Amid ‘serious headwinds,’ Assante, Stonegate hit record AUM

Assante Wealth Management and Stonegate Private Counsel, the wealth advisory divisions of CI Financial Corp., reached a record $37 billion in assets under management, the company said on Thursday.

The results for CI Financial’s Q3 ending September 30 came amid headwinds from new regulations and pressures to change fees, Peter Anderson, CI’s chief executive, said on a conference call with analysts.

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“We acknowledge our industry is facing serious headwinds, including regulatory changes, slower sales, the rise of passive investing and fee pressures. We’ve seen some firms react to these headwinds, with an example being the recent Janus Henderson deal,” Anderson said, referring to Henderson Global Investors’ plan to take over Janus Capital and create one of the world’s largest investment firms by AUM.

“I expect there will be more transactions like this in the next 24 months,” he said. CI, he added, continues to look for acquisitions amid industry consolidation in Canada. The company announced the purchase of an 80% stake in Grant Samuel Funds Management, a manager of investment strategies and products in Australia and New Zealand.

“We’re interested in acquisitions and are looking both inside and outside of Canada,” Anderson said.

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Steven Donald, president of Assante, added that fee transparency pressures should be seen as an opportunity for advisors.

“Moving toward fee-disclosed or fee-based platforms continues to be an emphasis. I actually believe this is a tremendous opportunity for those advisors that are embracing that, because there will be a migration of assets toward advisors that provide the articulation of value, and have open and transparent billing,” he said.

CI Financial’s total AUM was $112.5 billion at the end of Q3, up 7% from $105.3 billion a year earlier. Net income was $136.8 million, down 4% from $142.8 million the same period a year ago.

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In a setback for CI Financial’s institutional asset management business, the company said $2.3 billion will be redeemed in Q4 as a result of further redemptions by Scotiabank and another unnamed financial institution. “These mandates have low fees and the financial impact will be minimal,” CI said.

Assante and Stonegate remain focused on mass affluent and high-net-worth investors, he said, and families with more than $500,000 invested with the wealth advisory firms account for 64%, or $24 billion, of assets.

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