RBC
Wealth Management is a business that has in its own unpretentious way
risen up the rankings, but as far as one of the top men at the Canadian
firm is concerned, the ascent is far from over.

The firm, part of Royal Bank of Canada, with C$562 billion ($571.7
billion) of client assets, has been on a branding and marketing drive,
hired more managers and recently taken over the closely-read Capgemini World Wealth Report, previously produced in association with Bank of America Merrill Lynch. RBC is certainly putting itself about.  

And unlike many of its global peers, RBC has avoided most – if not
all – of the bullets from the 2008 credit market meltdown and also
avoided damaging tax and regulatory fights in the US and elsewhere. But
as far as George Lewis, RBC Wealth Management
group head is concerned, there is still plenty of work ahead in markets
such as the UK, the rest of Europe and Asia, as well as the home
hunting grounds in North America.

“In Asia, we are under-represented and we realized that fact about 18
to 24 months ago. We looked to build scale in Singapore and Hong Kong
and that remains our focus, serving high net worth and ultra high net
worth clients,” Lewis told this publication in a recent interview.

“The challenge in the region is that it is a relatively new source of
wealth where clients are becoming more experienced; we are moving into
the second generation of wealth creation and the role that a wealth
manager can provide,” he said.

Lewis and colleagues have been busy. In late August,
Toronto-headquartered RBC changed its senior leadership team. Paul
Patterson, currently head of global trust, was appointed as deputy
chair, RBC Wealth Management, for ultra high net worth - international.
He is based in London. That move follows Michael Lagopoulos’ decision to
retire from RBC after 26 years’ service at the end of next month;
Stuart Rutledge, who is currently head, global wealth services, strategy
and transformation, was named head, global trust, RBC Wealth
Management. He is based in Jersey. As chair of RBC's global trust
advisory board, he will also oversee RBC Wealth Management’s trust
business internationally.

In September, RBC appointed Steve Sokić as head of UHNW, trust,
fiduciary and tax - a newly-created role for which Sokić has relocated
from Jersey to Toronto; he reports to Patterson. Meanwhile, the firm
appointed Shehreen Quayyum and Jaime Zuloaga as directors for the
Americas desk at the firm’s London-based UK private client wealth
management team. The latter moves highlight how RBC, unlike some of its
global peers, is continuing to prospect for business from expat US
clients, for example, despite the rising compliance burdens of the US
FATCA Act.

There have been some headwinds to contend with in tough markets,
however. At the end of August, RBC reported that net income at its
wealth arm fell by C$36 million to C$156 million for the quarter ended
31 July compared with the same period a year ago. Excluding the negative
effect of C$29 million ($21 million after tax) related to certain
regulatory and legal matters in the current quarter, net income fell by
C$15 million or 8 per cent, largely due to lower transaction volumes
reflecting continued investor uncertainty, partially offset by higher
average fee-based client assets. In general, however, the bank is in
relatively robust shape. Wealth management still has plenty of upside
potential to grow its share of overall bank revenues and profits; at
present, revenues and profits account for 7 per cent and 10 per cent of
the totals, respectively.

Recruitment drive

In the UK, a key market for RBC Wealth Management, Lewis said the
firm was ahead of schedule in hiring 100 relationship managers by 2015.
“We are looking for high-performing, experienced talent at competitors;
we look for people who are attracted by the value proposition at RBC. We
make sure the first question they ask is 'why would moving to RBC
benefit my client?',” Lewis continued.

“In wealth management, the importance of an individual representing
an organization in terms of safeguarding its reputation and building the
business is absolutely critical. We are looking for people who have
built their career with one or two institutions and looking at us for
what might be their last career move,” he said. Of course, Lewis noted,
the 2008 crisis has forced many high-caliber individuals out of some
institutions at short notice.

Lewis talked about the three elements of what RBC sees as its
international wealth strategy: its leading position as a financial
services business in Canada; secondly, its aim to be a global provider
of capital markets and wealth management solutions [including the
investor services business formerly called RBC Dexia]; and thirdly,
protecting its edge in markets such as the Caribbean.

Rankings

RBC Wealth Management is the sixth largest wealth management firm in
the world and is the largest in Canada, and the sixth largest in the US,
Lewis said.

“When someone creates wealth in their domestic market, and they are
concerned about wealth protection and the like, that is our sweet spot,”
he said.

In any debate about wealth management strategy, one issue that
inevitably comes up is how to play the tug of war between onshore and
offshore financial centres at a time when the latter have been under
relentless international attack. In Asia, however, Lewis said that the
firm is focusing on doing business in IFCs.

“We don’t have a strategy to move onshore into China or onshore for
India. Our exposure for growth is focused very much on these [Singapore
and Hong Kong] centers of business,” he said. “We are very much focused
on the international financial centers of Geneva, Hong Kong, London and
Singapore,” he said.

Although Lewis is confident, it was necessary to ask him about
near-term problems and risks, such as that of a hard landing by the
Chinese economy – hardly a phantom menace given the pumped up nature of
its real estate market.

In the longer run, RBC remains convinced that Asia is a vital growth region, regardless of any speed bumps, Lewis said.

In Asia, RBC Wealth
Management, which currently oversees about $10 billion (US dollars) of
client money, aims to reach $25 billion in 2015.

The RBC brand

The firm does not have the flashiest image, but one gets the
impression that this Canadian firm likes it that way at a time when
investors look for solidity.

“When we started the [global] wealth management segment in 2007 we
experienced faster growth than in other sectors. Wealth management is a
great complement for our banking clients. The biggest change since 2007
has been the relative outperformance of the Canadian financial system in
general,” he said.

The Canadian side of the bank remains its bedrock. The firm has over
2,000 advisors in the US, managing around $185 billion (US dollars) of
client money; in Canada, RBC accounts for 22 per cent of the country’s
wealth management market by assets.

Finally, this publication asked the familiar question about
any ambitions in terms of mergers and acquisitions. “There may be merger
and acquisition opportunities; we think there is considerable
opportunity to grow organically,” he added.