For Purpose, Steadyhand will add a licensed mutual fund dealer, a book of mass affluent clients, and retail investment operation that Purpose can build onto, Purpose CEO Som Seif says.The Globe and Mail
CEO Som Seif is adding $1.3-billion in assets to his financial services company Purpose Unlimited Inc. with the purchase of Vancouver-based Steadyhand – one of the first low-fee mutual fund companies to advocate for more transparency in how investment fees are reported to Canadians.
On Monday, Purpose announced it has entered an agreement to buy Steadyhand Investment Management Ltd. and Steadyhand Investment Funds Inc., an independent wealth management firm serving about 4,000 Canadian investors in Vancouver and Toronto.
Financial details of the transaction were not disclosed.
The deal – which is expected to close in the second quarter – will boost Purpose’s total assets under management to more than $30-billion and add Steadyhand’s team of 20 individuals, including chief executive officer Neil Jensen, who co-founded the firm in 2007 with industry veteran Tom Bradley.
“We’re not just looking for bolt-on deals or asset aggregations,” Mr. Seif said in an interview. “We look at things that are strategically critical to our environment.”
For Purpose, Steadyhand will add a licensed mutual fund dealer, a book of middle-class Canadians who have between $100,000 and $1-million of investable assets, and a retail investment operation that Purpose can build onto, Mr. Seif added.
But the acquisition is also part of Mr. Seif’s five-year vision to hit $100-billion in total assets across the entire Purpose group of companies.
“We can do it organically but at the same time we see a really important role for M&A and supporting the advisory firms and the organizations on our platform to grow as well,” Mr. Seif said.
The Steadyhand brand was first launched just before the financial crisis hit while Mr. Bradley was trying to find a wealth manager for his own family’s needs. He wanted an alternative to the major Canadian banks – a sector he had recently retired from at the time. Instead, he found himself stepping back into financial services to build a low-fee, actively managed fund company that would also offer clients personalized investment advice.
Along with Mr. Jensen, Mr. Bradley built Steadyhand while also becoming an advocate for fee transparency, a major pain point for Canadian investors who found it difficult to calculate what managers were charging in fees for advice. Steadyhand was among the first companies to break out fees, prior to regulatory changes in 2016 that now require it.
“We were a small firm but we built it with bigger ambitions,” Mr. Bradley said in an interview. “Our platform is very scalable and we’ve never compromised on that as we’ve grown the firm. But now we have reached a point where we need more capital to reach the goals we want to bring our clients.”
The much-needed capital is mainly for digital capabilities, Mr. Bradley says, an essential to building future client online portals, and one that Purpose can provide.
“Purpose shares our vision of offering Canadian investors a fresh alternative – one that empowers them with cutting-edge technology and personalized service, instead of making trade-offs between high fees or impersonal service that doesn’t reflect their financial needs,” Mr. Bradley added.
Mr. Seif said the Steadyhand mutual fund dealer and the team will be housed under the Purpose Adviser Solutions business, and maintain its brand. Steadyhand Investment Funds, which manages eight mutual funds, will be merged into Purpose Investments Inc. – an asset management company he launched in 2012 selling exchange-traded funds.
Today, Purpose has expanded into a larger financial services company offering both ETFs and mutual funds to investors as well as retirement and pension planning, small-business lending, digital assets and an independent adviser business.
“We have a big vision for how to ultimately enable customers and future customers to get the benefit of not just great investment management but also a planning first mindset of wealth management,” Mr. Seif said. “That is the future of this industry and it’s something I’ve been pushing our organization towards.”