Robert Frances zeros in on one word when asked to explain what’s driven the growth of Peak Financial Group to become one of Canada’s largest independent distribution holding companies: focus.
Frances, who founded Montreal-based Peak in 1992, says he chose to steer away from launching and managing mutual funds many years ago. Instead, the firm has focused on developing and servicing its network of advisors across Canada through its four member companies: mutual fund dealer Peak Investment Services Inc., investment dealer Peak Securities Inc.. fee-based planner Peak Financial Services Inc. and managing general agent Peak Insurance Services Inc.
“We decided to be fully independent of product,” says Frances, the parent firm’s president and CEO, who was named chairman of the board of the Investment Funds Institute of Canada In October. “We decided we wanted to do one thing, do it very well and make sure we do whatever it takes to please the advisors. And that’s what we’re doing.”
The formula has turned out to be a winner for Peak. The company and Frances are coming off a strong 2007, highlighted by Peak Investment Services’ acquisition of the assets of AXA Financial Services, a Montreal-based fund distributor and a subsidiary of France-based financial services giant AXA Group.
The AXA acquisition is the largest in Peak’s 15-year history. It has swelled the ranks of Peak employees, advisors and other financial professionals by more than 200 to about 600 and added 23 branches — 21 in Quebec, 1 in Halifax, two in new Brunswick — and a large office in Markham, Ont. The deal also added about $1 billion in assets under administration, bringing Peak’s total AUA to $5.5 billion.
“It gives us the ability to grow in the rest of Canada from a much stronger base here,” Frances says. “So, advisors in the rest of Canada are happy about that, saying: ‘Finally, there’s such a strong base in Quebec that we can use the profits here to start to invest in the rest of Canada, to strengthen our operations there.’”
The acquisition, which was announced in June and completed in October, is a good fit for Peak because AXA advisors wanted an independent dealer, Frances says. Integration has been helped by the fact the two firms had similar compliance and compensation structures.
Larger economies of scale will allow Peak to move ahead with improvements to documents, marketing and systems.
Besides focusing on its dealer activities, another key to Peak’s success has been maintaining conservative finances to weather the ups and downs in the financial servies industry, Frances says. But maintaining a close relationship with advisors has been paramount.
The firm spends “a ton of time” communicating with its advisors to figure out what they want and need, he says. “Too many companies grow too quickly and people start saying, ‘It was nice when it was small’,” he says. “And that’s what we want to avoid here. We want people to say, ‘It was nice then and it’s getting better and better as we grow’.”
Since its inception, Peak has acquired an interest in Quebec City-based mutual fund and insurance dealer Geoffrion Leclerc Marcoux et Associés Inc. (in 1999) and, in 2002, MGA Greater Montreal Financial Services of Westmount, Que.
“If you grow too quickly or if you grow without proper plans in place for that growth to be meaningful, you can lose touch with your existing advisors,” Frances adds. “It’s nice to grow and it’s fun to say you’ve grown. But there’s no point in growing unless, in doing so, you’re adding more value for your existing advisors.”
Frances was named chairman of IFIC this past fall after serving as the organization’s first vice chairman.
In a speech to IFIC’s annual leadership conference, Frances said a top priority will be to continue building “a relationship with regulators that is more proactive than reactive, more outward-looking than inward-looking.”
He also called on regulators to take a more proactive approach to dealing with the fund industry.
“The industry and the regulators have a collective responsibility, not just to understand each other but to come to a consensus about the best way forward,” Frances said. “We have a joint duty of care to make certain that the financial services system functions efficiently and effectively for the ultimate end-user — the investor.”
@page_break@Frances also called on IFIC members to play an active role in debates concerning regulatory issues such as registration reform and the proposed point-of-sale disclosure document.
“As each challenge presents itself, it is imperative that all members of the industry willingly engage in a thoughtful debate among ourselves on how we should face each challenge,” he said in his speech. “As participants in a regulated industry, we need to reflect on the fact that every new rule or regulatory initiative will impact our business models and, therefore, impact Canadian investors. We must recognize that if we are not actively engaged in the process, we cannot complain about the outcome.”
In an interview, Frances defended the fund industry from criticism about steep management fees, which one study concluded last year are the highest in the industrialized world. “The Canadian marketplace for mutual funds has a huge amount of choice,” he says, “and consumers have access to all types of mutual funds at almost all types of price points.
“There are many funds that offer options that include much lower fees, obviously, for lower service or no advice,” he adds. “If clients wanted those, they would be using those a lot more.
“What’s critical is there are options available,” he says. “And if consumers have options available and all options are disclosed, then they will choose the ones that are best for them. As an industry, we need to make sure that choice is always preserved and that clients feel that all options are available to them.”
Frances adds that the rash of investment scandals that have hit in the Canadian financial services industry in recent years involves a tiny minority of the industry. And public confidence in the mutual fund industry is reflected in its incredible growth over the past 15 years to more than $700 billion in assets under management. IE
Peak Financial Group carves own path to growth
The Montreal-based dealer and its president and CEO, Robert Frances, are coming off a strong year
- By: Don Macdonald
- January 21, 2008 January 21, 2008
- 12:08