Manulife to buy Berkshire-TWC

Manulife Financial has struck a deal to acquire Berkshire-TWC Financial Group Inc., bringing more than 700 advisors from 237 branches into the fold of the insurance colossus.

“When coupled with Manulife Securities, this will double our number of wealth management advisors across Canada and triple assets under administration in that business,” said Paul Rooney, president and CEO, Manulife Canada. “This increased distribution capacity will add a significant amount of high-quality business to our Canadian operations.”

The combination of Berkshire-TWC with Manulife Securities International would create a sales force of 1,500 independent advisors, Manulife said in a press release, with total assets under administration of about $19 billion.

“This sale reflects the continuation of our overall strategy to keep building momentum for our independent advisors and their clients,” said Bob Levis, CEO of Berkshire-TWC.

Maintaining that independence — or more specifically, the perception of independence — could prove tricky, but Roy Firth, executive vice-president of Canadian individual wealth management, Manulife Financial, says the company never forces product onto its advisors.

“We expect to earn every dollar of sales that these people give us,” he says.

“Their advisors are very similar to the type of advisors that we have in Manulife Securities,” says Firth. “[Berkshire] brings an IDA platform to our fold, and that’s something that we have wanted access to.”

Manulife hopes to retain the majority of Berkshire-TWC’s advisors, and Firth says the transaction “is structured to encourage that” but declined to give details. He says most Berkshire advisors are “advisors of substance” who will fit nicely with Manulife’s model, and that there are no plans to cut any loose.

“In the short term, it means very little to them in their everyday life,” he says, with the head office remaining in Burlington and little change expected in the back office staffing. For the foreseeable future, the Berkshire-TWC name will survive.

“There is a value to the name — it’s well-known in certain areas, and we think it’s a good name,” Firth says. “Eventually, we have to have some sort of similar naming model, but it’s yet to be determined.”

At least one analyst has speculated that the 237 branches could serve as a platform to evolve Manulife Bank into a traditional retail banking player.

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“I wouldn’t put too much credence into that,” Firth says, pointing out that the typical office is not a street-level operation that would be conducive to retail banking. “It operates in a branch model, but it’s not a branch model that you would think of as in the banking physical presence. We operate a virtual bank, and that’s how we intend to continue to operate.”

Advisors will be free to choose their platform, he says, as Manulife’s varying contracting models can accommodate either IDA or MFDA licensees.

“My guess is that advisors with larger, more sophisticated books will opt for an IDA brokerage platform,” says Firth. “We don’t force anyone to do anything.”

Firth says negotiations began in early May, and that the transition plan could take 12 to 18 months to implement. The target date for completing the purchase is August 31, 2007, although regulatory approval for the deal is pending. Financial details were not released.

As for Berkshire’s parent company, AIC Ltd., Firth says there was never any talk of purchasing the company, as it was not for sale. Speculation has been rampant lately that the fund company could soon become a takeover target, however, as it struggles to stem the tide of redemptions.

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

(06/26/07)