In 2017, when CI Financial bought BBS Securities, it was considered a bold move for the company.
Virtual Brokers, an entity of BBS Securities, had already made waves in the Canadian finance industry with the early adoption of self-directed investing, providing trade execution services for new investors, experienced traders and fund managers. The platform facilitates research, portfolio analytics and puts investors in control using advanced trading platforms.
Founded by Bardya Ziaian, BBS Securities and Virtual Brokers helped pave the way for the next generation of investors, not charging any broker fees through specific programs aimed at kids and young adults.
“Trading doesn’t have to be hard,” according to the Virtual Brokers website. “With that said, it never hurts to learn more about the basics, or review the options available to you when it comes to your money.”
Fast forward to 2021, and CI Financial is now acquiring promising financial service companies at a breakneck pace.
In just the last year and a half, the Toronto-based company bought 16 independent advisory firms in the US, with a combined total of $50 billion in assets under management, in what Barron’s calls an “acquisition spree.”
Then company leaders made their biggest deal ever in January with the acquisition of Chicago-based Segall Bryant & Hamill, a $23 billion asset manager with about $6 billion in assets under management, as well as $5.7 billion for Dowling & Yahnke. In March, CI Financial bought yet another RIA with the purchase of Brightworth, a $4.5 billion RIA based in Atlanta.
As the Barron’s article points out, it’s still unclear whether these expensive acquisitions will pay off for the company, but CEO Kurt MacAlpine is confident it’s heading in the right direction.
“The end game is we want to be the leading private wealth platform in the United States, period,” MacAlpine said. “And we believe the RIA business in the U.S. is the single best model for advice delivery in the world.”
Not everyone is convinced that CI Financial can reach the necessary scale in the U.S. The RIA businesses purchased by CI Financial have yet to create significant profits for the company, according to FinancialPlanning.com.
“That’s what I kind of worry about with CI,” said James Shanahan, a senior equity analyst who covers CI Financial at Edward Jones. “Based upon disclosures they’ve provided, which are limited, it doesn’t appear that this wealth management strategy is very profitable yet...I think they are deploying so much capital into this business. I don’t think they’ve done an especially good job communicating the long-term opportunity.”
But boldness and adaptability rank high for investors, as it does for the companies and brokers that facilitate those investments.
The ever-changing landscape of the investment world requires the ability to transition and sometimes to team up to further impact and growth, and that looks like exactly what CI Financial is attempting to accomplish.
Although technology has paved the way for more inclusive and educated investing, CI Financial, which bought BBS Securities for its modern approach, seems to still see long-term value in the traditional RIA market.
As investment opportunities become more mainstream, brokerages and brokers have had to adapt with changing technology and newer ways of doing things. CI Financial seems to be playing both games: acquiring cutting-edge firms like BBS Securities and Virtual Brokers, while also expanding its influence in wealth management.
Business, particularly in the financial services industry, never remains stagnant.
The contribution of CI's wealth management segment to its net earnings could reach $139.2 million after the Dowling & Yahnke deal closes, an increase of $28.2 million from 2020.
Net income at CI Financial was $103 million in the first quarter of 2021, a 3 percent year-over-year increase.