The Australian planning firm that started out with only five advisors and went on to become the largest dealer Down Under has landed in Canada, with a plan to expand its global brand.

Professional Investment Services (Canada) Inc., based in Markham, Ont., is the newest subsidiary of its Aussie parent, Professional Investment Holdings Group. The parent owns investment dealer Professional Investment Services, which has grown to serve more than 600,000 clients in Australia, New Zealand, Hong Kong, Singapore, Malaysia and China.

Now the Aussie parent is launching its unusual business model in North America. Its strategy involves pairing advisors with accounting businesses. PIS’s development managers build contacts with small accounting firms of about three to five accountants, and identify the ways in which a PIS financial advisor may best serve the accounting firm’s clients. If the accountants get on board, PIS educates them about the financial planning process and then invites their clients to an introductory meeting.

Ninety-five per cent of the time, the clients are interested in the additional services a PIS advisor provides. In turn, the PIS advisor gains access to a whole new set of clients, and most double their books of business within two years, says Ken Rousselle, president and CEO of PIS’s Canadian subsidiary. The accountants earn a portion of the commissions generated by new sales and PIS rakes in more assets.

The model works, Rousselle says, because PIS does all the legwork.

“What often happens to advisors is they become so busy trying to make contacts and build their books that they have no time to implement a strategy,” he says. “At PIS, we implement the model, we bring in the centre of influence and we make it work.”

The firm entered the Canadian market in this past November through the acquisition of Calgary-based independent dealer Generation Financial Corp. Generation’s 108 advisors now operate under the PIS banner.

Choosing to enter Canada before delving into the much larger U.S. market may seem like a curious move for a firm so intent on speedy growth. But, as Rousselle sees it, Australia has more in common with the Great White North than some may think.

“Culturally, Australia is much more similar to Canada than it is to the U.S. We’re more laid back and our businesses are less aggressive,” says Rousselle, who replaced Generation president Ken Parker following the acquisition.

Although entry into the U.S. is on the agenda, PIS’s performance in Canada will serve as something of a litmus test going forward. So far, things appear to be going in PIS Canada’s favour. By most accounts, Generation’s advisors have adjusted well to the news of their acquisition; three new recruits have since joined.

The PIS business model was the brainchild of Robbie Bennetts, CEO and co-founder of the parent firm. He thought advisors and accountants were naturally suited to work together, and worked with five planners and seven accounting firms to launch PIS. Today, the firm has more than 1,500 advisors, 1,700 accountants and A$16 billion in assets.

The Generation acquisition isn’t PIS’s first foray into the Canadian market. The firm tested the waters shortly after 9/11, when it focused on getting accountants, not advisors, on board. But the tanking economy proved to be more of an obstacle than expected and the firm soon retreated.

Now that PIS has fine-tuned its strategy — targeting a distribution channel first, then pairing it with accounting partners — Rousselle is confident the model will see the same success in Canada as it has in other countries.

Although no advisor/accountant relationships have yet been launched in Canada, Rousselle is working with a number of accounting associations to make sure every rule and regulation is checked before PIS Canada moves forward. The firm hopes to pick up the accounting contacts made in its first foray in 2001, and is aiming to have the model up and running by the end of this year’s RRSP season.

“We’re hoping we’ll get a couple success stories out there and let the word spread,” he says.

Such success, of course, will depend largely on how well advisors buy into the plan. Prior to being absorbed by PIS Canada, Generation was known for being a no-frills dealer that paid its advisors 100% commissions. Its advisors, in turn, paid a monthly desk fee and operated much like independent business owners. There was no real training, marketing or sales support.

@page_break@If the advisors choose to trade in their desk-fee model for PIS’s decidedly more growth-oriented model, they’ll be able to participate in the firm’s Activity Train program, which promises to enhance their businesses. They’ll also receive marketing and sales support, have access to training and get a chance to earn equity in the holding company.

Advisors must reach a threshold of $25,000 or $40,000 in net commissions to the dealer to qualify for share ownership. The tiered threshold gives advisors incentive to expand their businesses and buy more shares, says Rousselle.

For now, most advisors are taking a “wait and see” approach. Under the PIS business model, advisors operate on a traditional grid that earns them a 75%-90% payout. It’s a typical — if not above average — compensation structure. But for advisors content to keep all their commissions for themselves, it might be a tough sell.

“At this point, I’m happy to stay on the desk-fee model. But never say, ‘Never’,” says Jim Gilbert, an advisor in Stettler, Alta. Gilbert was a Generation advisor for less than two years when PIS entered the scene. Previously, he spent 15 years as an advisor with Partners in Planning Financial Group Ltd., at which he grew tired of sharing his commissions with the dealer. After buying a second book of business, he decided Generation’s desk-fee model was a better deal.

With 800 clients and a $1,200 monthly desk fee, Gilbert is in no rush to add clients to his already full roster. But he will keep an eye on other advisors who choose to adopt the model.

It’s the same story for Dean Cockell, a former Generation advisor in Winnipeg. A self-proclaimed “growth guy,” Cockell is intrigued by the idea of doubling his book of business, but will wait to see how the strategy plays out with other advisors. Like Gilbert, Cockell left another dealership to join Generation in 2001 because of the latter’s attractive desk-fee model.

“It’s all going to come down to whether there are enough clients out there to attract,” Cockell says. “If PIS does what it says it is going to do and takes care of all the legwork, that’s definitely a bonus. I’ll have to see.”

But Rousselle isn’t waiting around while his advisors decide how to run their businesses. He has been on the road steadily, meeting with new advisors. And he’s working on getting the firm up and running in Ontario, where he plans to stay. Currently, PIS Canada is registered only in Manitoba, Alberta, Saskatchewan and the Northwest Territories. As for the growth strategy in Ontario, Rousselle is hoping the business model will speak for itself.

“In Ontario, we’ll acquire if it makes sense for us to acquire,” he says. “But our model and our ownership program is definitely strong enough for us to go out there and recruit. We’ve already added new advisors, and we plan to add more.”

In the meantime, he is striking deals with fund companies in a bid to win lower fees for clients.

Rousselle is taking his cue from Australia on the compliance practices he’d like to see at PIS. “Disclosure in Australia is much more robust than it is here,” he says. “We have some of it but not all of it, and we really want to be in the forefront, in terms of disclosure.”

As a start, Rousselle would like to improve transparency with a standard zero front-end load with trailer for all sales. The rest of the changes will be small, he says, as advisors are already drowning in never-ending compliance rules and regulatory changes.

“The idea is not to make compliance more burdensome, but to incorporate it into our best practices. This should be part of how advisors conduct business,” he says. “There’s no reason we can’t be ahead of the curve.” IE