Diversico Finances Humaines has made its first acquisition outside Québec. Its largest transaction thus far. The firm also bought two business blocks in Québec. CEO Daniel Guillemette confirms.

Diversico’s new block of business is situated in Sudbury, Ontario. It belonged to MGA Horizons financial Group. The Québec-based acquisitions are Marcolin & Associates, and the remaining shares of Groupe financier Sphinx, Guillemette says.

Necessary foundations

In fact, the opportunity to buy the Horizons block of business in Sudbury was sparked by the stock market meltdown of 2008, Guillemette told the Insurance Portal. This crisis prompted him to launch his business process manager iGeny, which he fine-tuned until 2012. He launched the digitization service ScanSqad two years later, followed by the IT standardization service TechnoSquad in 2015.

These systems laid the foundations for Diversico’s expansion through acquisitions, without geographical constraints, Guillemette explains. “Working from home with no need for physical travel has long been part of our plans. We want to recruit the best, wherever they may be. Acquisitions outside Québec are thus a logical next step in our plan,” the Diversico CEO adds.

Without all this groundwork, Guillemette says he could not have acquired the Sudbury firm in early July, on Canada Day. The block of business was part of the Continuum Financial Centres network, which Horizons had developed under John Hamilton and its financial partner Granite Global Solutions to acquire large business blocks.

Horizons vantage point

Nick Pszeniczny, Financial Horizons Group CEO, shared Guillemette’s views on the deal. “This transaction with Diversico underlines our will to support independent financial security advisors. Succession planning is a particularly crucial line of business in this sense. We are playing a major role by helping our advisors with their plan. This deal is one more step in this direction.”

The Horizons CEO also summed up the situation for his clients and advisors in northern Ontario. “We are working in tandem with Diversico to ensure that they continue to receive the support they need. Our Continuum Financial Centres in Kingston and Kitchener are still very important for us. We will continue to build on our solid foundations to launch new initiatives to support our advisors,” he adds.

Canadian and local Image

Outside Québec, Diversico will operate under the Diversico Canada brand. “Sudbury was the best possible place to kick it all off, as opposed to Quebec,” Guillemette says.

He adds that he wants to capitalize on the rich history of the block of business acquired in Sudbury to fuel his expansion. The sales volume was amassed by Gerry E. Doyon. It was acquired by Continuum in 2015.

Guillemette heaped praise on Doyon and his firm Doyon Financial services. In fact, he has asked Doyon to take on a more active role in the Sudbury operations..

“Gerry is an exceptional person. He has done great things in the community. We will reinstate the name Doyon Financial Services as a tribute to his past,” Guillemette explains.

Largest transaction

Guillemette says he is mainly buying the annual recurring revenue of Horizons’ business block in Sudbury. He stopped short of divulging the transaction amount or the multiple used.

However, he told the Insurance Portal that this was the first acquisition that Diversico concluded that involved recurring revenue of over $1 million, although a few deals had come close.

Another distinctive feature of this block of business: about 75% of its revenue comes from individual insurance, and the rest from investments; group business is minimal.

Other acquisitions outside Québec will follow, the CEO continues. Discussions are advancing well with firms in both Saskatchewan and Ontario. “It will all start from Sudbury. We want to expand the team to 20 representatives to also cover the territories of Timmins and Barrie,” Guillemette points out.

Window of opportunity

Why is Diversico determined to expand across the country? Mainly because a window of opportunity opened, Daniel Guillemette says.

“We saw it starting in 2008, when we created iGeny. At the time we looked at all the existing systems first. We even considered personalizing SalesForce. In the end we opted to build our own system to avoid being dependent on an external system. From the start, our game plan included a Canada wide expansion.” 

The dynamics of the life and health insurance industry also created this window of opportunity. The wave of consolidation in the Canadian life insurance industry affected insurers first, followed by MGAs. Advisors are the last piece of the puzzle.

“Advisors are all getting on in years. Soon they will all be old. Compliance pressure also affects these dynamics. There will still be young people who will love the industry, who won’t want to work in a bank or for a salary at an insurer with small bonuses, who will want to stay independent,” the CEO explains.

The era of advisors working in their basement is over, Guillemette continues. “They are dying off. They need to deal with an independent group. We will not be the only firm to be well organized enough to serve them. For now, we think we’re the best structured. We have a very large window to attract young people who adore technology and abhor administration. We welcome them every week.”

The CEO is currently having serious discussions with close to 15 advisors to acquire their blocks of business.

Two other acquisitions

Another recent acquisition concerns Groupe financier Sphinx, a firm already 50% owned by Diversico, that Daniel Guillemette had launched with Guy Carignan in August 2019. Why acquire the remaining volume? Guillemette compares the transaction to the buyout of the Horizons block in Sudbury: the Sphinx model was designed to focus on the 80% of the clients that generate 20% of the income.

Guillemette and Carignan agreed to prioritize Diversico’s method, which is well suited to a clientele that is underserved by their financial advisor. Carignan will thus remain an important telemarketing supplier for the group, an approach that spurred their success while he led the sales agencies of iA Financial Group.

The other Quebec acquisition is Marcolin & Associates, which Diversico will wholly own. In the lead up to the buyout, Jim Marcolin is visiting all the clients to announce the transaction.

“Jim approached us because we have a reputation as being an acquirer in the market. However, we are not well known in the English-speaking community. Jim asked the Horizons people to recommend someone who could take over his business. They suggested our firm, along with another large securities firm and another group,” Guillemette points out.

65 acquisitions in all

These three acquisitions bring Diversico’s track record to 65 transactions. This total does not include deals concluded by other subsidiaries such as Groupe financier Proficio, led by Sébastien Sévigny.

Assets under management have risen to $500 million, the firm’s CEO says. Insurance and investments generate most of its income. Guillemette estimates that insurance accounts for 55% of Diversico’s income, and explains this situation by the many business blocks bought from Great-West advisors working for level commissions.