Canaccord recruiting more than 9 advisory teams, $2.5B in AUA

Canaccord Genuity Group Inc. says it has recruited nine advisory teams that, together with more planned acquisitions, will help grow assets under administration by about $2.5 billion.

“In recent months, we have welcomed nine high-performing investment advisory teams and we continue to gather commitments from others. These current and planned additions represent combined new assets of approximately $2.5 billion, which brings us significantly closer to our stated goal of $15 billion in assets under administration and ultimately beyond that level for this business,” Dan Daviau, chief executive of the Vancouver-based company, said on a conference call with analysts Wednesday morning.

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As part of Canaccord’s strategy to grow its Canadian wealth management unit, the company last month recruited the LePoidevin Group from National Bank. The team of Vancouver advisors brought over more than $1 billion in managed assets.

In September, Canaccord said it was raising $60 million through a private debt offering to support recruitment of advisors and grow its Canadian wealth management business.

Speaking for the company’s Q2 results, Daviau said Canaccord was benefiting from flux in the industry and wasn’t interested in buying a firm, even amid speculation that Richardson GMP is for sale.

He questioned why the firm would acquire another independent for 2.5% of assets when it can recruit advisors “much cheaper than 2.5% of assets, and you’re getting the people you want, and you’re not bringing on ancillary infrastructure that you ultimately have to rationalize.”

Daviau added: “We’ve really had more advisors come at us than we’ve seen in a very long time.”

Brad Kotush, chief financial officer, said the $2.5 billion in additional AUA from recruitment is what the company hopes to achieve in the short term, and the AUA coming in immediately from the nine advisory teams is closer to about $1.5 billion. None of the new information about new recruits was reflected in the company’s Q2 results, which ended September 30.

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Canaccord, an investment bank and money manager that also has wealth management offices in Europe and Australia reported its second consecutive quarter of profitability for its Canadian wealth management business after recording losses in recent years.

Wealth management for North America reported income of $632,000 in the quarter ending September 30, up from a loss of $1.67 million in the same period a year earlier.

AUA in Canada increased by 9% to $10.3 billion at the end of the quarter, up from $9.5 billion a year earlier.

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The company announced that Kotush, CFO, executive vice-president and chief risk officer, has decided to leave the company, becoming effective after the release of its Q3 results in February. At that time, Don MacFayden, currently CFO of Canaccord’s U.S. subsidiary, will become CFO and executive vice-president.

Adrian Pelosi, treasurer and senior vice-president of risk management, will also be moved up to treasurer, executive vice-president and chief risk officer, and Nick Russell, CFO of Canaccord’s Europe and U.K. subsidiary, will become senior vice-president of finance.