How one brokerage scaled up to last for generations

by Leo Almazora20 Oct 2021

It was only recently that the Targeted Strategies Group, an insurance brokerage and planning boutique based in Saskatoon, announced the successful completion of its succession plan.

The firm’s founder, Garnet Morris, retired from the firm and the Canadian insurance industry after a 40-year career. As part of that graceful exit, the firm’s CEO, Susan Kichuk, PhD, has acquired controlling interest of the company.

“About 20 years ago, Garnet started the Targeted Strategies Group, and from there he built up a clientele that includes some of the most successful entrepreneurial families in Canada,” Kichuk told Life and Health Professional. “He was able to attract these families because he was a true innovator who understood insurance better than anyone else, probably almost better than the insurance companies themselves.”

With his knowledge of insurance as a product and understanding of his clients’ needs, Morris was able to provide effective insurance-based solutions to their tax, estate, and succession planning issues. Things were going as well as they could probably get for a boutique brokerage with 16 employees focused on family-owned businesses. But five years ago, he realized that it was time to follow his own advice.

“Targeted Strategies was a successful family-owned business. But like most family-owned businesses, it was overly dependent on the founder,” Kichuk said. “It wasn’t scalable, and it wasn’t sustainable.”

Morris believed his clients could maintain their wealth across generations, and that insurance would play a critical role in their intergenerational estate planning. To make sure their interests are properly protected, he realized the need to create an organization that could provide that even without him.

At the same time, he recognized that his strengths lay in innovating and providing solutions around insurance, but not in organization building. He hired a recruiting firm to find someone with that skill, which is how he got in contact with Kichuk.

“Over the last five years, we've worked to take the founder's life insurance expertise and innovation, and we've been able to institutionalize it into an organization that is both scalable and built to last multiple generations,” she said.

Over that time, Kichuk said the firm was able to substantially grow its presence in the ultra-high-net-worth market, with offices in Vancouver, Calgary, Saskatoon, Toronto, and Kitchener-Waterloo. Currently, the firm is the number one broker of permanent life insurance in Canada, with over $10 billion of permanent life insurance placed across Canada.

Today, the Targeted Strategies Group includes a stable of 125 accountants, lawyers, actuaries, and other professionals, including a few principals who were senior partners at various firms. That investment in talent, in Kichuk’s estimation, is something that’s highly unique in the Canadian and perhaps even the North American or global markets.

“It’s like the flywheel effect,” Kichuk said. “It’s slow to get started, but it accelerates over time … good people attract good people.”

With that deep bench of expertise, the Targeted Strategies Group is able to sit across the table from the advisors of its high-net-worth clients and offer top-notch insurance solutions. According to Kichuk, each of the firm’s clients is assigned a dedicated team of actuaries to determine what policy or group of policies is best for them, with accountants to craft tax-optimization strategies and lawyers to engineer sustainable wealth structures that will transfer well over generations.

Among the different bespoke solutions the firm is able to offer, Kichuk said, involves the transfer of wealth, especially in cases where an estate must be divided equally among heirs without having to divest or liquidate their business and other assets. And because ultra-high-net worth clients tend towards charitable giving, making in-kind donations of life insurance is another area the group advises on.

“Also, we are probably the foremost experts in Canada on the financing of insurance policies,” Kichuk said. “In the later years, premiums can get very large, and it’s ideal to have a partner who can help you find the financing partners you need when one banking institution can no longer afford to take on the entire risk.”

Over the course of the pandemic, Kichuk said entrepreneurs’ interest in succession planning skyrocketed. While no one typically wants to think about their mortality, COVID has put a fire under many business owners to confront those issues, which has led to an explosion in business from clients who need help charting a possible course through the unknown future. That tide is also providing a lift to insurance companies, which are seeing growth in policy purchases across the board.

While that trend is a great near- to mid-term shot in the arm for the industry, Kichuk is concerned about the longer term. The average insurance broker, she said, is pushing into their late 50s or early 60s, which means a lot of the policies being sold today come with a risk of not being supported over the long-term when the broker retires. This leaves them with an ‘orphaned policy’.

“Using permanent life insurance as a long-term planning tool entails a lot of management, so this is really a concerning trend,” she said. “We have built a multi-generation organization to ensure this doesn’t happen to our clients. We’re starting to talk with insurance companies right now about possible solutions for the industry, because we don’t want Canadians to be left with orphan policies that they don’t know how to manage.”