Our mission: To continue building and growing a top-tier wealth
management business that becomes a fully integrated financial
services firm, with Richardson GMP being the foundational
centrepiece, to provide a comprehensive suite of client solutions
across the entire family household balance sheet.
Our ambition remains a bold one: to be the destination of choice
for Canada’s top advisors who share our entrepreneurial spirit,
independent culture and philosophy to deliver unparalleled
face-to-face advice to Canadians opting for non-bank points of
access for wealth management advice. To achieve this, we believe
our best opportunity is to build on the success of Richardson GMP,
a company we created with Richardson Financial, the leadership
team and talented investment advisors at Richardson GMP more
than a decade ago.
In this environment of uncertainty and changing demographics,
where good advice is in increasing demand, we are confident
that, together with Richardson GMP, we have the right strategy
and the key ingredients necessary to succeed. We have a strong
balance sheet; a proven national brand in Richardson GMP; and
we have amongst the best investment and wealth management
professionals in the industry who care deeply about the well-being
of our growing base of high net worth clients across Canada.
Our strategy for the future of Richardson GMP wasn’t formed in
isolation. We engaged outside experts, we assessed opportunities
for independents in a wealth management market dominated by the
banks, and we sought feedback from shareholders. Together with
Andrew Marsh, Richardson GMP’s CEO, we held town hall meetings
with Richardson GMP’s investment and wealth professionals and
those who support them across Canada. We also hosted several
client events and recruiting meetings across Canada to hear directly
from our key target market on what is and isn’t important in a wealth
management firm of the future. Armed with this knowledge, I am proud to share in my inaugural
letter to you how far we have come in the last year, where we are
now, where we are headed and the path that will lead us there.
A YEAR OF CHANGE
2019 was a pivotal year for GMP. Bluntly, after a nearly decade-long
challenging landscape for independent investment banks focused
on niche markets in Canada, the Company was struggling to attract
investors to its story. We experienced disappointing share price
declines year after year. It was abundantly clear we needed to
change course to redeploy our cash resources toward a segment
of the market that held far greater promise. And so, after careful
deliberation, the Board announced the sale of the capital markets
business to Stifel Nicolaus Canada Inc. (Stifel) on June 17, 2019
and we completed the transaction on December 6, 2019.
The sale transaction was a lengthy process due to a variety of factors
including securing complex regulatory approvals. These unavoidable
delays had a significant impact on our operating results for the year.
Our capital markets revenues were $59.5 million in 2019 compared
with $165.8 million in the prior year, and we reported a consolidated
loss of $53.2 million compared with net income of $2.5 million in
2018. This year’s loss included large one-time impairment charges,
restructuring, severance and professional fees incurred to transform
At Richardson GMP, assets under administration at the end of June
were $28.3 billion, recovering most of the short-term losses from the
sharp drop caused by the COVID-19 pandemic. This highlights the
stability and resilience of their business driven by strong demand for
face-to-face wealth management advice and a long-term investment
strategy. On another front, the appeal of our go-forward plan continues
with our partners at Richardson GMP adding six advisory teams and
expected client assets of over $1 billion since August 2019, with
many more in discussion with Richardson GMP across the country.
Today, GMP’s remaining assets are cash, a carrying broker business
and an approximate 34.1% interest in Richardson GMP.
OUR PATH FORWARD
While pursuing the sale of the capital markets business, the Board
formed a Special Committee, comprised solely of independent
directors excluding management and representatives of RFGL to
consider, among other things, the potential consolidation of the
ownership of Richardson GMP under GMP.
In late 2019, the Special Committee began exploratory discussions with
RFGL and the investment advisor representatives on Richardson GMP’s
board to acquire the remaining interest in Richardson GMP not owned
by GMP in exchange for common shares in GMP.
In pursuing a potential transaction with Richardson GMP, the
objective is to own 100% of a business that has a proven brand and
strong record of performance. It is one of the largest independent
wealth management firms in Canada that has the scale and
national platform to gain a greater share of the Canadian wealth
management market that is expected to grow to $7.7 trillion by
2028 (Source: Investor Economics). While this market is dominated
by the six major chartered banks, we believe strong independents
like Richardson GMP with considerable scale and strong brand
recognition will continue to play a pivotal role in attracting investment
professionals and high net worth clients who value independence,
choice and highly personalized service.
At the end of 2019, Richardson GMP had just under $29 billion in
assets under administration, 162 investment advisory teams, nearly
900 employees operating out of 19 locations across Canada, over
$272 million in annual revenues (74% recurring) and $50 million in
adjusted EBITDA. Richardson GMP’s investment advisory teams,
our partners in this exciting journey, are among the top in the
industry with an average practice size of approximately $176 million
in client assets.
A key draw for Richardson GMP’s investment professionals and
others looking to join them (including their client base of high net
worth clients) is the rich 90-year history of the Richardson brand in
financial services and their success in creating wealth over more than
five generations. For the second consecutive year, Richardson GMP
was recognized as a Great Place to Work® by its employees, with
91% of investment advisors saying, “I am proud to tell others I work
at Richardson GMP” and “Taking everything into account, I would
say this is a great place to work.” Some of Richardson GMP’s leaders
are profiled in this year’s Annual Report, and we look forward to
highlighting more in future reports.
These and other factors afford us a unique opportunity to capitalize
on our investment in Richardson GMP to drive future success
including a strong balance sheet, an opportunity to continue to own
a meaningful portion of the business through GMP and gain access
to public markets for liquidity and capital for accelerated growth.
THE IMPORTANCE OF CULTURE
RICHARDSON GMP ENTERS INTO STRATEGIC ALLIANCE WITH CORMARK SECURITIES
In June 2020, Richardson GMP announced a strategic alliance with
Cormark Securities Inc., one of Canada’s premier independent
investment dealers, that will result in Richardson GMP’s advisors
and their extensive high net worth clientele having preferred access
to Cormark’s industry-leading research and new investment issues
and ideas; and Cormark’s marquee issuer clients and institutional
investors benefiting from close collaboration with Richardson GMP’s
growing network of professional, experienced and knowledgeable
investment advisors who are some of the best in the country.
A NEW NAME
At our upcoming annual and special meeting of shareholders,
shareholders will be asked to approve changing the name of GMP
Capital Inc. to RF Capital Group, which we believe will be better
aligned with the firm’s wealth management-focused growth strategy.
Later this year, Richardson GMP, conditional upon the approval of the
RGMP Transaction, will also change its name for the Anglophone and
Francophone markets, respectively, to:
After a multi-year process to transform GMP, we can begin to focus
our resources on capitalizing on the considerable opportunities in
the multi-trillion-dollar wealth management industry. Our franchise
remains strong and resilient, with considerable net working capital
at both GMP and Richardson GMP.
I would like to thank our shareholders, clients and our partners
at Richardson GMP for your patience and continued trust as we
execute our transformation.
I would also like to thank the members
of our Board for your bold decision-making, vision and wise counsel.
Tomorrow will assuredly look different from yesterday; but the
journey promises to be exciting.
Interim President and Chief Executive Officer
Interim President and Chief Executive Officer