Industrial Alliance buys National Financial

Industrial Alliance Insurance and Financial Services has struck a deal that will expand its presence in the wealth management business.

The Quebec-based insurer will acquire 100% of the shares of National Financial Corporation, the corporate parent of AEGON Dealer Services Canada, Money Concepts (Canada) and National Financial Insurance Agency.

Industrial Alliance already owns Investia Financial Services and FundEX Investments. Today’s purchase adds more than 350 financial advisors in 65 branches across the country, bringing Industrial Alliance’s total number of advisors to about 2,500.

“Part of this deal’s significance is the notion that for advisory firms to thrive and grow, they must achieve a certain level of scale,” says Dan Hallett, president of Dan Hallett and Associates. “I don’t know if there is a magic number but it seems a common goal is to shoot for the 1,000 to 1,500 advisor range at a minimum.”

The acquisition of National Financial adds about $2.8 billion in assets under administration, bringing Industrial Alliance’s total to over $17 billion.

“This agreement allows us to further expand the scope and diversity of our distribution networks Canada-wide,” said Normand Pépin, executive vice-president of Industrial Alliance. “We expect that, over time, all related distribution channels within IA will benefit from a broader product and service offering, in addition to economies of scale and scope associated with the sharing of support and services, resulting in greater efficiencies.”

Upon completion of the deal, AEGON Dealer Services will be merged with Investia, while the Money Concepts brand and business model will be preserved. National Financial Insurance Agency, the firm’s managing general agency, will continue to serve Money Concepts advisors.

“Integration is always a challenge, and this is a fairly large scale integration, so there are bound to be speed bumps,” says Hallett “Pure distribution doesn’t have great margins so any cost efficiencies enjoyed longer-term as a result of scale will be a positive for the firm.”

The deal is Industrial Alliance’s thirteenth acquisition in the wealth management market since 2000. It is subject to regulatory approval and is expected to close by June 30, 2008.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com