"If they were a product manufacturer it would have stopped dead" – President explains firm acquisition

Another Canadian independent has been acquired. PWL Capital today announced that the independent wealth management firm will be acquired by OneDigital, a US financial services firm with insurance, HR, and wealth management business lines. The deal will see OneDigital acquire 100% of PWL with a commitment to maintain the firm as an independent subsidiary.

Brenda Bartlett, President of PWL Capital Inc. outlined how the deal came about and why they decided to accept the acquisition by OneDigital. She put this acquisition in the context of wider industry trends as more external players look to acquire Canadian wealth firms as a means of accessing the intergenerational wealth transfer. She explained, too, what this acquisition will mean for the advisors at PWL and how the unique features of their team made them attractive to their American buyers.

“There's definitely a very clear understanding of our strengths and that they do not want to do anything to disrupt our strength, but they bring different strengths and we are absolutely open to leveraging their strengths in Canada,” Bartlett says. “We have grown in the last 10 years because we've adopted a content creation strategy and used digital media to connect with Canadian investors. That’s been a very successful strategy…OneDigital has grown in many ways, but they don’t do content creation, and there’s an opportunity for PWL folks to help them get up and running on that side of the business.”

The acquisition was not something that Bartlett or the leadership team at PWL initially sought out. They were approached by OneDigital and initially, Bartlett explains, they were simply too busy serving their clients to give the offer serious thought. Through organic growth and investment in social channels, PWL had grown to $5.5 billion in AUA across 2,300 Canadian households. That changed, however, when the PWL leaders travelled to Atlanta to meet their OneDigital counterparts.

Bartlett says that she and her team found in OneDigital a near-total alignment in values. They saw similar approaches to work and client service, despite some of the differences in business lines. They also saw areas of complementary strength. OneDigital maintains a significant technology team which Bartlett says will help PWL stay ahead of tech developments. Moreover, they offer an injection of capital which PWL can use to drive growth through the acquisition of advisory teams and firms.

While OneDigital maintains a Registered Investment Advisor (RIA) business in the United States, Bartlett notes that there are no plans to build a similar model at PWL. Regulatory hurdles are one factor but she emphasizes the commitment by OneDigital to maintain independence in PWL’s operations. In the context of other firm acquisitions by investment fund manufacturers or conglomerates with manufacturing subsidiaries, she stresses that any compromise to PWL’s independence would have been a non-starter.

“If they were a product manufacturer, it would have stopped dead right there, because that crosses our line of independence,” Bartlett says. “We do not want to be part of an organization where they're creating, manufacturing their own product and selling that through to clients.”

PWL’s advisors responded to the news of the acquisition with a degree of surprise, followed by excitement as the firm explained the nature of the deal, according to Bartlett. The team is relatively young and the firm is growing, which OneDigital emphasized in their acquisition. The response, therefore, has been a focus on where PWL might find growth in future.

From a client standpoint Bartlett says that nothing will change. That was another “non-negotiable” for PWL. In the wider context of increased interest in wealth management firms, she thinks this acquisition can hold lessons for firms and advisors. More US and Canadian players, be they conglomerates, manufacturers, or private equity are interested in the advisory space. Bartlett believes that an acquisition does not mean compromising on core values.

“You can remain true to your values and your vision while still partnering with a with a larger firm who will help with financing and help with technology,” Bartlett says. “You don’t have to sell out. Because we are definitely not changing our values or our vision to serve Canadians…I think too many advisors get blinded by the number that gets flashed before their eyes. But it’s not the number that’s important, it’s the values of the folks you’re getting into bed with.”