By acquiring the insurance business of Groupe Financier Multi Courtage and a holding in its mutual fund firm Multi Courtage Capital, Groupe Cloutier is taking over one of the last few independent MGAs in Quebec still owned by its founder or family members.

A meeting in June 2020 between Guy Duhaime, founding president of Groupe Financier Multi Courtage, and Gilles Cloutier, chairman and founder of Groupe Cloutier, sparked the transaction. “I agreed to sign a confidentiality letter to start the process, which took 10 months,” Duhaime says. Other organizations approached him in the interim with direct or indirect offers. Were there any insurers among them? “Maybe,” he replied.

Groupe Cloutier's family values and independence sealed the deal, Duhaime continues. “I knew that Gilles had handed over the president position to Patrick, whose two sisters were also executives (Claudine Cloutier, vice-president, living benefits, and Karine Cloutier, vice-president, marketing and corporate development). I liked that. It's a family business. I've been a fierce advocate of independence for years, especially for Québec-based companies.”

Like its new partner, based in Saint-Hyacinthe, Groupe Cloutier is part of a group that is shrinking due to sustained pressure from consolidation. Patrick Cloutier, CEO of Groupe Cloutier, showed Insurance Portal an internal document that counted about 50 MGAs in Quebec in 2001. Today, Cloutier estimates that there are about a dozen, divided into three categories: MGAs owned by an insurer, consolidators, and independently owned MGAs.

In the transaction press release, the MGA explains that the partnership between Groupe Cloutier and Groupe Financier Multi Courtage will help strengthen independent financial services distribution in Quebec. Cloutier and Duhaime shared the details and rationale for the transaction with Insurance Portal. 

Expanded presence and assets 

One positive outcome of this transaction: Groupe Cloutier gains a sixth financial centre and some 80 financial advisors, almost all of whom hold both financial security advisor and mutual fund representative licences. What’s more, this centre is located on the South Shore of Montreal, where the Trois-Rivières-based MGA did not have an office. Its team of 150 employees was also expanded by 15 employees. 

Groupe Cloutier's CEO also points out that the addition of Multi Courtage's insurance and investment fund businesses gives the organization a total of $5.5 billion in assets under management.

Like Cloutier Group, Multi Courtage uses Broadridge's Winfund software as its mutual fund administration system. In insurance, Multi Brokerage uses Equisoft's Centralize system, while Cloutier Group uses its in-house Maestro system. Both systems will remain in place. 

Daniel Richard, CEO of Groupe Financier Multi Courtage until the transaction is closed, will eventually become regional manager of Groupe Cloutier in a centre to be dubbed the “Rive-Sud Financial Centre”, explains Patrick Cloutier. “Daniel will be the leader of the centre,” he says, adding that David Parent, Vice President sales and business development at Groupe Cloutier will be orchestrating the transition and integration following the transaction.   

Groupe Cloutier's five other locations in Quebec are the Montreal Financial Centre, Québec City Financial Centre, Trois-Rivières Financial Centre, Gatineau Financial Centre, and Sherbrooke Financial Centre.

Patrick Cloutier mentions that Groupe Cloutier is licensed by the Mutual Fund Dealers Association of Canada (MFDA) to operate outside of Québec. Overall, he says he has a few representatives in Ontario and Nova Scotia, along with distribution agreements in New Brunswick. “Ninety-seven percent of our business is in Quebec,” he said. “For now, we have no plans to expand outside of Québec, where there is still quite a bit of growth to be had.” Multi Courtage has no activities outside la belle province.

Guy Duhaime not retiring yet 

Groupe Cloutier and Guy Duhaime both hold 50 per cent stakes in Multi Courtage Capital. Duhaime remains president of Multi Courtage Capital and will still oversee Multi Courtage’s insurance operations. Patrick Cloutier is vice-president of Multi Courtage Capital and François Bruneau, vice-president of administration of Groupe Cloutier, also sits on the board of directors of the firm, together with Duhaime, Cloutier and Richard.

“Guy was not ready to sell 100% of his fund firm. We're very happy that he's going to stay on for quite a while. Keeping things going is very important to Groupe Cloutier, in both insurance and mutual funds,” Patrick Cloutier says.

The Groupe Cloutier CEO confirms that all Groupe Financier Multi Courtage staff will remain in place, as will the processes within the mutual fund division. “We are adding service, especially to our specialists’ advice,” he adds. Retaining the 15 or so Groupe Financier Multi Courtage employees is another piece of good news, he says. “Fifteen competent colleagues are joining the Groupe Cloutier family. We really need them in a context where labour is getting harder to find in our field.”

Attracted by independence and family values 

Gilles Cloutier founded Groupe Cloutier in 1978. Two years later, Guy Duhaime founded Groupe Financier Multi Courtage. Michel Kirouac brought the two executives together. He and Duhaime know each other well, having sat on the same industry advisory committees, including the Autorité des marchés financiers distribution practices committee. They had also been discussing various industry issues for years, including MGA consolidation.

Patrick Cloutier wants to ensure business continuity at both firms. The MGAs share the same values, he points out. “We have always been very focused on human values and relationship building, with our advisors and our employees alike. Multi Courtage has a similar approach.” Cloutier and Duhaime said they connected extensively with advisors and employees on May 3, the day the transaction was announced.

Common front against consolidation 

Why did Guy Duhaime choose to sell his insurance operations now? One main reason is the “choice insurers made to eliminate small MGAs outright.” Duhaime has often publicly spoken out against insurers’ increased volume requirements, which forced smaller MGAs to enter into distribution agreements with larger ones. This explains the steady consolidation in recent years, he says. 

“In insurance, that was our problem. At the beginning of each year, we had to negotiate with insurers to keep our distribution contracts. They would agree as long as our bonus went down. I have never understood the financial reasons why insurers would pay 15 per cent to 20 per cent more to large MGAs when we can get the same service from them through a third party... We don't have this problem with Multi Courtage Capital,” Duhaime says. He adds that his mutual fund division is profitable.

Acquiring Multi Courtage’s insurance business solves this problem, Patrick Cloutier continues. “We have a direct distribution contract with all the insurers. This was not the case for some of the insurers that Guy dealt with.” 

Regarding ongoing consolidation, Patrick Cloutier hints that advisors are losing their sense of belonging. Many fear that they'll have to favour one provider over another. “I'm not saying that's what's happening, but there have still been quite a few changes in the distribution network lately,” he says. 

“Groupe Cloutier is independent and here to stay,” Cloutier adds. “The transaction consolidates our place as an independent firm, a concept that is still relevant in 2021 and for years to come.”