Morningstar Minute - CI Financial buys Sentry Investments

CI is acquiring a firm that, in our view, struggled to find the balance between stewardship and salesmanship.

Shehryar Khan, CFA 25 August, 2017 | 5:00PM
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Shehryar Khan: On Aug. 10, 2017, CI Financial announced they were purchasing independent investment manager Sentry Investments for $780 million in cash and stock.

If approved by the regulator, the Sentry acquisition would add to CI’s stable of wholly-owned investment shops that already includes Cambridge, Signature Global Asset Managers and Harbour Advisors. CI has achieved success with their model of acquiring firms outright or using subadvisors. And while not every acquisition has worked out as planned, the firm has an overall track record that suggests that they allow the portfolio management teams to invest how they see fit while providing them with scale, back-office and marketing support. Their CEO Peter Anderson confirmed that the portfolio management team played a part in their interest in the deal.

For Sentry, the sale to CI continues the transition period that the firm has been going through since the departure of CIO Dennis Mitchell in 2015. The firm eventually replaced him with E-L Financial’s Gaelen Morphet a year later. And earlier this year, after a settlement with the OSC, CEO Sean Driscoll, son of the firm’s founder John Driscoll, left the firm and was replaced with Philip Yuzpe.

In Sentry, CI is acquiring a firm that, in our view, struggled to find the balance between stewardship and salesmanship. Despite a stable of strong portfolio managers such as Michael Simpson, Aubrey Hearn and James Dutkiewicz, senior management still chose to employ practices such as incentivizing advisors with higher commissions than the industry standard until 2016, and had a run-in with the regulator over its sales practices earlier this year.

Now that CI has landed one of the largest independent asset managers in the country to its stable, we’ll be watching closely to see what direction they take the firm going forward.

For Morningstar, I’m Shehryar Khan.

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Shehryar Khan, CFA

Shehryar Khan, CFA  Shehryar Khan, CFA, is a senior investment analyst for Morningstar’s Investment Management group.

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