IPC adds muscle with purchase of IPG

Thus far, those “tools” include: IPC Investment Corp., a mutual fund dealer; IPC Securities Corp., a full-service investment dealer; IPC Estate Services Inc., which covers insurance and estate planning needs; and Counsel Portfolio Services Inc., a portfolio-service company. Now, through the takeover of IPG, services to be added include the IPG advisors; IPG Insurance Inc., a managing general agency (MGA); Virtuco Technologies Inc., which provides an Internet-based client relationship management software system; and Brigata Capital Management Inc., which develops and sells mutual funds.

In the coming year, operations at both IPC and IPG will be “business as usual,” says Reynolds. However, the long-term plan is to have all advisors, clients and services under the IPC brand.

“That, really, for the next year, is the primary focus,” he says. “As we move through the transaction, eventually the objective is to have one organization. But that sometimes takes time. You really want to make sure that the primary focal point is to make sure there is no disruption to how IPG does business and how they interact with their clients.”

To ensure the amalgamation goes smoothly, Vince Valenti, IPG’s president, will remain with IPC for the foreseeable future. Initially, Valenti’s role will be to help with the transition. In time, however, Valenti has his eyes on a business-development role at IPC.

“I would welcome that [role],” Valenti says. “I have worked with a lot of dealers, a lot of advisors, over the years. I’m active on the [Mutual Fund Dealers Association of Canada] board; I’m on the [board of the] Federation of Mutual Fund Dealers [of Canada] as well. So, I think I can continue to bring value to the industry and, of course, to IPC.”

One area of business that is likely to see changes after the initial transition is compensation. IPG advisors work on either a grid, which maxes out at 90%, or on a flat-fee model of $19,000 a year. IPC on the other hand, gives an 85% payout to the branches, which then decide the appropriate compensation for each advisor.

The flat-fee model, in particular, is an issue – one that is likely to be phased out over time, given that both Valenti and Reynolds don’t see it as feasible. “It’s a model that made a lot of sense 15 years ago,” Valenti says, “but it’s outdated and it’s completely out of sync with the current times.”

Regarding the grid structure, no “major adjustments” are planned for the coming year, says Reynolds. However, all advisors eventually will be moved to one grid. Having that year’s grace period, Reynolds adds, will allow management to explain the various services and value that IPG advisors can expect from their new firm.

Another area the firms will be merging in the future is their insurance operations. As part of the acquisition, IPC purchased IPG Insurance while also expanding its relationship with a third-party provider, Toronto-based PPI, which has two channels: PPI Advisory and PPI Solutions Inc.

In 2012, IPC and PPI formed a strategic alliance that allowed IPC advisors to distribute insurance products through the PPI MGAs. This arrangement also gave IPC advisors access to proprietary PPI products and estate planning services.

IPG entered into a similar arrangement with PPI in 2011; in this case, IPG outsourced its MGA’s work to PPI.

Bringing those two PPI partnerships together should improve the level of services that both IPC and IPG advisors have received in the past. “Amalgamating those arrangements makes it that much more efficient,” says Reynolds.

As well, Counsel Portfolio Services, an indirect subsidiary of IPC, purchased Brigata Capital Management as part of the IPG deal. The Brigata purchase is a “natural progression” of IPC’s business model, says Reynolds. “[Brigata has] some good structure to it and it fits quite well into what [IPC] has already been doing for years.”

Furthermore, both acquisitions emphasize the need for companies to grow quickly to remain competitive, says Dan Hallett, vice president and director, asset management, with HighView Financial Group in Oakville, Ont. It’s getting more difficult for small firms and mutual fund companies to maintain their profit margins, Hallett says, and one way to combat this persistent problems is to grow: “[If] you’re a buyer, that allows you to continue to scale up or, [if you are] a smaller independent selling, that allows you to get folded into a larger organization and stay competitive that way.”

The IPG acquisition is IPC’s 25th since its founding in 1996. In 2010, IPC purchased Regina-based Partners in Planning Financial Group Ltd. and its subsidiaries, including Titan Funds Inc. IPC is owned by Winnipeg-based IGM Financial Inc.

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