added another $1-billion to that figure. The now mid-sized dealer hopes to reach $4-billion within three to four years. “We’ve almost doubled the assets every year that we’ve been open, as our advisors become proficient and clients start to know that we’re doing mutual funds, as well.”
To get there, when the dealer launched, it partnered with the Investment Funds Institute of Canada (IFIC) to run licensing bootcamps in an effort to cross train the Co-operators’ 750 existing life and general insurance agents – three-day events in which facilitators reviewed all of the required licensing material and lesson plans before administering the final exam to the would-be dealing representatives. Ongoing, she says the firm also offers internal training that ranges from effectively filling out client applications to practice management strategies for building the mutual fund business into advisors’ existing agency businesses.
Aiming for a well-rounded offering
The firm’s reasons for offering mutual funds include the ability to offer holistic services – including home and auto, alongside life insurance – to clients seeking financial services support. She says the mutual fund dealer’s acquisition strategy is part of introducing new clients to the Co-operators’ broader suite of products.
Interestingly, the company is also taking a page out of the playbook in which the different lines of business support one another. “Co-operators is very much for that middle class and mass affluent Canadian,” Nardi says. “That market is really geared towards mutual funds.” She says the company is able to serve much smaller clients who might otherwise be sent to call centres, because of the company’s other lines of revenue, including home and auto insurance.
She adds that the mutual fund dealer was created because the company was missing an opportunity to serve almost 90 per cent of its existing clients with a wealth product. “That’s why we decided to bring in mutual funds. We got the entire agency force registered and licensed. Every single agency across Canada (now) has the ability to sell mutual funds.”
