Strategy

INTERVIEW: RBC Wealth Management-US Says Growth Pace Quickens, Eyes Fresh Initiatives

Tom Burroughes Group Editor 27 July 2017

INTERVIEW: RBC Wealth Management-US Says Growth Pace Quickens, Eyes Fresh Initiatives

The US-based wealth management part of RBC spoke to this publication about recent rapid developments, and spoke of more to come.

RBC Wealth Management-US started this year with quite a bang, rolling out the first in a planned set of digital tools to help wealth planning, and executives at the firm say more announcements about service offerings are in the pipeline.

And the brand of this firm, part of Toronto-headquartered Royal Bank of Canada, has a strength and reputation that is going to loom larger in the US market, driven by a marketing strategy to that end, Michael Armstrong, CEO of RBC Wealth Management-US, told Family Wealth Report in an interview.

“I’m feeling very good about the opportunity set here,” he said, talking about how digital tools are helping advisors to build out a service offering in the US, which the firm regards as its second “home market”. “We are seeing an acceleration in where we are going……wealth management is key to RBC’s US strategy.”

In January, the wealth management business launched new tools to support its fee-advisory business and further refine its focus on goals-based planning; by the end of that month, all 1,800 of its US-based advisors could use RBC WealthPlan, a customized version of PIEtech’s MoneyGuidePro® wealth planning software. More rollouts and products are scheduled.

RBC WealthPlan is designed, the firm says, to take the “best that MoneyGuidePro® has to offer and integrate it with RBC Wealth Management’s existing software to provide advisors and clients with a comprehensive and fully integrated wealth planning tool”. With developments such as robo-advisors and fintech ideas all the rage, RBC, like its peers, realizes it has to spend resources in these areas to keep ahead.

And away from tech, hiring of people has been brisk. Last September, RBC Wealth Management-US brought back Ann Senne to its ranks as the head of the newly created advice and solutions group. Senne previously served as senior vice president and head of wealth management product for US Bank, had spent more than 20 years of her career. The firm has made hires such as that of Angie O’Leary, the firm’s head of wealth planning and a newly-formed position; in May, it appointed Amit Sahasrabudhe to its executive ranks as head of strategy and technology - also a newly-made role. He is a former advisor at Deloitte. In 2016, the wealth management business appointed Bryan Mullin as head of its alternative investment platform. Mullin most recently served as principal and director of alternatives research at Slocum Inc., a Minneapolis-based advisory firm that specializes in serving institutional investors.

RBC has not just been acquiring people; late in November 2015 it completed its acquisition of City National, a California-headquartered lender renowned for a large block of business in the media and entertainment industry in and around Hollywood. Globally, that deal aided RBC's profile, particularly in the media and entertainment segment. With the momentum coming from that sort of deal, Armstrong and colleagues want to keep pushing. Asked about new products and services being considered, he said “we are very focused on a fintech solution for securities-based lending” – an announcement around this area could happen soon. 

Results 
Armstrong and colleagues know that all this activity and money spent on tech and hiring needs to translate into the bottom line but also strengthen advisors’ relationships with existing clients as well as help attract new ones. Asked what sort of performance measures he uses, Armstrong did not give a specific number but said that “advisors will be proud to be here - the other metrics will come along”. “If clients are satisfied and advisors are happy then this is obviously going to be great for us as a commercial enterprise,” he continued. 

Some of the changes being made are quite recent, so maybe not yet bedded in enough to shape results. The bank in May reported that in the three months to April 30, wealth management net income (across its entire business, not just in the US) stood at C$431 million ($346 million, as of July 27 exchange rate), up by C$45 million or 12 per cent, from a year ago, mainly due it said to increased earnings resulting from growth in average fee-based client assets which benefited from favourable equity markets, and higher net interest income reflecting volume growth and the impact from higher US interest rates. 

The development of the US wealth business of RBC can be seen against a background of changes to how the bank's booking center and country coverage is changing. In recent years RBC has cut back on some areas, such as Latin America and the Cayman Islands; this is part of a trend of wealth management houses consolidating booking centers to focus on places where they can build profitable scale.
 


Artificial intelligence
Banks’ use of digital tools includes that whole, sometimes scary-sounding area of Artificial Intelligence. AI has been cited as a way to chart consumer trends, prospect for clients and find out what they want based on stated preferences. Still very much in early stages, it is an area that excites Amit Sahasrabudhe, who as mentioned earlier recently joined RBC WM-US. He also spoke to FWR about his role and what the bank is looking to spend money on. 

“We are making a significant investment into spaces such as Artificial Intelligence across the whole firm. I am beginning to understand how to best deploy AI,” he said, referring to examples such as in portfolio management. Elsewhere, RBC continues to invest in ideas about “access on-the-go” for advisors and clients via mobile devices such as tablets, and access data from remote locations. 

What about the buzz around blockchain technology (the online digital ledger associated with crypto-currencies such as Bitcoin)? Sahasrabudhe was cautious; it was early days in deciding whether to deploy resources there, he said. “Blockchain has very strong potential in terms of what it can do. In the wealth business here I can think of a few ways where it could be leveraged, but AI is more of a priority,”  Sahasrabudhe said.

Interns and Millennials
As announced earlier this year, the wealth management house has revamped its internship program to allow it to learn from those on summer job placements while simultaneously educating them. And the ideas coming out of the program have been excellent and are being put into use by the firm, Armstrong said.

“We are looking forward to several intern project presentations in the next few weeks,” he said.

Talk of internships raises the question of how a firm such as RBC can engage with those much-written about Millennials, famed for their lack of reverence for traditional brands and desire for hands-on involvement with money. The internship project is designed to help the bank think about what Millennials actually want,” Armstrong continued. 

The bank’s internship program groups some 27 interns into small teams, which will work collectively on maximizing a specific business opportunity for the firm or solving a particular business challenge. 

 

 

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