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EXCLUSIVE INTERVIEW: RBC Aims To Help HNW Clientele Sleep At Night - Part 1

Chrissy Coleman

17 December 2012

This is the first instalment of a two-part interview with one of the top men at the wealth management business of Canada’s RBC.

Simon Ng, head of wealth management and trust at RBC Wealth Management, Hong Kong, could be crowned the “King of Caution”. Labelling Canada’s largest bank by assets as “very prudent”, and its clients as “conservative”, one wonders if a bit of fire is missing in the quest to take on Asia’s yield hungry high net worth clientele.

However, given the current unpredictable climate, Ng exclusively told WealthBriefingAsia in an interview that helping clients “sleep at night” has been fundamental to its success, placing the bank within the top 10 ranking of wealth management companies in the world.

According to recent quarterly results, as reported previously by this website’s sister publication, WealthBriefing,  net income at Royal Bank of Canada's wealth management business rose from $157.1 million in the third quarter to $210 million at end-October - up 16 per cent year-on-year and 33 per cent on the prior quarter.

While RBC’s clients may be enjoying peaceful slumber, Ng and the Asia team are fully aware of the growth potential of their division. With wealth management such a significant part of the RBC business, and Asia being home to vast wealth, Ng spoke of excitement bubbling just around the corner, in 2013.Growth Plans

Ng spoke of “aggressive” hiring plans in Asia for 2013. But first, the bank must “fix” any shortcomings and “build” a robust platform from which the wealth management arm can grow in Asia, and ultimately, globally.

Listing Mainland China, Taiwan and Indonesia as key areas with increasing wealth preservation needs, Ng said: “We have a very ambitious plan in Asia; we would like to grow our current assets under management of about $11 billion to about $25 billion in above three year’s time.”

This means more than doubling the client facing head count, which is currently at 65, evenly split between Singapore and Hong Kong. This is part of the “growth” stage of the “fix, build and grow strategy” that RBC Wealth Management Asia is judiciously following, with the view of creating a scalable business, said Ng.

The offering

With regards to “building”, Ng said that in response to demand from its global clients: “We will have a new system in 2013, we are changing our business model and adding to our product range in 2013.”

The extended product range will include “accumulator/de-accumulator” products , also known as share forward accumulators, which NG said sounds “scary”, because of the financial crisis but, “It’s not a bad thing, it’s just had a bad experience and it’s actually a good vehicle to enhance return.”

RBC Wealth Management will also be offering its Asian clients equity options, which are not currently available via the firm’s platform.

But for now, RBC Wealth Management is concentrating on fixed income, and forex – areas that that are very important asset classes to its clients, said Ng.

In an environment plagued with uncertainties including the ongoing Euro-crisis, the looming US “fiscal cliff” and the speculation as to whether China will achieve a hard or soft landing, “wealth preservation”, over “high growth”, is the primary goal for the majority of RBC’s wealth management clients.

In the search for steady growth, Ng said:  “At RBC Wealth Management, at least for the last year, we see almost half of the (wealth management) transactions are related to fixed income.”

Does he see this changing any time soon, surely there is a glimmer of hope for riskier investments? Discounting the three mentioned headwinds, or assuming they don’t have disastrous results (RBC predicts China will have a soft landing), Ng said thinks his clients will be open to a bit more risk, saying that he believes people are at least “less pessimistic than before”.

In fact he is already witnessing investors reducing cash holdings and developing a taste for equities. However, structured products are still a no-no, deemed too risky for the moment. And in terms of alternative asset classes, demand for hedge funds remains “very low” at RBC Wealth Management.

But what Asians do love are natural resources, anything from agriculture to precious metals, said Ng. And RBC, with its roots in a country plentiful in natural resources, Ng believes the global brand can boost the related equity offering to the Asian wealth management division.

The second instalment of this interview will be run tomorrow.