The Vancouver-based firm will also look to build out its insurance business by partnering closely with manufacturers

By Rudy Mezzetta | December 2012

Credential Financial Inc., the primary wealth-management services provider to the Canadian credit union system, is launching several new initiatives to bolster and enhance its overall service capabilities, giving financial advisors working through credit unions greater capacity to serve their credit union member/owner clients.

"It's really about ensuring that wealth management is integrated across an entire credit union organization," says Doce Tomic, CEO of Vancouver-based Credential, "and that the advi-sory component complements all the other banking services at the credit union."

Credential, owned by the Canadian credit union system, provides individual credit unions with wealth-management services through various subsidiaries, which include a securities dealer, a mutual fund dealer, a managing general agency and a direct brokerage.

In the new year, Credential will be launching a key initiative to expand its fee-based business, as it sees that business model as a major growth area.

Credential also will be looking to build out its insurance business by partnering closely with manufacturers such as Burlington, Ont.-based CUMIS Group Ltd., which is a part-owner of Credential, and Guelph, Ont.-based Co-operators Group Ltd.

"Members are looking not only for advice on asset management but on financial planning overall," Tomic says. "So, insurance becomes much more embedded in the overall client/advisor relationship."

Credential, in order to give itself more flexibility in serving its credit union partners, also will transition to a self-clearing model, beginning in January 2013. Previously, Credential had partnered with Vancouver-based Canaccord Capital Ltd. to provide clearing services.

"We have the scale now," Tomic says. "And with our direct-investing channel, too, we wanted to make ourselves more nimble while making sure our services were all tied in together."

Credential also recently opened a foreign-exchange, fixed-income and equities trading desk in Montreal in order to expand its capital markets capabilities.

Credential, which is celebrating its 20th anniversary in business this year, has partnerships with 225 credit unions across Canada, including one with the largest credit union in Canada outside Quebec, Vancouver City Savings Credit Union.

Credential's most notable competitors in the credit union wealth-management space are Vancouver-based QTrade Financial Group and Markham, Ont.-based Worldsource Wealth Management Inc.

About 1,300 credit union-based financial advisors hold their registrations through Credential, with roughly 170 of those on the Investment Industry Regulatory Association of Canada platform and the remaining 1,130 on the Mutual Fund Dealers Association of Canada platform.

Credential holds some $13.5 billion in assets under management, up from $8.5 billion four years ago, when Tomic joined the firm as CEO.

"I expect a continued growth in assets," he says. "I think it's taken us a couple of years to lay down the foundation properly. But the advisors have really responded exceptionally well, now that the programs are in place."

In terms of building out Credential's fee-based business, Tomic says, the firm will be looking to work with partner providers to construct guided portfolios for clients. Credential also will be looking to its new Montreal trading desk to provide a broader array of fixed-income products for advisors with fee-based businesses.

Tomic sees a fee-based approach as more appealing to clients who are interested in a holistic approach to wealth management.

"When you go through a prolonged period of economic uncertainty," Tomic says, "as we have both in Canada and around the world, that causes a lot of trepidation. Investors are much more conservative overall. And there's a shift toward advice, first of all, and toward a greater focus on the correct allocation of assets and the correct balance of risk and safety."

This search for advice and planning also is why Tomic foresees steady growth in the insurance side of Credential's business, which, he says, will lead more advisors to become dual-licensed.

Credential works with each of its credit union partners, Tomic says, to construct an individual wealth-management delivery strategy suited to each specific credit union in order to bring in the right set of advisory services and support structure, as well as to try to complement the other services provided by that credit union.

"We really position ourselves in the background as very similar to ‘Intel Inside'," Tomic says. "We were founded and built by the credit union system for [the member credit unions] to have a wealth-management offering. And we have more than 220 employees working on only that."

Tomic believes that the key to Credential's future success will be working with its partner credit unions to integrate wealth management more fully into the provision of other banking services, making sure that clients know that they can stay with their credit union when it comes time to seek out wealth-management services.

"The issue isn't with what we can deliver; we have a very strong wealth-management offering," Tomic says. "It's evolving those services in the segments in which the members are interested, and it's in building out member awareness that we have these services." IE