Toronto-based bank of Nova Scotia is committed to respecting the independence of financial advisors at DundeeWealth Inc., which the bank now owns outright after striking a deal with parent Dundee Corp. Scotiabank will resist imposing a bank-owned brokerage mentality on the Toronto-based DundeeWealth, say senior bank executives.

“The main message is that it’ll be business as usual [at DundeeWealth],” says Barbara Mason, executive vice president of wealth management at Scotiabank. “It’s a highly respected and successful channel. We’re not looking to mess with the culture.”

Financial securities analysts, who generally laud the deal as a positive one for Scotiabank, say mitigating any defections of DundeeWealth advisors displeased with the idea of working for a bank will be critical to the long-term success of the deal.

“It’s always a worry, when you buy a business that is human capital-intensive, that you could end up losing some of the staff you’ve acquired,” says Robert Sedran, banking securities analyst with Toronto-based CIBC World Markets Inc. “I think Scotiabank will be very careful not to alienate its new staff.”

Scotiabank announced on Nov. 22 that it had scooped up the rest of DundeeWealth that it didn’t already own for $2.3 billion. Three years ago, the bank had bought an 18% stake in DundeeWealth, plus all of Dundee Bank of Canada, when Dundee Corp. ran into turbulence during the asset-backed commercial paper crisis.

With the recent deal, Scotia-bank now has a total of $55.3 billion in mutual fund assets under management, good for fifth place among Canadian mutual fund firms, and some $117.1 billion in assets under administration once the AUA of DundeeWealth, ScotiaMcLeod Inc. and Scotiabank’s online brokerages are combined.

As part of the deal, Ned Goodman, founder and controlling shareholder of Dundee Corp., will remain as non-executive chairman of DundeeWealth and a subadvisor managing Dynamic Focus+ Resource Fund. David Goodman stays on as president and CEO of DundeeWealth.

Scotiabank has said it intends to operate its ScotiaMcLeod brokerage, with its 789 Investment Industry Regulatory Organization of Canada-licensed advisors, and its DundeeWealth arm, with its 495 IIROC-licensed advisors and 525 Mutual Fund Dealers Association of Canada-licensed advisors, as separate channels, protecting the culture of each one. That move was also applauded by analysts.

States a report by John Aiken, analyst with Barclays Capital PLC in Toronto: “Maintaining David Goodman as the head of operations is a good first step, in our view. And Scotiabank will have to move very cautiously should it try to move systems and compensation [at DundeeWealth] more in line with what is currently in place on its own platform.”@page_break@Mason says there will be plenty of cost synergies for Scotiabank in owning the two platforms, in terms of avoiding duplication, adopting best practices and achieving scale. But, she adds, Scotiabank will look to realize only those synergies that won’t affect how either platform operates.

Sedran agrees that Scotiabank will have to find the right balance between costs savings and not harming the successful DundeeWealth platform: “The opportunity here for Scotiabank is more of one to grow revenue than of one to reduce costs. You can improve the product offering or change the back office without necessarily changing the culture. It’s tricky to manage, for sure; but if you can do it, you can ultimately be more successful.”

Mason says it is too early to comment about any possible changes to the compensation structure for advisors, but she did appear to acknowledge that it would be an important future consideration for management: “Our commitment is, No. 1, to establish a great environment to work in — [and part of that is] paying for performance, paying for growth. We’re absolutely there. It is early days, and those are things with David Goodman as CEO — partnering with him — [about which] we’ll make the right decisions.”

Mason says she does not think that there is any appreciable danger of cannibalization — the two firms competing for the same clients — and suggests that not only is there plenty of room for both channels in the marketplace but the two firms are different enough to appeal to different client segments. Clients who like having their wealth-management needs, as well as other financial services, all provided by a bank group could be drawn to ScotiaMcLeod, for instance. Other clients might prefer the independent culture of DundeeWealth, she suggests.

Mason adds that she and other Scotiabank executives have had early discussions with senior executives at DundeeWealth regarding what Scotiabank products or services might interest DundeeWealth advisors. These could include equities research, new issues, private banking products and services or access to estate planning experts.

However, Mason is quick to stress that any Scotiabank products and services that could potentially be offered to Dundee advi-sors will not be forced upon them: “It’ll be by choice. We won’t disrupt the integrity of the channel.”

In terms of the big picture at Scotiabank, the DundeeWealth acquisition came as a surprise to financial securities analysts — albeit a mild one — as most thought the bank more likely to buy the rest of Toronto-based CI Financial Corp. , in which Scotiabank purchased a 37.6% stake two years ago.

Most analysts now believe that any possible further investment in CI by Scotiabank is further in the future, with Scotiabank concentrating in 2011 on integrating DundeeWealth into its newly reorganized global wealth-management unit. IE