Independent investment dealer Canaccord Financial Inc. has announced plans to close 16 underperforming branches, and cut 35 advisory teams, from its Canadian wealth management division, in an effort to bolster the division’s performance.
Canaccord (TSX:CF) said Monday that shutting the underperforming locations and focusing on major centres will allow it, “to better service its private clients by concentrating its support resources and capital investments in client service activities in its key markets.” It also hopes that the move will improve the division’s operating results and target its efforts on regions where it sees the most opportunity to grow its market share.
The 16 branches that are scheduled to close only account for 16% of the $13.1 billion of client assets administered by Canaccord’s Canadian wealth management division, the firm says. The remaining 84% is run at the 16 branches that will remain open in 14 cities, supporting approximately 180 advisory teams.
After the branch reductions, Canaccord expects the wealth management division will operate on a near break-even basis in current market conditions. It says that the branches that are remaining open can be consistently profitable and that it is committed to their growth.
As a result of the closures, the firm expects to take restructuring charges — including severance and other charges related to the closing of offices — of approximately $11.5 million, which will be reflected in its fiscal second quarter. These charges are in addition to previously disclosed restructuring charges related to the consolidation of Canaccord’s Montreal office.
Eden Financial acquisition expands UK wealth management platform
Separately, the firm also announced that it has entered into an agreement to acquire the wealth management business of Eden Financial Ltd., a boutique private client investment management business in the UK, which expands its UK wealth management platform, known as Collins Stewart Wealth Management, and reflects its strategy of capitalizing on the consolidation of the UK wealth management industry. .
Canaccord will pay up to £12.8 million (C$20.3 million) in cash for the firm, with £7.68 million (C$12.2 million) payable upon completion of the deal, and up to £5.12 million (C$8.12 million) after 12 months, subject to revenue retention and revenue mix thresholds. Further incentives of up to £4.0 million (C$6.3 million) have also been set to reward further revenue growth and meeting revenue mix targets, it says.
Once Eden Financial becomes part of Canaccord’s platform, it is expected that assets under management at Collins Stewart Wealth Management will total approximately £9.0 billion (C$14.3 billion). London-based Eden is an independent private client investment management business with £835 million (C$1.3 billion) in assets under management on behalf of 2,500 clients (as of August 31).
Initially, Eden Financial will retain its brand, but Canaccord is planning to rebrand all of its UK, Europe, and offshore wealth management operations as Canaccord Wealth Management in 2013.
The firm will also take restructuring and other charges of approximately £3.3 million (C$5.2 million) related to the deal in its fiscal third quarter.