Streamline and delegate: that’s the reasoning behind the decision of Mississauga, Ont.-based Investment Planning Counsel (IPC) to partner with a managing general agency (MGA)to offer more depth and expertise in its insurance offerings.
In June 2012, IPC entered into a partnership with PPI, which markets and distributes insurance products through two separate MGA firms: PPI Advisory in Toronto and PPI Solutions Inc. in Calgary. The IPC/PPI agreement required several months to engineer and process, and the two firms have now completed what they call a “strategic alliance.”
As a result of this alliance, PPI will now deliver IPC’s insurance offerings, including access to specific proprietary products and estate planning services.
Although IPC had considered several options before choosing PPI, including strengthening its own existing insurance platform, John Novachis, IPC’s executive vice president of corporate development, says that partnering with PPI was a “no-brainer.”
The alliance, Novachis says, will prove increasingly beneficial for IPC’s financial advisors when dealing with high net-worth clients. This, he says, is important, given both the dearth of institutional know-how in that space in Canada and that PPI Advisory has an established history of serving high net-worth clients.
As for PPI, the alliance with IPC points to a larger trend. Says Jim Virtue, president and CEO of PPI Solutions, which serves the Canadian middle market: “Firms that specialize more in investments will be looking to partner with firms [like PPI] to deliver their insurance offerings so they can get the best of both worlds.
“It’s very difficult to build a national insurance MGA that can offer all of the services [clients want],” he adds. “A lot of investment-focused firms don’t have the mass to build out nationally.”
Byren Innes, senior vice president and a director with NewLink Group Inc. in Toronto, says that many financial planning firms, such as IPC, are realizing that they can’t be everything to everybody. Instead, they are better served by using specialists in particular sectors to provide their clients with complex products. Insurance is one of these sectors. The financial planning firms then can focus on their core business of offering investment advice and investment funds.
Explains Innes: “This is IPC saying, ‘We gave it our best shot, but it’s not what we do best. We’re good at investments and financial planning. But this insurance stuff, for whatever reason, we couldn’t get to scale’.”
This kind of partnership makes a lot of sense for organizations such as IPC, Innes adds, because many of them are scaling back on the number of insurance firms they do business with, partly to reduce their risk and maintain more control over their operations. In contrast, those firms that have consistently invested more money in developing insurance options for their clients have tended to be more successful.
As a result, many financial advisors at firms such as IPC have fewer options when it comes to offering insurance products to their clients. The IPC/PPI partnership should help both firms, Innes says, when it comes to offering more informed choices to clients who want to buy insurance along with other financial products.
The partnership will affect about 1,000 IPC advisors, Novachis says, who will not see any changes to their commission structure and can continue to operate under their local brand within their own communities. This will be in addition to the added training, technical, sales and product support that will be offered to advisors by PPI.
“The gain here far exceeds the potential loss [for advisors],” says Innes. “To me, this is a pretty positive thing for advisors.”
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