Canaccord’s wealth management earnings set records

The firm also reported $409 million in revenue in its fourth quarter ended March 31 — down 5% from a year earlier and up 5.1% from the previous quarter.

Globally, the firm said its capital markets division earned revenue of $202.9 million during its fourth quarter, a decrease of 10.3% on a year-over-year basis. This was “largely due to reduced advisory fees revenue reflecting the more difficult environment for completions.”

The firm’s Canadian capital markets business generated $62.7 million in the latest quarter, down 10.6% year over year, but up 62.4% from the third quarter, primarily due to higher revenue from advisory fees.

“Fiscal 2024 results in our capital markets division continued to reflect a persistent, sluggish backdrop, which resulted in a substantially lower appetite for risk equities and a notable decline in advisory completions over our core mid-market focus sectors,” said Dan Daviau, president and CEO of Canaccord, in a conference call with analysts Thursday.

Meanwhile, the firm’s global wealth management business set a quarterly revenue record of $200.1 million and an annual revenue record of $773.4 million, an increase of 9.2% from 2023.

Moreover, Canaccord’s total client assets in its global wealth management operations reached a high of $103.9 billion, an increase of 8.0% from a year prior. In Canada, client assets increased by 7.6% year over year to $38 billion, Daviau noted.

He attributed this to “the positive inflows from recruiting and acquisition efforts, in addition to net client inflows and strengthening market valuation.”

The adjusted pre-tax income contribution from the company’s wealth management division amounted to $34 million for the fourth quarter and $140 million for the fiscal year, an increase of 11.7% and Canaccord’s second highest results on record.

The firm’s board approved a fourth-quarter common share dividend of $0.085 per share.

“This reflects continued strong performance of our wealth management division, which has been the primary driver of our resilience in 2024,” Daviau said.

The firm has also overhauled its board of directors, with Daviau set to take over the role of chairperson and several members leaving.

Daviau told analysts Thursday that Canaccord’s outgoing chairman David Kassie will still be involved in other aspects of the business and that having a smaller board will improve the firm’s agility, while providing an appropriate balance of independence to ensure accountability and sound risk management.

He added that having himself take over as chairman will allow the firm to streamline its communications.

“The job of the chairman is to facilitate information flow between the management teams, the company and the board. I can do that best and I can do that most quickly,” Daviau said.

“We certainly still involve the governance associated, and like I say, the board’s more independent today than it’s ever been at 80% independence, so we feel pretty good about the structure here going forward.”

On May 31, Canaccord also announced the acquisition of Cantab Asset Management, a professional firm of independent financial planners, wealth managers and discretionary investment managers based in the U.K., pending regulatory approval and customary closing conditions.

The transaction is expected to close in September 2024.