Peak expands in Western Canada

Customplan Financial Advisors is an MGA with more than 300 advisors in British Colombia, Alberta, Saskatchewan, Ontario and Newfoundland. Under the deal, those advisors will join Peak’s network of about 1,000 independent financial advisors and registered professionals in Canada, including about 300 active insurance advisors.

Unlike a typical merger or acquisition, however, the deal does not involve a change in ownership of either firm. Customplan will remain an independent MGA, operating in partnership with Peak. It will retain the Customplan brand in Western Canada.

“This is not a conventional transaction, or just a straightforward acquisition,” said Robert Frances, president and CEO of Peak Financial Group. “This is more of a coming together of two independent MGAs, Peak Insurance Services and Customplan.”

Amid a trend of consolidation in the MGA marketplace in Canada, Frances said the deal represents an alternative way for firms to gain economies of scale without sacrificing their independence.

“We think other MGAs across the country are going to look at this and say this might be an interesting model, where a founder of an MGA can continue to operate in full independence, and be part of a national network, yet not have to sell everything – not feel that they’re being consolidated into something else,” Frances said.

Under the partnership, the firms will benefit from sharing the costs associated with technology and systems, according to Byren Innes, senior vice president and a director with NewLink Group Inc. in Toronto.

In addition, the MGAs will be able to leverage each others’ strengths: Customplan advisors will be able to tap into Peak’s expertise in the mutual fund business; and Peak advisors will benefit from Customplan’s core strength in insurance, including its group insurance offerings. This will likely generate more cross-selling opportunities, Innes said.

“The Customplan advisors will do more mutual funds than they would have, and the Peak advisors will do more insurance than they would have,” he said. “I would think business will go up overall.”

The arrangement also provides stronger support for advisors – especially for Peak advisors located in the west, where the firm hasn’t previously had a large presence, and for Customplan advisors based in the east.

The deal made sense since the two firms have very similar business models, according to Karl Krokosinski, president and CEO of Customplan Financial Advisors.

“We are proud of our alliance with Peak,” he said. “Peak’s vision, commitment and values are literally identical to our own and will allow Customplan Advisors to enhance their activities in mutual funds and securities in a climate where their independence will be fully respected.”

Peak said the move is part of an effort to diversify its revenues. In addition to its insurance arm, the full service dealer operates Peak Investment Services Inc., Peak Financial Services Inc. and Peak Securities Inc. The company has about $6 billion in assets under administration, and serves about 135,000 investors across the country.

The deal follows other acquisitions Peak has made in recent years, as it strives to become one of Canada’s largest fully independent financial groups. In 2009, it acquired mutual fund dealer Promutuel Capital Financial Services Firm, and in 2007 it acquired mutual fund dealer AXA Financial Services Inc. Peak’s last acquisition in the insurance business was in 2002, when it acquired MGA Greater Montreal Financial Services.