IG Wealth hires Goldman Sachs to bring institutional investment strategy to masses

IG Wealth Management, which oversees the savings of roughly one million Canadians, is handing a multibillion-dollar investment mandate to Goldman Sachs Group Inc. as part of the Winnipeg-based company’s push to bring institutional investor strategies to the mass market.

On Tuesday, IG Wealth is announcing it concluded a year-long search by hiring Goldman Sachs Asset Management to steward a family of five funds branded as the IG Strategic Wealth Portfolios. The portfolios currently hold $23.2-billion in client savings, roughly 15 per cent of IG Wealth’s total assets under management.

IG Wealth head of investment solutions Florence Narine said in an interview that Goldman won the assignment by showing it could deliver sophisticated global investment strategies in equities, fixed income and alternative assets such as private equity and infrastructure to individual clients at competitive fees.

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The IG Strategic Wealth Portfolio includes funds focused on income and growth, along with three balanced fund offerings.

“Goldman proved they could deliver the best of their institutional service to our clients, and their culture fits with ours,” Ms. Narine said. She said IG Wealth chose the New York-based company after a competition between a short list of five asset managers.

IG Wealth is a unit of IGM Financial Inc. and part of the Power Corp. of Canada conglomerate, controlled by Montreal’s Desmarais family. The firm, formerly branded as Investors Group, has one of the country’s largest wealth management teams, employing more than 3,000 financial advisers.

IGM Financial is also parent to Toronto-based Mackenzie Investments, which continues to manage savings for many IG Wealth clients. Ms. Narine said Goldman Sachs is one of more than 20 external asset managers available to IG Wealth customers and their advisers.

Goldman’s asset management division has approximately US$4-trillion in assets under management, with a focus on institutional investors such as pension plans, insurers and wealthy families. In 2004, when the Canada Pension Plan Investment Board first began hiring external managers, the fund manager picked Goldman as one of its four advisers.

“We believe a modern approach to asset allocation, dynamic investment strategies, robust risk management processes and well-diversified portfolios help clients achieve their objectives across market environments,” Alexandra Wilson-Elizondo, co-chief investment officer of Goldman’s multi-asset solutions division, said in a press release.

“We are excited to partner with IG to bring the capabilities of our multi-asset solutions team to IG’s clients across Canada,” she said.

Asset management platforms like IG Wealth, the six big banks and independent investment dealers like Canaccord Genuity Group Inc. compete fiercely for advisers. Ms. Narine said IG Wealth’s partnership with Goldman will be part of the company’s hiring and retention strategy.

IG Wealth is bringing Goldman into the fold during a bull market in equities and a period of geopolitical uncertainty that has clients committing more of their savings to markets. Ms. Narine said adding the Wall Street firm’s expertise to its offering is meant to ensure IG Wealth can meet its clients’ needs across market cycles.

IG Wealth, like any large money manager, gets a substantial boost to its profitability as it scales up and adds to assets while keeping expenses flat.

IG Wealth’s assets under management grew by 18 per cent to $153-billion over the 12 months ending June 30. In the same period, the company’s earnings before interest and taxes, a key performance measure, soared 29 per cent to $264-million, according to a report last month from RBC Capital Markets.

Over the past year, RBC analyst Bart Dziarski said parent IGM Financial has done successful turnarounds at both IG Wealth and Mackenzie. In the August report, Mr. Dziarski said: “IGM is focused on new growth opportunities driven by strategic investments.”

IGM Financial is also a major force in direct investing, without advisers, through its 25.5-per-cent stake in Wealthsimple Technologies Inc. Founded in 2014, Toronto-based Wealthsimple has $155-billion of assets and four million clients.