Financial platform to serve Canadian investment dealers

A pair of startups have come together to create an integrated investment advisory platform to serve the Canadian financial services industry.

Rockwater Capital Corp. announced Wednesday that it has entered into a four and a

half year outsourcing deal with IA Sciences Inc. as well as NT Global Advisors Inc. to build an Integrated Managed Account (IMA) platform.

Rockwater is a publicly traded holding company and First Associates Investments Inc., is its investment dealer subsidiary with about 200 investment advisors across Canada managing $4.1 billion in assets.

The platform, which will offer more sophisticated customer profiling and risk tolerance assessment, will go live in the fall.

“”We feel it’s important to own and control our platform, but that doesn’t mean doing all the work ourselves,”” said Lawrence McCann, director, products and services for Rockwater’s investment dealer subsidiary, First Associates. “”We are building one (interface) so that we profile our client once, we analyse the situation once, we assess the risk tolerance once and then when we build their asset allocation we get to populate that asset allocation with any number of different types of ways of getting it done. As simple as that sounds, it isn’t easy to accomplish.””

The company is positioning itself as an alternative to the bank-owned brokerage firms and it needed to have a broad suite of products that would be comparable to those available to advisors at large brokerage firms. Most firms have two or three platforms to accommodate what First Associates and Rockwater are doing with one.

McCann said there were two pieces that were critical to get the platform right from the start.

“”The back office systems are incredibly important — these platforms are extraordinarily complicated to have everything hanging together so we needed a firm like IA Sciences who has done this and has the technology to support it. A lot of other firms have built these internally and learned a tonne of lessons the hard way. We can’t afford to, nor do we want to learn those lessons live with our clients or advisors.””

IA Sciences runs software that was built to handle the Royal Bank’s so while it is a small firm, McCann has faith it is a “”robust piece of technology they have wrapped up and are selling.””

“”It’s getting us on the operations side, miles ahead of where we would be if we just decided to do this ourselves,”” he said.

Rockwater will also be working with Chicago, Ill-based NT Global Advisors Inc. (Northern Trust), a company established in 1889 and known for delivering investment advice to some of the “”wealthiest clients in the world”” according to McCann.

“”They will help us select, hire and fire our managers as well. We have the thing book-ended pretty well. In the middle what retain by owning it is all the pricing and business decisions about how we deploy it and use it — that’s something you don’t want dictated to you,”” he said.

IA Sciences hosts all the technology at their site and has all the operation staff required.

“”The knew exactly the kind of product they needed to manufacture but they were uncomfortable with all the heavy technology investment required. That’s why they approached us,”” said Graham Jones, vice-president of sales and marketing with IA Sciences in Toronto.

“”We provide Rockwater access to the reporting and query functionality that they require through the Internet. So they don’t have to have any technology investment on their part to work with us,”” said Chris Jackson, president and CEO of IA Sciences.

“”If you were to start this from scratch you would have to spend $3 million to $5 million to build what we already have. So from an organic growth or start up perspective it makes more sense to take advantage of an infrastructure that already exists as opposed to building it yourself and waiting 12 to 18 months before you can go to market,”” he said.

–Illustration by Jarrett Osborne

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