In an exclusive interview with The Insurance Journal, Don Charter, chairman and CEO of Dundee Insurance Agency Ltd., says he wants to change a misconception about Dundee’s commitment to insurance.
In meetings with advisors who joined Dundee Wealth Management Inc. from the Cartier Partners network, acquired by Dundee at the end of 2003, Mr. Charter says he has repeatedly come up against a misconception about his company. “It’s been this huge question of, ‘Is Dundee really focused on insurance? Because, you know, you haven’t in the past,’” recounts Mr. Charter, who is also the chairman, CEO and president of Dundee Securities and the head of Dundee Private Investors and Dundee Mortgage.
Mr. Charter is seeking to change this perception. “Insurance is very important to me. I would not have built and started Dundee Insurance if it were not the case.”
Dundee created its own insurance agency in 2000 to provide insurance support, service, training and products to its advisors. Prior to the Cartier acquisition, about 75% or more of Dundee’s advisors were dual-licensed to sell insurance. Interestingly enough, adds Mr. Charter, everyone viewed Cartier as having a very strong insurance focus. But the percentage of dual-licensed advisors was much lower in that network, he says, estimating it at around 50%.
Mr. Charter also views it as an advantage that Dundee started its own insurance managing general agency (MGA) from scratch, enabling it to build a system that well serves its advisors’ needs. “We did not inherit a standing MGA.” Cartier, on the other hand, was created from a series of mergers that were not integrated well together, he adds.
The perception that Dundee is not committed to insurance isn’t widespread in the industry at large, Mr. Charter believes. “I think that the misconception had to do with part of the Cartier advisory network who were not familiar with us and where the background was more insurance oriented.”
He calls the reaction in Quebec, where Dundee did not have much of a presence before the acquisition, “interesting.” He elaborates on this comment by explaining that there was just a lack of knowledge about Dundee in Quebec. “With the advisors not having a lot of knowledge about us, they just came to conclusions, often being pushed in that direction by our competitors who were busy trying to recruit advisors and were providing, I guess, inaccurate rumours about what Dundee was all about.”
One of the main rumours was that Dundee did not have an insurance background. “...You can see that their bent would be to make it sound like we weren’t committed to insurance.”
Quashing such rumours is a “major chore with an acquisition and integration is getting out and communicating the true story to advisors,” explains Mr. Charter who has spent a great deal of time on the road talking with and listening to advisors. As a result of these meetings, Mr. Charter says he believes this misperception is now falling away as the advisors get to know and understand Dundee.
In addition, Dundee held two national sales conferences this fall. He calls the events “huge successes” with turnouts of 800 at the English language event in Toronto and 300 at the French conference in Montreal. “People were very excited seeing how we operate and the commitment we have to advisors, our commitment to their independence and the tools we’re bringing out…”
Mr. Charter adds that bringing on board more Quebec advisors was a primary motivation behind the Cartier acquisition in the first place. We wanted to have a better profile in Quebec on our wealth management division side. Before the acquisition he estimates Dundee’s number of financial advisors in Quebec at about 30. Now there are 400.
Interviewed in December, Mr. Charter explained that in January the company planned to complete the merger of all the Cartier insurance business into Dundee’s insurance business and roll out an updated platform “that has taken the best of both sides and put them into one.”
This integrated insurance business will operate under the name Dundee Insurance Agency Ltd., and will include both a national accounts and MGA platform to provide “maximum flexibility to our advisors. Key to this integration will be the adoption, by the former Cartier advisors, of the VirtGate back office system supplied by CoVirt Inc. Dundee Wealth implemented this system just over a year ago. This will replace Cartier’s in-house system. “When we compared the two, it was clear that VirtGate was a superior system.”
The system will also be useful for delivering marketing tools, information and data, he adds. “So we think it’s a productivity tool, training and marketing tool that will help advisors build their businesses.”
In January, Mr. Charter adds that Dundee will also roll out a platform with respect to its payout structure and what will be provided in terms of sales and marketing support for advisors in different regions. “So we’ve integrated the businesses, we’ve used this opportunity to examine both systems, pick what we think has been the most successful approaches and come out with a new defined way to get that out and working in 2005.”
Bringing the advisors from the Cartier system fully into Dundee’s system should go a long way toward reassuring the advisors about Dundee’s commitment to insurance, Mr. Charter expects. “I think, to some extent, it was just that nobody saw what we were going to do in terms of integration and we’re on the cusp of rolling that out now … I think that impression is going to go away just by (advisors) seeing what we’re doing moving forward and how we’re implementing it and the advantages of our systems.”
He praises the level of professionalism demonstrated by the advisors from the Cartier network as they go through the integration and systems conversion process. This professionalism has been “very impressive and confirmed our decision to make the acquisition that we did.”
Mr. Charter adds that this integration and conversion process is particularly daunting because Cartier was created from a series of mergers with “virtually no work having been done to integrate those acquisitions into one firm, so our process has been a really tough process integrating them in.”
For, example, the network’s technology was a mishmash of systems. “Cartier technically had, I think, nine different back office systems, so it’s not just like one conversion. We have nine of them to do with 2000 advisors.” They are “a great group of financial advisors. They just got put together too quickly.”
He notes that while the insurance side of this conversion is being rolled out in January, other parts of the system will be integrated throughout the year. One major conversion was put off until after RRSP season. The company is expecting to complete all back office system conversions by the end of 2005.
Mr. Charter believes that Dundee’s integration of the Cartier network may be the largest of its kind. “Where we’ve come from is a big job. I don’t know of an integration undertaking in this industry of the order of magnitude as the one we’re doing.”
The pay-off, on the insurance side, will be achieving a cohesive network of independent advisors in a fragmented industry, Mr. Charter predicts. The MGA market is, he says, “a very disorganized industry right now.” He believes it will face increasing consolidation over the next five years and that the newly integrated Dundee advisory group, with its insurance expertise, back office systems and Dundee’s resources, will find itself well positioned in this market.
“I think we can make good progress on the insurance side very much to the advantage of the financial advisors who are with us and do their business through Dundee Insurance.”