Strong U.S. growth pushes CI Financial to ‘most successful year’ ever

CI Financial posts record year as U.S. wealth management becomes firm’s biggest asset driver

February 22, 2022 5:49 PM

After a 2021 marked by an expeditious stateside expansion and an aggressive approach to acquisitions, CI Financial logged a record year that the Toronto-based firm’s leaders hope to replicate in 2022.

“2021 was the most successful year in the history of CI in terms of financial performance and asset gathering,” CI Financial CEO Kurt MacAlpine said in the firm’s fourth-quarter earnings statement released Tuesday. “These outstanding results stem from the tremendous progress we have made in executing on our strategy and the successful transformation of the company. During the year, we added $6.6 billion of new client assets, excluding market moves and M&A.

“This was the result of robust growth in wealth management and our best asset management flows in six years.”

M&A

Is CI Financial’s RIA buying spree profitable?

May 21, 2021 12:01 PM

Note: CI Financial discloses its quarterly returns in Canadian dollars. Unless otherwise mentioned, all figures are in Canadian rather than U.S. dollars.

M&A focus

CI Financial completed eight RIA acquisitions and two minority investments in the fourth quarter, adding $49 billion in assets to its U.S. platform. MacAlpine said the deals made, including strategic investments in alternative asset managers Columbia Pacific Advisors and GLAS Funds, bolster the firm’s ability to serve high and ultrahigh net worth clients. To support its expansion, CI Financial deployed $627 million toward strategic M&A in the final three months of the year.

“These heightened levels of activity were driven by two factors,” MacAlpine said during a Tuesday morning earnings call. “We continue to be the preferred partner of choice for the highest quality RIAs in the U.S., and there was a desire for many entrepreneurs to transact in advance of potential tax law changes, which pushed heightened deal activity into Q4 2021.”

Following the close of Q4, CI agreed to acquire the Toronto-based Northwood Family Office with $2.2 billion in assets and California’s Corient Capital Partners with $6.4 billion in assets.

Big U.S. performance

While the third quarter saw CI find its stateside home with the establishment of a U.S. base of operations in Miami to oversee CI Private Wealth, the fourth quarter was all about cementing American wealth management as a premiere moneymaker for the firm. MacAlpine said CI’s U.S. wealth management assets have surged past U.S. $100 billion, up from zero at the start of 2020. He added that U.S. wealth management is now the firm’s largest business line.

But CI is still doing fine at home. In Canada, the firm’s wealth management platform posted year-over-year asset growth of 20%, reaching $80.6 billion. AUM in CI’s asset management segment grew by more than 11% due to strong investment performance and positive net sales.

“The significant turnaround in net sales stems from actions taken to modernize our asset management business, including integrating our boutique investment teams into a single global platform and introducing a broad range of innovative investment solutions,” MacAlpine said. “Our wealth management businesses on both sides of the border generated strong organic growth contributing $6.3 billion in net flows in 2021, a record year for our wealth businesses.”

The bottom line

CI Financial posted record assets of $384.1 billion in Q4, a year-over-year increase of 65.9%.

“2021 was also a record year for asset gathering,” MacAlpine said. “Asset management net flows were roughly breakeven in the fourth quarter, but we finished the year with positive net sales for the first time since 2015. This $9 billion year-over-year improvement was a direct result of the transformation we've been undertaking in this business since 2019.”

Total fourth quarter revenues grew by 15.3% compared to the third quarter while net income grew to $123.7 million, up from $43.8 million in the third quarter. For the full year, revenues climbed 33% to $2.7 billion, but income in 2021 dropped to $412.4 million from $475.5 million in 2020.