On Monday, a new national independent brokerage firm called Wellington-Altus Private Wealth will be open for business and ready to take on the Big Six banks.
The Winnipeg-based firm combines the former Wellington West Capital — built by founder Charlie Spiring in his six years with National Bank Financial, along with his colleague Todd Degelman — and Toronto-based Altus Securities. It likely will be the largest and most successful launch ever in Canada.
Wellington-Altus will have five locations right off the bat. In addition to the Winnipeg head office, there are Degelman’s Saskatoon office, Altus’s Toronto office and its sub-office in Halifax, as well as a newly opened West Vancouver office.
Spiring, Degelman and Altus’s portfolios combine to give the new firm about $2.5 billion in assets under management at the get-go, plus access to the National Bank Correspondent Network (NBCN) back office.
"If we pull this off, like we expect, this will be the most successful opening of an investment dealer in the history of the business," Spiring said.
Altus co-founders Ben Kizemchuk and Paul Jelec are former colleagues of Spiring; they ran the Toronto office of Midland Doherty, while Spiring was running the Winnipeg office. They formed Altus in the early 1990s around the same time Spiring founded Wellington West Capital. (National Bank Financial acquired Wellington West for $333 million in 2011.)
Altus brings more than $600 million in assets under management to the new firm.
"Now, many years later, here we are joining up again and forming what we believe will be the dominant independent Canadian brokerage firm in Canada," Jelec said.
Their confidence has something to do with the fact that the Canadian brokerage business has become dominated by the Big Six bank operations.
"Looking at it from the industry side, they need some strong sources to help the food chain of wealth creation in Canada," Spiring said. "Someone has to start the new companies. We can be the balancing force."
Jelec said the Canadian investing public is better served when there is more competition.
"We think it is necessary," he said. "There has not been a time that it is more needed than right now."
Spiring was effusive in his gratitude for the treatment he’s received from National Bank, which has added to his confidence that the new venture will be a winner.
"Sixteen months ago I resigned as vice-chairman of the bank and at that time I told them I really wanted to build this with the support of the bank," Spiring said. He has built up a solid team of associates over that time.
"The CEO of National Bank has been incredible. They helped us in a lot of ways. For one thing, they allowed us to be open in what we were doing. Normally, you have to sneak out the back door overnight and do these things."
Instead, the bank allowed Spiring and Degelman to take close to $1.7 billion in assets out of its shop.
"It’s incredibly generous and we are going to try to support them," he said. "They are betting on substantial growth. They will be our back office so they will earn some revenue off that. And if we grow three, four, five times, they will be rewarded for their bet on us."
The thinking is that Canadian investors are hungry for an alternative to bank-owned brokerages.
Ian Russell, CEO of the Investment Industry Association of Canada (IIAC) said over the past eight years, about 30 independent firms across the country have disappeared.
"Banks have become more dominant. They have grown substantially," Russell said. "And there is a unique appeal to independents."
Russell cited several independents, including Richardson GMP, Canaccord Genuity and Raymond James.
"They are really very effective competitors in the business," Russell said. "There is plenty of evidence to show small firms can be very successful in this market and it’s very gratifying to see someone else step up to the plate."
Spiring believes the time is right and that the experience that the partners are bringing to the venture will allow them to "make new mistakes, but not the same ones we may have made in the past."
Technology is available now that can compensate for scale — and Spiring believes Wellington-Altus can get bigger and faster.
The plan is to double the number of offices by the end of the year, when the Winnipeg head office is expected to have a staff of as many as 50.
"I can see us at $5 billion by year-end," he said. "To put that in perspective, last time it took us (Wellington West) 10 years to get to $3 billion. We will be $3 billion by June. At the end, Wellington West only got to $10.5 billion. We (Wellington-Altus) will be halfway there inside our first year."