MacAlpine, age 38, has a big task ahead of him. In recent years, CI has faced a host of competitive pressures, including fee compression and rising regulatory costs; a shift in client product preferences and expectations; and the market dominance of the Big Six banks.
These headwinds resulted in a flood of net redemptions for the company and a corresponding drop in market value. In early October, shares of CI traded on the Toronto Stock Exchange at about $18.50 a share, down from a high of more than $36 in May 2015.
MacAlpine, who most recently was executive vice president and head of global distribution for WisdomTree Investments Inc., a New York-based ETF provider, says he’s “excited and energized” by the opportunity to lead “an iconic brand” and “a large, at-scale firm” with about $177 billion in assets under management (AUM) and administration combined.
In addition, MacAlpine cites the free cash flow – $146.5 million for the quarter ended June 30 – that CI generates, as well as its recent strategic investment in areas such as ETFs, alternative products and digital technology as being “incredibly appealing.”
“We have a great legacy business that we need to continue to grow – stabilize, grow and modernize,” MacAlpine says. “We also have some investments that are good investments, but we need them to grow in scale at a significant kind of rate and pace.”
MacAlpine says he is spending his early days on the job talking to employees, clients and shareholders about the future of CI. He plans to outline his overall strategic themes for the firm’s future during the company’s third-quarter conference call on Nov. 7, then work with his team on developing the company’s overall strategies from there.
CI insiders and industry stakeholders expect MacAlpine to bring a fresh viewpoint to the firm. In August, during CI’s second-quarter conference call, Anderson praised MacAlpine’s appointment, indicating that the firm’s board had been looking for “outside blood” and someone with a “keen, strategic vision of the industry” as CI searched for a CEO to replace Anderson, who had announced his intention to step away.
A first for CI
“This is the first time for CI to bring in an external person. That’s a big change,” says Scott Chan, director of research for financials with Canaccord Genuity Group Inc. in Toronto. “I think the Street is going to welcome that over time – if he can deliver on the strategy.”
MacAlpine, who was a partner and a leader with the North American asset-management practice at consultancy firm McKinsey & Co. from 2006 to 2015, says his experience working in the U.S., Europe and Asia will allow him to bring global perspective to his role at CI.
“I have the benefit of seeing trends unfold and working with firms in lots of markets,” MacAlpine says. “Canada is a leader in some trends, a follower in some trends and doesn’t participate [in others].”
In the asset-management business, MacAlpine says he believes that two core principles will inform whichever strategy the firm ultimately pursues. One is “world-class investment performance wherever you’re competing”; the second is communicating that value “in a way that the marketplace is aware of what you’re doing, what it stands for and how it fits into the overall portfolio,” he says.
Recently, CI has been revamping and consolidating its lineup of funds – in late September, the company merged 30 funds into others and renamed 19 funds – in order to simplify and achieve efficiencies.
That trend is likely to continue, says Dan Hallett, vice president and principal with Oakville, Ont.-based HighView Financial Group, adding that the industry overall has too many products. “The number of products will, and should be, consolidated,” he says, “and I think that’s not just a CI issue.”
MacAlpine says that CI will continue to build out its ETF product lineup, and that the firm is “well positioned with the CI First Asset ETF capability.” He also says that he anticipates the firm will continue to add more alternative-asset products. On Sept. 30, CI announced it had surpassed $1 billion in AUM held in its liquid alts products.
“We’re pleased with the start that we’ve gotten off to and are really looking forward to leaning into that segment overall,” MacAlpine says.
From a distribution standpoint, MacAlpine says, CI is reaping the benefits of the investments it has made in recent years. From its Assante Wealth Management Ltd. and Stonegate Private Counsel LP businesses to its digital platforms, WealthBar Financial Services Inc. and Virtual Brokers, CI has options that allow it to serve clients at all asset levels – and in the manner they choose, he says.
Best for the client
“We have a great starting point,” MacAlpine says. “[The question is:] ‘How do we make sure that all of these businesses collaborate, work together and work alongside one another so we can deliver the best ultimate end-experience from a client perspective?’”
MacAlpine says he will be looking at sources of both organic growth and growth by acquisition, adding that “opportunities [in the marketplace] do exist.”
However, MacAlpine says, what’s most important is that the firm not waste its opportunity to take a step back, understand what its clients want and position the company to succeed over the long haul.
“If our clients have the best outcomes possible,” MacAlpine says, “our business benefits – and our shareholders ultimately benefit.”