A new Canadian wealth management firm led by an industry veteran has launched with $2.3-billion in client assets under management, created through the consolidation of four independent advisory firms and financed by U.S. private equity.
Toronto-based Sonance Financial Inc. will operate as a registered portfolio manager under a fiduciary standard, the closest Canadian equivalent to the registered investment advisor (RIA) model that has become popular in the U.S. during the past decade. Danielle Skipp, who has held senior compliance and executive roles at various firms, is the firm’s chief executive officer.
Miami-based Trivest Partners LP is the controlling shareholder of Sonance Financial, with Ms. Skipp and the founders of the four legacy firms among the other shareholders of the new enterprise.
Advantage Financial Services Inc. in Lethbridge, Alta., SONA Wealth Counsel Inc. in Ottawa, JV Financial Group in Edmonton and Transition Financial Advisors Group Inc. in Phoenix are the four founding partners.
The partners will operate like “lawyers in a law firm,” united by common values and philosophies, says Ms. Skipp, who is working out of the head office in Toronto.
The partner firms will share expertise, technology and resources while keeping existing client relationships. In total, Sonance Financial has 21 client-facing employees, including registered advisors, who serve 1,400 business owners, entrepreneurs and high-net-worth clients, Ms. Skipp says.
Although the RIA opportunity in the U.S. has now been almost fully realized, the opportunity for firms to consolidate under an RIA-like portfolio manager registration in Canada “is still at its early stages,” says Ms. Skipp, who left her role as Nicola Wealth Management Ltd.’s managing director for Ontario last year to start the new venture.
Other U.S. private equity firms have shown an interest in Canadian wealth management recently. Earlier this year, Boston-based private equity firm Berkshire Partners announced a strategic investment in Vancouver-based Harbourfront Wealth Group.
Sonance’s model will give the founders greater control over how the overall business is run compared with working at a Canadian Investment Regulatory Organization (CIRO)-regulated investment dealer, Ms. Skipp says.
“This isn’t a shared services platform that I’m building, and then [the partners] will elect to use like I’m their vendor,” she says.
She declined to say how much Trivest Partners invested in the new business, but pointed out that Sonance has more than 50 employees, with 14 on the corporate team, and has recently rolled out new end-to-end technology for advisors across the firm.
Sonance Financial’s roots began two years ago, when Trivest Partners reached out to Ryan Peterson, owner of Advantage Financial, expressing interest in Canada’s wealth management space.
Although Mr. Peterson was happy with his dealer, Aligned Capital Partners Inc., he says he was attracted by the opportunity to get “full operational control of the business and partner with other established firms that also put clients first.”
Brian Wruk, president of cross-border tax and financial planning advisor Transition Financial, says he and his business partner, Mitchell Marenus, were approached by 30 U.S.-based amalgamator firms in the past three years to discuss a partnership, but had rejected them all until the Sonance opportunity came up.
Mr. Wruk, who is originally from Edmonton, says Sonance gives Transition Financial the opportunity to operate in the same way it always has, while giving his company an opportunity to access better technology and provide cross-border advice services to clients across the business.
Ms. Skipp says Sonance plans to at least double the number of partner firms in the coming months.
“[We have] a really active and exciting pipeline of future partner groups,” she says.
Most of the advisors in Sonance’s pipeline are with independent firms rather than bank-owned brokerages, Mr. Peterson says.
Advisors at independent firms “already own their own businesses” and can make a transition more easily. Meanwhile, advisors at bank-owned brokerages may end up in disputes with their dealers about who owns and can speak to their clients, making it a more difficult proposition for them.
Nevertheless, “I think we will eventually get to [the bank-owned brokerage] space,” he says.
Ms. Skipp says she thinks more advisors will consider breaking away from “the CIRO[-regulated] world.”
By the time advisors at investment dealers grow their books of business to the $300-million to $500-million asset range, “they really want to control more of their client experience and not have the dealer dictate what that’s like,” she says.
“Some will attempt to form their own portfolio management companies, but [...] it’s complicated, it’s difficult. You need more than just AUM to do it,” she says.
Sonance provides portfolio management services through Sonance Wealth Partners (the new name of the former SONA Wealth Counsel) and Transition Financial.