Desjardins to acquire Worldsource wealth and insurance businesses from Guardian Capital

Desjardins plans to operate the three companies as standalone entities with their current management teams and employees, and maintain advisor independence “with respect to open architecture for products and solutions,” a release from the firms said.

IDC, WFM and WSI serve more than 5,000 independent advisors in the Canadian insurance and financial advice markets.

“This acquisition strengthens Desjardins in the important life insurance and wealth management sectors across Canada,” said Desjardins Group president and CEO Guy Cormier in the release.

WFM and WSI will strengthen the firm’s distribution of retail investment products, he said, while IDC will extend Desjardins’ market reach and leadership in independent life insurance distribution.

“All three acquired companies align with Desjardins’ values and commitment to win the trust of members and clients and will continue building on their outstanding growth serving clients through the independent advisor channel,” Cormier said.

Following the acquisition, Desjardins will have more than $2 billion in life insurance premiums in force and $43 billion in combined assets under administration in mutual funds, segregated funds and securities (per June 30 figures).

Guardian president and CEO George Mavroudis said the sale of the wealth businesses allows the firm to focus on its investment management business.

He said the deal won’t have a major impact on Guardian as it operated independently from the Worldsource businesses. He also said finding a buyer that would maintain Worldsource’s way of operating was important.

“Worldsource has its leadership and management team and, very importantly, in this transaction, Desjardins identified that our team was exactly who they wanted to run the business going forward,” Mavroudis said in an interview. “It’s business as usual.”

Doce Tomic will lead the dealership on the MFDA and IIROC side, he said, while IDC executive chair Paul Brown and president and CEO Phil Marsillo will continue to lead the MGA business.

“All the people that report in to them will continue to have the same roles,” Mavroudis said. “Continuity was critical.”

He said there’s no distribution deal with Desjardins for Guardian products, as Desjardins will continue to respect the independent distribution channel for advisors. Worldsource advisor sales of Guardian products “is not that significant relative to our total AUM,” he said.

The transaction is expected to close in the first quarter of 2023.

Desjardins has been focused on expanding across Canada in recent years. A 2017 partnership between Desjardins, CUMIS and provincial credit union centrals created Aviso Wealth, a large independent wealth management firm for the credit union system (Desjardins owns 50% of Aviso).

Doce Tomic, Guardian’s head of wealth management, recently told Advisor.ca that wealth firms can benefit from partnerships with credit unions.

“As the credit unions have grown and have had a stronger foothold — not only in retail banking but also in business and commercial banking — the values of being entrenched in the community and being a member and an owner of the credit union, to those individuals that specifically deal with them, is very important,” he said.

In October, Worldsource announced it had extended its 14-year partnership with Coast Capital for another decade.

Rating agency DBRS Limited said the acquisition will give Desjardins “a leading position in the independent distribution of life insurance and retail investment products in Canada and accelerate its growth strategy across the country.”

The transaction would be “easily absorbed” by Desjardins and have a minor impact on its capital, DBRS said.