The Canada-headquartered bank reveals how it is positioning its wealth management offering in the UK and Channel Islands region.

(This item, which drew significant web traffic, is repeated for readers' benefit as the summer vacation season winds down.)

There has been a new force at work in RBC Wealth Management’s business covering the UK and Channel Islands, as the Canada-headquartered firm steps up focus on markets where it can hit the high notes.

The force in question is Tony Johnson, who was made head of sales and relationship management at RBC Wealth Management over a year ago. The role was newly created for Johnson, who was previously global head of sales and distribution with RBC Investor and Treasury Services. It was part of a push by the firm to make its wealth management operations more “scalable and agile”, he says, and focus on five client segments where the bank aims to make big inroads.

“We have to be clear on what the client experience really means and there’s a huge emphasis on how we will win as one RBC,” Johnson told WealthBriefing in a recent interview at his firm’s Riverside House offices in London. (RBC is eventually moving to new premises in the City, taking all parts of the firm under one roof.)

Johnson went into detail about how the sales process is becoming ever more professional and analytical, embedding an end-to-end sales and relationship management methodology, so that RMs can connect more meaningfully with new clients and better serve existing ones. This approach will win for a bank that has not been afraid to take some tough decisions about focusing on specific markets and letting some sub-scale operations go, he said.

Like many of its peers, Toronto-listed RBC has reviewed its number of booking centres for efficiency reasons. It has sold its Swiss private bank to Geneva-based Banque Syz, for example; it has shuttered some Latin America business and closed its private banking branch in Miami, Florida. Notably, though – contrasting with certain other banks – the firm still has a significant trusts business, an area it sees as a strength. While some operations have been cut, others have grown, including via acquisitions. Last November, for example, RBC completed its acquisition of City National Corporation, picking up a business that is known, among other things, for its book of business among the Hollywood and wider sports, media and entertainment segment. There is a lot of change in the air.

Across the whole of the business, recent results – with a one-off boost from the City National deal – have been encouraging. Wealth management net income of C$303 million ($239 million) for the first quarter ending 31 January shot up C$73 million, or 32 per cent, from last year. Wealth management results also reflected lower restructuring costs of C$19 million (C$18 million after tax) related to its international wealth management business, and higher earnings from growth in fee-based client assets - mainly in Canadian wealth management and global asset management. Compared to last quarter, net income was up C$48 million, or 19 per cent.

Wealth management matters greatly for RBC. It accounts, along with insurance, for about 18 per cent of RBC’s total earnings. As far as the whole of Royal Bank of Canada is concerned, its three “home” markets are Canada, the US and the UK. In the UK market, it operates across three platforms: Wealth Management (including Global Asset Management), Capital Markets and Investor & Treasury Services. Within wealth management, Johnson’s domain is the UK, the Channel Islands and a representative office in Dubai.

“My role, really, is to implement a sales transformation here, creating a single distribution team and a structured client segment focus,” he said. There are five principal areas: business owners and entrepreneurs (the single-largest client area, with about half of its clients); corporate executives (mostly financial industry figures); sports, media and entertainment; multi-family offices, and finally, “wealth transfer and retirees" (areas such as trusts). Heads of these segments, who report to Johnson, include Mark Hassett, Sandy Swinton and Mike Reed. 

Quite a large part of the interview was taken up with Johnson’s views about how the sales process should work. “Institutional businesses tend to have a stronger origination mindset than the wealth industry does in general and we need that specialisation. It’s not that prevalent in this industry,” he said.

“The RM’s role is critical and the lynchpin of the client strategy, but we are clear that a client is a client of the bank,” he said, dealing with the industry concern that has been expressed that in too many firms the exit of RMs has led to their taking books of business away. It is very clear that Johnson wants a culture where teamwork is paramount and the client feels the full benefit of working with RBC.

“We are looking a lot at how we originate clients that we want at RBC and there is a lot more focus now on connectivity and discovery,” he said. Finding new clients requires more work around planning and obtaining information. Digital developments, for example, are helping this process. And ultimately, the more information an RM has available, the better the sales proposition to a new client can be.

“Our future sources of competitive advantage will be an agile, simplified and scalable business, together with sales and relationship management superiority which, combined, will underpin delivering an unrivalled client experience,” Johnson said. 

Getting teams right
“We have now right-sized the team and got it to the point where we can go out and hire,” he said. “We’re actually looking outside of the traditional talent pools to build the team. What’s important to us is that we bring in people with the right behaviours and the ability to forge strong client relationships. Those people don’t necessarily have to be in RM roles within the industry and, in fact, broadening our search criteria means that we are finding candidates with a really diverse range of skills and technical experience which can only benefit our business.”

Already, the improvements to the sales process have generated “very good results”, Johnson continued. One target is to achieve 50 per cent of business from new clients and the other half from offering multiple solutions to existing clients.

Part of the process has been changing how RMs are rewarded, he said, moving to 50 per cent of the reward coming from performance and the other half from behaviour. In other words, the overall conduct and collaboration of a manager, including the standards of behaviour and professionalism, is a big driver of compensation. “For us, behaviour is about acting as 'one RBC’ and doing what’s right: following consistent sales methodology, and controlling conduct risk. By creating a collaborative team environment, we remove the focus from the individual and embed a culture of knowledge sharing, which ultimately benefits our clients." 

With all such change, it is vital to carry out surveys and seek to find out what clients think about the outcomes to know that the changes are working, he said. Metrics such as client wins/loss ratios, RM retention rates and internal succession plans are all part of how Johnson keeps tracks of how well RBC’s wealth operation in his territory is faring.