Richardson GMP Insurance Services Ltd., a division of Toronto-based Richardson GMP Ltd., one of Canada’s leading boutique brokerage firms, has forged a formal alliance with Toronto- and Calgary-based specialized MGA PPI Financial Group Inc. that allows Richardson GMP access to the full range of products and services available through PPI Financial’s national network of offices.

In addition, Richardson GMP’s advisors and in-house insurance wealth-management experts will also have access to PPI Financial’s local insurance consultants. Increasingly, insurance products are being used in tax and estate planning strategies for high net-worth clients, says Andrew Marsh, Richardson GMP’s CEO, and the deal with PPI Financial allows Richardson GMP to offer the best solutions to its clients and at a reasonable cost.

“Insurance is an important part of what a wealth-management firm needs to offer its clients,” says Marsh. “Managing wealth is not just about stocks, bonds and mutual funds. An overall wealth plan involves such activities as making a will, protecting wealth in the case of death or disability, philanthropic goals and planning for the intergenerational transfer of wealth or sale of a business. Insurance can play an important role, and any firm that doesn’t offer it is missing a big part of the client strategy.”

For PPI Financial, the broadening of the relationship with Richardson GMP will allow the MGA to serve a broader segment of clients, says Kevin Wark, the firm’s senior vice president, business development. PPI Financial will now be supporting Richardson GMP advisors and their clients through two distribution arms: PPI Advisory and PPI Solutions Inc. (Richardson GMP has had a relationship with PPI Advisory for four years, which began with GMP Private Client LP before its merger with Richardson Partners Financial Ltd. in 2009 and continued with the merged entity.)

The new arrangement formalizes the Richardson GMP/PPI Advisory contract, which includes the latter’s provision of strategic advice on the use of insurance in such areas as tax and estate planning. The new deal also includes a relationship with PPI Solutions, which will see that firm perform all the back-office administration, such as the processing of applications.

“We want to outsource the part of the insurance business that is simply a commodity,” Marsh says, “and focus our efforts where we can add value in helping clients with wealth management. Richardson GMP will not incur the fixed costs of handling the back office or supporting the business infrastructure. With PPI Advisory, we benefit from the consulting arrangement and share the variable costs that are proportionately tied to insurance sales and revenue.”@page_break@Commissions are usually paid when insurance products are sold — and these, Marsh says, typically will be split among PPI Financial, Richardson GMP’s in-house wealth-management team and the advisor who deals directly with the client.

“We can provide a high-quality solution to the client without the fixed costs of administering an insurance business that many of our competitors have to deal with,” Marsh says. “We can do the right thing for our clients, from a low-cost perspective.”

PPI Financial traditionally has received very strong ratings in Investment Executive’s Insurance Advisors’ Report Card from the advi-sors who work through the MGA for the support the MGA offers the advisors in developing appropriate insurance strategies for clients.

In fact, in the 2010 Report Card, PPI Financial was awarded a strong rating of 9.4 (out of 10) in the “products and support for high net-worth clients” category. Furthermore, the firm received ratings of 9.4 in the “support for wills and estate planning” and 9.0 in the “support for tax planning” categories.

A strong determinant of advi-sor satisfaction in past Report Cards has been their ability to access the professional expertise needed to advise their clients on wills and estate planning directly.

The Report Card results in 2010 also revealed that PPI Financial advisors were pleased about the company’s conservative attitude toward risk management. They expressed confidence in the company’s stability — the likelihood of the firm being around to make good on future obligations.

The expansion of the relationship with PPI Financial will allow Richardson GMP to include targeted insurance solutions for business owners and their employees, including group benefit and pension capabilities. Marsh foresees increasing demand for many kinds of insurance-related strategies as baby boomers grow their wealth and come into inheritances.

“Insurance is often a component of strategies for reducing risk and minimizing taxes from an estate perspective,” he says. “Some of these strategies can be complex, depending on the level of wealth. The more we can help our clients with various aspects of their lives, the stronger and deeper those relationships will be.”

Since the market meltdown of 2008, clients have become more concerned about managing risk, Marsh says — and insurance products can be useful in helping clients protect their financial security and the interests of the next generation.

“Previously, clients were focused primarily on wealth accumulation and investment goals,” says Marsh. “[But] concerns about preservation and protection [now also] have come into focus.” IE