In the evolving world of insurance, in which there is no such thing as an archetypal managing general agent, Toronto-based PPI Financial Group has defined its own niche.

Since its inception almost 30 years ago, PPI’s focus has been on the wealthy and ultra-wealthy, says Jim Burton, PPI’s chairman and CEO. “Most carriers are unsuccessful on their own in doing that.”

PPI’s ideal client is a professional or executive with $1 million in investible assets or a business owner with a business worth $1 million. But PPI also serves clients with growth potential, says Kevin Wark, its senior vice president.

As a result, instead of serving a broad demographic, PPI provides technically complex products and services to suit sophisticated clients. For example, tax planning — a special interest of Burton’s — has figured significantly at PPI.

This has allowed PPI to build a favourable reputation among insurers. “PPI is a very special MGA,” says Neil Skelding, president and CEO of RBC Insurance. “It’s almost an entity unto itself.”

RBC is attracted to PPI’s focus on the high-end market, especially its ability to develop products. “It provides products and services to the who’s who of Canada,” Skelding notes.

PPI has developed two universal life products for RBC; while they’re RBC-branded, PPI has the exclusive contract to distribute them nationally.

Skelding attributes this arrangement to PPI’s in-house expertise: “It’s a well equipped boutique house.” PPI has 200 staff members, including lawyers, actuaries, accountants and information-technology professionals.

Another PPI-developed product, underwritten by Royal and SunAlliance Group PLC, is called TriAccess. It provides reimbursement of up to $3 million for a policyholder who travels to the U.S. to have serious medical problems treated. The product is distributed exclusively by PPI.

In the more than 30 years since Burton started in the insurance industry, he has always tried to differentiate his business. When he began, he says, there were two types of agencies — branch agencies staffed by captive agents and MGAs.

“MGA” became a catch-all term, referring to anyone who had an independent contract with an insurer, says Burton. However, he says, MGAs have tended to be small operations, usually with one to three offices.

PPI has a broader reach, with eight offices from Victoria to Montreal. “I’ve always seen myself as a national distributor,” says Burton.

Unlike other financial services firms, PPI has never aspired to be anything but an insurance MGA, eschewing the dual role of MGA and mutual fund dealer. Burton says he felt he could defend value in a sophisticated insurance market of customized products. “My niche is upscale insurance,” he says.

Appreciation for this focus is reflected in the loyalty of PPI’s independent associates: more than 80% of the business written by PPI associates consists of products supplied by PPI.

The associates themselves are focused primarily on the insurance industry: only 38% of PPI advisors hold a mutual fund licence, while 55% have the chartered life underwriter designation.

PPI works with a core group of 150 associates. The average age is 54; average time in the business is 26 years.

“Other MGAs are collectors of relationships,” says Burton. They’re trying to attract the average independent advisor — usually based on remuneration, he adds.

While PPI doesn’t pay the highest rates, says Burton: “We provide services that help our associates make the most money.”

Product manufacturing also distinguishes PPI, Burton adds. His ambition has always been to provide a value proposition for advi-sors who want to serve the upscale market. He decided on this direction for two reasons: first, consumers were becoming more sophisticated in the 1970s; second, Ottawa reformed the Income Tax Act in 1972, which resulted in planning challenges and opportunities.

These developments coincided with Burton’s early days in the business. Before PPI, Burton worked as an advisor with Sun Life Assurance Co. He didn’t want to depend on friends and family to build his book, and decided to distinguish his services with tax expertise.

He took courses offered by the Alberta Law Society, updating advisors on tax changes. He also regularly attended Canadian Tax Foundation conferences.

Taxes continue to be a major concern at PPI. It has a tax policy committee, which meets monthly. It consults regularly with other industry organizations such as the Conference for Advanced Life Under-writing, Advocis and the Canadian Life and Health Insurance Association. It makes submissions on tax issues to the federal Finance Department.

@page_break@In fact, Burton was a driving force behind the creation of CALU in 1991 and was its founding chairman.

CALU members generally are high-end advisors who provide a wide range of advice, including estate planning, corporate-owned life insurance and employee benefits. One of CALU’s main activities is to lobby Ottawa on tax issues affecting insurance clients.

PPI made a conscious choice to keep to the insurance business, but it has also developed strategic relationships with upscale investment boutiques. This appeals to their shared clientele — mostly wealthy people in their 60s whom, Burton says, “don’t want to be hustled. They’re looking for planning.”

PPI also has a financial planning division. Its approach, says Wark, is to collect and review a client’s past tax returns, company tax returns and wills. PPI can also consult with the client’s accountant. Afterward, objectives for retirement, tax and estate planning, business succession and charitable giving are formulated.

As a client’s business grows more successful and family needs evolve, more sophisticated planning is often needed, says Wark. “We fill in the gaps,” he says.

Even if clients already have obtained legal and tax advice, says Wark, PPI will review overall plans “to see what we have to improve them.”

Compliance is one of Burton’s concerns about the future of MGAs. “We’re going to be taking on a lot more responsibility for governance of advisors,” he predicts.

Under the law, says Grant Swan-son, executive director of licensing and market conduct for the Financial Services Commission of Ontario, MGAs are treated the same as individual agents.

The responsibility for compliance lies with the insurers, says Swanson. They must screen agents for suitability, and report regularly on agents’ suitability status.

The need for compliance stems from the varying roles of MGAs. Some merely provide back-office administration, while others sell, says Swanson.

Burton says advisors may be “MGA shopping” to see which one imposes the least compliance bur-den. But he adds that PPI “doesn’t want to be in that market.”

PPI’s predecessor was Prairie Pacific Insurance, started in 1978. From its first office in Calgary, the firm expanded throughout Western Canada. Soon after, Burton joined forces with Toronto-based Dickstein Insurance Agencies to form PPI.

In 1992, PPI introduced its disability benefits division. In 1997, it established itself in the group benefits market.

PPI has strategic supplier agreements on the individual life side with RBC Insurance, Standard Life Assurance Co. of Canada, Manulife Financial Corp. and AIG Life Insurance Co. of Canada. On the group benefits side, some of the companies it deals with include Great-West Life Assurance Co., Sun Life Financial Inc. and Manulife.

In 2006, PPI wrote up about $85 million in new individual policy premiums, and $30 million worth of new group premiums. In 2005, it wrote new individual premiums of about $70 million, and new group premiums of $27 million.

Overall, Burton says, PPI has $1 billion of individual policy premiums in place, and about $250 million in group premiums. IE