Halifax-based Beacon Securities Ltd. will divest its entire retail operation effective Sept. 1 to focus on its institutional operations, a decision three years in the making.
"At the end of the day, we felt clients were best served by a firm that did only [retail]," says Daniel Holland, Beacon's executive vice chairman and managing director in Halifax. Five of Beacon's six retail advisors will move to Assante Wealth Management (Canada) Ltd.'s Hydrostone office. The sixth advisor has joined an investment services team with one of Canada's Big Five banks.
The decision to focus on institutional operations began to take form in 2012. After more than two decades as an East Coast firm, Beacon expanded its operations to Toronto and subsequently opened offices in Calgary and Montreal. With that growth came the push to expand the firm's private client group. To do that, Holland looked at everything from bringing on partners to hiring new advisors during a cross-country trek lasting 14 months. But ultimately, the decision was made that the firm could no longer operate in the retail space.
"We've looked. We've tried," says Holland. "We came to the conclusion [the best place for] our staff and our clients was where the focus is on retail."
Advisors had a say in choosing their new home, says Holland: "We wanted to involve staff and presented them with a short list."
Assante Hydrostone administers more than $1 billion in assets on behalf of clients in Atlantic Canada. "It has scale," says Holland.
Holland, who returned to Nova Scotia in 2006 to the company his father, Lonny Holland, had founded in 1988, notes that the boutique firm, a full-service investment dealer serving clients across the country, had occupied an increasingly unusual niche in the Canadian investment landscape. "It's rare to find fully integrated investment dealer firms at this size," Holland says.
Enjoying the level of success Beacon has experienced is also unusual, he adds: "We've expanded meaningfully at a time when other firms have experienced challenges."
Growth has defined Beacon over the past decade as its staff has risen to 40 in four offices across the country from roughly six people in 2006. However, it's the institutional side of the business that has driven that growth. Its revenue has grown by more than 50% a year since 2012, according to Holland, who declined to provide assets under management.
Now, Beacon is turning even greater attention to its institutional operations, fixed-income and equity capital markets. "We will focus on the piece of the business we have grown significantly since we expanded in 2012," says Holland. "Our firm is committed to growing our national platform in the institutional area."
"What you're witnessing is a boutique that is rolling out a well-developed and coherent plan," says Ian Russell, president and CEO of the Investment Industry Association of Canada in Toronto. "It's one thing to offer a very specific retail service, but in the current environment, you need a lot of scale and size. Most clients are looking for a much broader suite of products and services."