Toronto-based Manulife Financial Corp.’s acquisition of the Canadian operations of Standard Life plc represents a positive move for Canada’s largest insurance company, according to analysts, as it beefs up Manulife’s wealth management business considerably. However, the news is being received with less enthusiasm in the advisor community, amid concerns that it eliminates a strong player from the industry and reduces choice for clients.

“I certainly do not see it as a positive for advisors or for policy owners,” says Bradley Sumner, an advisor with Investment Planning Counsel in Kingston, Ont. “This is not a very attractive purchase for those of us who deal with clients on an everyday basis, because it takes a pretty fine player out of the equation.”

Less competition in the product market is rarely positive for advisors and clients, says Jim Ruta, founder and CEO of Expert Institute in Toronto, and a regular columnist with Investment Executive.

“If I were an agent,” says Ruta, “I would be bemoaning the loss of good products, and would be bemoaning the loss of a competitive option.”

Manulife announced on Wednesday that it had entered into an agreement to acquire the Canadian operations of Standard Life, based in Montreal, for approximately $4 billion in cash, subject to regulatory and shareholder approval. Standard Life is Canada’s fifth largest insurer, with 2,000 employees, 1.4 million customers and $52 billion of assets under management.

Standard Life was an attractive target for Manulife, particularly because of Standard Life’s strong presence in Quebec – a province where Manulife is interested in growing – and its comprehensive wealth management operations.

“Strategically, it looks like a good fit, as it increases [Manulife’s] exposure to Quebec, where they’re under-represented,” says Murray Leith, vice president and director of investment research at Odlum Brown Ltd. in Vancouver. “It also increases their exposure to wealth management, which is a less capital-intensive, more attractive business.”

“The transaction should allow Manulife to increase its earnings contributions from lower volatility, fee based wealth management operations with little impact on its market sensitivities,” said John Aiken, an analyst at Barclays, in a research note.

After the first year, the deal is expected to boost Manulife’s earnings by approximately three cents per share over each of the next three years, excluding transition and integration costs. Although the market will likely view that earnings projection as “underwhelming”, according to Aiken, analysts suspect that the transaction will yield additional benefits over time.

“I think there will be a longer term payoff,” says Leith. “I imagine that’s what’s motivated them.”

Despite the largely positive reaction from analysts, those on the front lines of the industry view the acquisition as the departure of a well-respected industry firm.

“It’s a loss of one of the great companies in this industry,” says Ruta. “Standard Life was an excellent firm, and it was nice to have that competitor in the marketplace.”

Standard Life exited the individual life insurance business in Canada at the beginning of 2012, ceasing sales of new policies in order to focus on investments, group savings and group benefits. Even after its departure from the individual insurance space, however, advisors say the company offered an impressive selection of investment and retirement products, including mutual funds, segregated funds, managed portfolios and annuities.

“For any new clients, they’ll have one less shop to be able to go to,” says Sumner.

However, Ruta says Manulife could seize the opportunity to expand its own product lineup once it absorbs Standard Life. In addition, he notes that clients with existing Standard Life insurance policies could benefit from a broader suite of conversion options compared to those that became available when Standard Life ceased sales of new policies.

“That is a positive, in my opinion,” Ruta says. “That could really make a difference for those stranded or semi-abandoned policyholders.”

The level of service that advisors and clients receive, however – an area where Standard Life has a strong reputation – faces the possibility of deteriorating under a company as large as Manulife.

“I would be worried about service,” Ruta says.

Subject to the receipt of all necessary approvals, the transaction is anticipated to close in the first quarter of 2015.