Buying a Book AND Organic Growth: How Two Advisors Strike a Careful Balance

Amid a wave of industry consolidation, David Asselin and Louis-David Gouin from Desjardins Securities discuss the benefits and challenges of teaming up – not only to deliver clients next-level service, but to build their business through both organic growth and outright acquisitions.

True Partnership – A Decade in the Making

Louis-David Gouin: David and I met more than a decade ago, when we were both working for an asset management firm. As we became friends, we discussed the possibility of opening an advisory practice together one day. A few years later, when I received an offer from Desjardins Securities in Sainte-Foy, I accepted in large part because of those conversations.

David Asselin: It’s true – becoming Investment Advisors was always part of the plan. Our decision was split among three reasons: First, we really liked recommending the right solutions for clients – and the difference between a wholesaler and an IA is you get to manage that process fully, from planning to implementation. Second, it provided a situation where WE were in charge, motivated only by ourselves. And finally, it was the perfect professional environment for our client-focused approach to service and development.

Two Roads to the Same Business

Louis-David: The transition took a lot of hard work. To succeed, I drew on my wholesaling skills – going to Desjardins branches, among others, around the city, knocking on doors, shaking hands, and building relationships with the local managers. The result: Most of my prospective clients came from branch-level referrals. And by the time David was ready to merge our practices, the business had grown organically from zero to almost $70 million.

David: My story is a little different. While making the career shift, I was contacted by a branch manager at Desjardins Securities who was selling his business. It seemed like an exciting opportunity, so I onboarded his clients – who had approximately $70 million in assets – before merging with Louis-David last year, creating a joint practice of two different types of clients: those brought in through cold-calling and referrals, and those brought in via acquisition.

While this added scale, we soon learned each grouping had unique expectations of us – and the portfolio. Some investors preferred individual stock-picking, while others were attracted to pension-style asset management.

Louis-David: In general, it’s becoming normal for individuals to get the full “institutional” treatment: asset allocation, portfolio construction, due diligence, etc. That’s the new status quo. So, we put our attention on maximizing returns net of fees and taxes, which may not be glamorous but at least kept the focus where it should be – on the bottom line.

David: What helps is we have complementary skills, unlike some teams that are composed of two smart individuals filling the exact same role. We take a different approach. Louis-David handles approximately 70% of the development, which includes relationship building at the branch level, and I take responsibility for 70% of the portfolio management and servicing side of the business. Both of us build experience across the firm, but we also specialize where it makes sense.

Merging Two Books into One

David: We were incredibly proactive in terms of client communication. When I joined Desjardins Securities in July, we notified clients that the merger was going to happen before the end of the year. Even though we were not officially a team, we presented ourselves as one.

The first step was informal; we had a five-minute introductory meeting tacked onto a regularly scheduled review. Then we sent an official letter, timed for when the deal actually went into effect. By then, 95% of the households had been successfully introduced to the other partner.

Louis-David: We made a crucial decision to always say “our clients” instead of “mine” or “his” – because the plan was to operate as a unit rather split the business down the middle. Having a unified front definitely helped build confidence between the two of us – and with clients.

As David mentioned, it was equally important to lean into our strengths. For example, I have a degree in mechanical engineering, which helps me see problems from a more rational and quantitative perspective than most Advisors. Being able to blend technical skills with actual client service was – and continues to be – a differentiator for our practice.

David: This is an important point. Even our experience as wholesalers has enormous impact, because we bring substantial product expertise to the table. We know how various solutions compare to their benchmarks, competitors and alternatives. We know how to analyze them. And we know how to implement them in a client’s portfolio.

I was also wholesaling until recently, which give us valuable street intelligence on best practices – such as how to structure our business model, product suite and disclosure information. So when Louis-David and I sat down to create the building blocks of our combined practice, it was easy to get on the same page. We knew exactly which habits to embrace and which to avoid.

Louis-David: For clients, I think it also helps to know that we gave up lucrative sales positions – and put in the time and effort – to work directly with them. It engenders trust to know it was not purely a monetary decision on our behalf.

David: Exactly. We didn’t become Advisors by chance. It was a choice based on our desire to help people better manage their wealth – and investors feel that when meeting us for the first time.

Growing for the Future

David: These days our focus is on growing the book organically, in order to attract clients who are more aligned with our philosophy, investment style and service approach. Often this requires some education for those who are more familiar with the classic broker-model from the eighties and nineties. We explain how transactional that style was, and how the business has evolved over time.

Louis-David: There’s an old French-Canadian quote that we use when talking about industry shifts: “Innovate or die.” This helps underscore that the wealth management business is like any other – it changes constantly. Where once we used to handle investments and nothing more, we now develop a complete financial plan that optimizes net worth. It’s no longer about individual asset selection, it’s about providing access to the best portfolio managers available.

David: We also mention the research which shows the vast majority of portfolio managers – 90% according to a Morningstar report – don’t beat their benchmarks. Think about that: if a professional team whose ONLY job is to beat the market faces those odds, it doesn’t make sense for Advisors to try, especially when we can spend that time adding real value through planning. Explaining this rationale can take from two to twenty minutes, depending on the investor’s prior beliefs.

Louis-David: Ultimately, we want to work with investors who appreciate what we’re doing. If they don’t feel we are adding value, it’s unlikely they will continue to be our clients for very long. This is why prospects get to hear about our process on day one, so they can decide right away if we’re speaking their language. Are we the right fit? That’s the question.

To gain more valuable insights, practice management ideas and innovative business-building tools, contact your BMO Global Asset Management Regional Sales Representative.