Desjardins financial Security took another step in its path to expand outside the Quebec market when it scooped up Performa Financial Group Ltd., the Montreal-based mutual fund dealership and subsidiary of Standard Life Financial Inc. Performa’s 125 advisors serve 20,000 clients and manage $1.3 billion in assets, 90% of which are outside Quebec.

Desjardins ranks fourth among Canadian life and health insurers in terms of written premiums. In Quebec, it ranks No. 1. “Our objective over the next three years is to double our market share outside Quebec,” says Denis Berthiaume, Quebec City-based senior vice president of individual insurance at Desjardins. “And we knew any future developments for us would have to come from the rest of Canada.

“This acquisition gives us access to a new distribution channel and a market with which we did not have a lot of contact,” he adds. He would not disclose the cost of the transaction, which is expected to receive regulatory approval by next month.

Once the deal is finalized, the next move will be integration. Performa advisors will be rebranded under the banner of Optifund Investments Inc. , a subsidiary of Desjardins, which currently has 700 advisors across Canada and about $3.8 billion in assets under management, about one-third of which is outside Quebec.

Optifund was created in the mid-1990s as a means of giving Desjardins’ sales force, which operates under the Laurentian Financial Services brand, access to third-party products. But, unlike LFS advisors, who are expected to place at least a portion of their business through Desjardins, Optifund advisors operate independently of their parent company. They sell products from all major life insurance companies, as well as segregated funds and mutual funds.

Performa’s integration with Optifund won’t immediately bring big changes, says Berthiaume. At present, Performa advisors mostly sell mutual funds offered by 65 Canadian suppliers, and it will take time to expand their product offering.

“Our main objective is to ease the transition during this process,” says Berthiaume, adding that Desjardins will help with the cost of rebranding. “With the help of our advisory committee, our approach is to work with these advisors and find out what their needs are and gradually introduce products in which they might be interested.”

In the meantime, a more aggressive marketing campaign is in the works as Desjardins eyes the western market. But westward growth will come with a degree of difficulty.

“It can be a challenge to bring new people into the Optifund network because they don’t know who we are yet. And to recruit quality advisors, they have to know our name,” says Karen Tinsley, Desjardins’ senior consultant for public affairs and communication in Toronto. She says Desjardins is recruiting individual advisors, but “critical mass” can only be achieved through strategic acquisitions.

“This deal allowed us to acquire some high-performing sales people outside the province of Quebec, and now our challenge is to keep them,” she says.

To that end, Berthiaume is confident that Desjardins’ offering will appeal to the Performa network. “The one thing we want to keep is the independence of advisors,” he says. “At the same time, we feel we can bring added value to these new advisors.” A wide range of insurance and savings products will be available to Performa advisors, but they will not have requirements to produce, Berthiaume says.

Optifund general manager Stéphane Dulude will manage the back-office operations, and Nancy Schafer of Performa will run the Performa network under the title of senior director. Former Performa president Andy Mitchell has left the firm to “pursue other career interests,” the company says.

The sale of Performa reflects a strategic shift for Standard Life, says Joseph Iannicelli, the Montreal-based firm’s president. Since taking the helm in January 2005, Iannicelli has been retrenching operations to focus on core lines of business — in particular, manufacturing and marketing wealth-management products.

“Pre-2005, our strategy and our focus was to be a full-service supplier in the marketplace, and I think that was a little too general,” Iannicelli says. “I wanted to look at our strengths, look at areas in which we had traction and branding, and maximize on those areas in which we do very well.”

Iannicelli says the decision to sell to Desjardins was strategically beneficial for both firms. “Part of Desjardins’ strategy was to look outside Quebec, and we had a need to divest ourselves of the network and focus on our strengths,” he says. “It’s a win-win situation for both organizations.” IE