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Richardson Wealth partners with Fidelity Clearing to boost growth plans in ‘gamechanger’ pact

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Independent wealth manager Richardson Wealth Ltd. has entered a strategic partnership with Fidelity Clearing Canada ULC as it looks to free up capital and pushes ahead with plans to triple its assets under management over the next five years.

On Thursday, Richardson Wealth- a subsidiary of RF Capital Group Inc. that manages more than $34-billion in assets – announced it has entered into a strategic agreement with Fidelity Clearing Canada for custody, clearing and trade settlement services. Richardson will also gain access to a more advanced technology platform with digital capabilities for advisers, which will help accelerate the company’s ambitious growth plans, says Richardson Wealth CEO Kish Kapoor.

“This is a gamechanger for us. In order for us to get to $100-billion in assets, we need to have someone who can keep up with the pace of change that is happening in the industry right now around digital capabilities,” Mr. Kapoor said in an interview with the Globe.

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“For our shareholders, this allows us to achieve cost savings by leveraging Fidelity Clearing Canada’s scale and it moves our business to a more variable cost structure…..we are also reducing the need for significant future technology investments and will be able to free up that capital to accelerate our organic growth and advisor recruiting.”

Upon regulatory approval, Richardson expects to move over to Fidelity’s platform by the fall of 2022. Currently, Richardson Wealth has clearing services provided by RF Securities Clearing, another subsidiary of its parent RF Capital.

This is not the first partnership the wealth manager has announced since selling off its capital markets business in 2019. In June 2020, Richardson aligned with investment bank Cormark Securities Inc. and earlier this year it set up an agreement with Envestnet to provide a unified managed account platform for its advisers.

Fidelity Clearing Canada services more than 100 investment companies in Canada, and together with Fidelity Investments Canada ULC, represents over $222-billion in assets under administration and management, as of June 30.

The partnership will more than double Fidelity Clearing’s individual assets, said Fidelity Clearing Canada president Scott Mackenzie.

“We began building a digital platform over five years ago and while I wish I had a crystal ball to see where we would be today, we were already looking at ways we could make life easier for advisers such as removing paper and opening new accounts in a seamless digital fashion,” Mr. Mackenzie said in an interview.

“We were actually just building against a vision that we saw evolving in the U.S. and one we have seen through our global partners in Europe. Clearly everybody, at the start of COVID-19, or even through the last year, has talked about needing to digitize. But we were already there and we were already delivering the capability.”

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The agreement with Fidelity Clearing Canada will free up a portion of operating expenses that would have been allocated to upgrade the company’s technology and back office capabilities, some of which could have taken between five to ten years to build in house, Mr. Kapoor said, although he did not provide an exact dollar figure of what those cost savings will be.

Richardson Wealth is one of Canada’s largest independent wealth managers, with 160 investment advisers. But over the past three years, it has undergone a tumultuous restructuring plan that began with GMP Capital – which was renamed RF Capital Group Inc. – selling off its capital markets division in 2019. The company then had to purchase the 67-per-cent stake of Richardson GMP, the wealth management arm it did not already own – a proposal that was tweaked several times owing to the COVID-19 pandemic and a last-minute shareholder revolt over the proposed share price. The dispute ended last October when a majority of shareholders voted in favour of the acquisition.

In May, Mr. Kapoor unveiled the company’s new strategy, which included growing both the company’s assets as well as the number of investment advisers. Mr. Kapoor says while he would consider possible acquisitions of both asset managers and financial advisory firms, using capital for a larger acquisition will not likely occur until the end of 2022.

“We are focused on both organic growth and recruiting… but as great opportunities present themselves, we’re not even having to reach out- there’s more people coming to us,” Mr. Kapoor said.