IPC to remain advisor friendly, CEO pledges

(March 4, 2004) Steve Meehan says he understands the fear that Investor Group’s (IG) takeover of his firm has created among its advisors — the CEO of IPC Financial Network says if he was an advisor, he’d feel the same way. But Meehan is convinced the firm’s 600 advisors will be supportive once they realize that IPC will remain completely independent from its new parent.

Last week, IG announced plans to acquire IPC in a friendly takeover bid valued at $100 million. Under the terms of the deal, IPC will continue operations as an independent firm, with the current management team.

“Advisors have to understand that this is going to be a separate and distinct business,” Meehan says. “So things will be the same, IG is not going to meddle in their business.”

“There are certainly a few people who are worried that IG is going to come in and change everything but the reality is that they invested in us because they wanted to grow in the independent channel,” Meehan adds.

Considering the relatively small size of the transaction, the only way it works from IG’s perspective is to grow the IPC business, states Meehan. “And to do that they have to support the philosophy and culture we’ve always had, that is to be a very advisor-friendly organization.”

Meehan says he’s actually surprised at how well the deal with IG is being received among IPC’s advisors. “I think as advisors understand what it means to the company, they think it’s a great transaction. It’s not IG the operating company that’s bought us, it’s the public company that owns IG and Mackenzie. That’s an important distinction.”

The Mackenzie example provided Meehan with a “high degree of comfort,” he says. IG purchased Mackenzie in 2001, but the firm has remained independent. “And the management at Mackenzie say IG has done what they said they would do — they have not interfered in the business.”

Industry analysts agree IPC will likely operate independently of IG. Rudy Luukko, investment funds editor at Morningstar Canada, calls it a “no-brainer” prediction.

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“It wouldn’t make any sense whatsoever to fold IPC advisors into the IG sales force,” Luuko says. “There is zero overlap in terms of the fund assets under administration since the IG advisors sell only the proprietary IG funds, and IPC advisors sell only third-party funds and the in-house Counsel funds. Combining the two into one entity would totally undermine the reputation IPC has established as an independent dealer that is free to pick and choose from the offerings of various companies. And it wouldn’t make any sense for IG either because one of the reasons behind this acquisition is to diversify into that independent advice channel.”

Meehan says the IG deal makes perfect sense for IPC, giving the small company the ability to leverage off IG’s scale without getting directly involved in their business.

As well as providing IPC with the opportunity to build a brand and invest in new technology, Meehan says the agreement takes away the cloud of uncertainty regarding the firm’s future.

“We’ve always had a good company and a good culture, but for the last couple of years, there were rumours that we were going to be bought. But now that’s gone, I can say clearly we’re going to be around for the next 10 years, so it puts us back in growth mode.”

“I think we’ll be attracting an awful lot of people.”

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What do you think about IG’s move for IPC? Does it threaten the independence of IPC advisors? Join in a conversation already started in the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(03/04/04)

Doug Watt