Qtrade Financial Inc., Credential Financial Inc. and NEI Investments announced on Tuesday that they will be merging in a deal that will create Aviso Wealth, an independent wealth-management provider for the Canadian credit union (CU) system that will have more than 500,000 clients and $55 billion in combined assets under administration and management.
The deal also solidifies the reach of Lévis, Que.-based financial giant Desjardins Group, owner of Qtrade and co-owner of NEI Investments, as a key partner in the delivery of wealth advisory, asset-management, insurance, discount brokerage and correspondent services for all Canadian financial co-operatives.
"[Aviso Wealth] will, in all aspects, offer credit union members and other clients a strong alternative to the banks and other wealth-management companies," says Guy Cormier, president and CEO of Desjardins Group, in a statement. "This is another great step forward in our pan-Canadian development and good news for our clients."
Aviso Wealth will be 50% owned by Desjardins Group and 50% owned by the CUMIS Group Ltd. and the five provincial CU centrals. The transaction is expected to close in the first quarter of 2018, subject to approval from regulators.
Aviso Wealth's CEO will be Bill Packham, currently the CEO of Qtrade. The firm will be headquartered in Toronto and Vancouver, as well as having regional offices across Canada.
"Credit unions have been advancing their [wealth-management] platforms quite dramatically the past five or six years," Packham says, "and have been doing so because of the resources that each of us [Qtrade, Credential and NEI] have brought to the table to assist them in that."
Credential provides wealth-management services to about 175 CUs while Qtrade has deals with about 30 CUs. Most major Canadian CUs outside Quebec — including Vancouver City Savings Credit Union, Coast Capital Credit Union and Meridian Credit Union — have deals with one or both of Credential and Qtrade.
Aviso's plan is to integrate the businesses of the three merging firms during a transition period that's expected to take 12 to 18 months after closing.
"In every area of our business — wealth management, asset management, online brokerage, digital and correspondent services — we each have good representation in those activities between at least two or three firms," Packham says. "So, we'll integrate them, make them stronger and combine resources. At the end of the day, those will be even stronger businesses."
The merger of wealth-management services will occur between the three merging firms, Packham says, while Desjardins will continue to offer its own wealth-management services.
For example, Qtrade and Credential's online brokerages — Qtrade Investor and Credential Direct — will likely be merged, Packham says. In contrast, Disnat Direct, Desjardins' online brokerage platform, will continue as a separate operation.
"[Disnat] is very important for the Caisse's [Desjardins'] network, and for its other networks," Packham says. "We do compete somewhat in the pan-Canadian marketplace, but it's a very large space and both us are looking to grow our respective."
Financial advisors with CUs affiliated with either of the two firms will continue to work under the Credential and Qtrade brands for an interim period. However, the longer-term plan, Packham says, is to have the advisory force work under the Credential branding, under the Aviso Wealth umbrella.
Meanwhile, Qtrade's mutual fund platform, Oceanrock Investments, which offers responsible investing (RI) mutual funds under the Meritas brand and traditional funds under the Oceanrock brand, will be likely be intergrated with NEI Investments, which offers NEI Ethical funds and NEI Northwest funds.
"The combined [assets under management] will be more than $8 billion, and the NEI business unit, being much larger, will be the key unit driving it forward," Packham says. He envisions the platforms being cut down to two brands, one for RI and the other for non-RI funds.
Doce Tomic, president and CEO of Credential, and John Kearns, president and CEO of NEI Investments, will continue to run their respective firms through to the closing of the deal and help in the transition, after which both will leave the company, Packham says. "[They've] been great partners, and we've worked very closely together through this transaction."
Credential is owned by the Canadian CU centrals plus CUMIS, which is itself owned by Central 1 Credit Union and the Co-operators Life Insurance Ltd. Meanwhile, NEI Investments, a provider of RI products, is a division of Northwest & Ethical Investments LP and owned jointly by the CU centrals and Desjardins Group.
In addition to serving the CU market, Aviso Wealth will continue to look for ways to expand and evolve the products Credential, Qtrade and NEI Investments currently provide to third-party dealers, institutional clients and other partners and customers.
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