IPC isn’t growing its high-net-worth wealth business on the private portfolios of former chief executives. It’s expanding the service on an aging demographic.
As the wealth management industry is confronted by a reorganization amid technological change and consolidation, IPC is growing its high-net worth business as baby boomers retire and sell their family businesses.
“From an age point of view, baby boomers have been our clients traditionally, but now they’re coming into $4 million, $5 million, of investable capital,” Chris Reynolds, co-founder and CEO of IPC, says in an interview.
The firm’s private wealth business, for clients with more than $500,000 in assets, has gained about $825 million in net new assets in three years and will exceed $1 billion by the end of the year, Reynolds says. To support the business, the company is certifying an additional 25 to 30 wealth advisors per year, he says.
He says clients are looking for capital preservation, growth, tax minimization, and estate planning as families prepare to transfer assets to the next generation. The company’s clients include roughly 300,000 families across Canada, most of whom know someone planning a big liquidity event in the next three years as their small businesses are sold or retired, Reynolds says.
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“They’ve built a widget factory in Barrie. They’ve done well and raised a family, paid off their home,” says Reynolds. “We’re also seeing farms sold. Just recently there was chicken farm quota; these things [can] sell for $3 million.”
Focused on communities
Reynolds says the strategy of IPC, which has total AUA of about $25 billion, is to grow its private wealth business by providing a one-stop, community-based private wealth service. The firm has just under 10% of the $300-billion* independent wealth management market, he estimates, defining that market as non-bank.
He says the company has 850 independent advisors across the country. Of those, about 100 are in IPC’s private wealth branch.
The company will also continue to expand through acquisitions, Reynolds says, though he declines to divulge any ongoing talks. “There’s always something on our table,” he says.
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IPC’s competitive advantage over the banks, he says, is its community presence and lower costs. IPC advisors—found “everywhere from Cold Lake to Hanover to Orillia”—work as consultants, saving the firm expenses associated with offices and full-time employees.
Reynolds says about five of every 25 new IPC advisors come from banks amid their downsizing, though he acknowledges the independent work requires an entrepreneurial drive.
IPC eyeing Wealthsimple
The firm is also running a pilot program to use the Wealthsimple robo-application for its advisors. IPC’s owner, Power Financial Corporation, has invested $30 million in the platform.
“Wealthsimple is part of the family,” Reynolds says. “We do have a prototype, which we’re working to develop with Wealthsimple for our advisors. […] I believe every firm is going to need to have some sort of service in that space, including us.”
CSA proposals a burden?
Reynolds says he supports the CSA’s best interest standard proposals, provided that any new rules don’t create unnecessary burden.
“As an independent, believe it or not, we have over 21,000 investment codes [for funds] on our system that actually have money in them,” he says. “If the best interest standard says I have to understand 21,000 different products, that’s going to be somewhat of a challenge. If the burden is simply to do our homework and have our recommended programs for our clients, that’s easier.”
*A previous version of this story cited incorrect information and stated the market was $300 million. Return to the corrected sentence.