Edward Jones Canada is buying Fiduciary Trust Company of Canada from Franklin Templeton for an undisclosed sum.Cole Burston/The Globe and Mail
Edward Jones Canada is making its first-ever acquisition.
The independent wealth manager is buying Fiduciary Trust Company of Canada from Franklin Templeton for an undisclosed sum. While the transaction is relatively small – FTCC manages about $1.5-billion while Edward Jones has more than $70-billion in Canadian assets under management – it represents part of a continuing strategic shift for the company.
FTCC describes itself as a provider of customized wealth management services specifically for affluent Canadians. That is a sharp contrast to Edward Jones, which has long been known as a mainstay of suburban strip malls serving mostly middle-class earners.
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The Canadian subsidiary of U.S. investment giant Edward D. Jones & Co. has more than doubled the amount of money it manages from $30-billion in 2018 by establishing more downtown locations and focusing more on high-net-worth clients. David Gunn, head of U.S. and Canada business units at Edward Jones, said buying FTCC is the next step in that growth plan.
“It is really the natural evolution of the business that we have grown with so many Canadian clients that we need more in-house services,” Mr. Gunn said in an interview. “Previously when trust and estate services were needed we would have to refer that business outside our company.”
“The other part of the acquisition is the private-wealth arm, which is really exciting as we continue to service high-net-worth clients,” he said.
When the deal closes, subject to regulatory approval of the next six to 12 months, a total of 16 FTCC employees, including three portfolio managers, will join Edward Jones Canada. Clients and advisers of the trust company can expect no change in service, Dennis Tew, head of national sales in Canada for Franklin Templeton and a member of the FTCC board of directors, said in an interview.
“They will still be dealing with the same people,” Mr. Tew said.
Talks between Edward Jones and Franklin Templeton about buying FTCC began two years before a deal was reached, Mr. Tew said. According to Mr. Gunn, that is partly because growth by acquisition is a new strategy for Edward Jones.
The company did very little M&A at all until hiring former Goldman Sachs executive Hasan Malik in 2022 as chief strategy officer. Mr. Malik has led some acquisitions for Edward Jones in the United States, Mr. Gunn said, but FTCC represents its first acquisition in Canada.
Independent trust companies are relatively rare in Canada. Of the 354 entities regulated by the Office of the Superintendent of Financial Institutions, fewer than one in 10 are trust companies that are not already owned by a major lender or insurer.
“With the trust company, that does open up the opportunity to provide additional products, like mortgages or savings accounts,” Mr. Gunn said. “That is not the plan right now, but having a trust licence opens that door in the marketplace.”
“We will also continue to look at acquisitions in the marketplace,” he said. “But we are not going to be going on an acquisition spree; we will be very selective.”