Strategy

INTERVIEW: A Look At The Structure, Strategy Of RBC Wealth Management - US

Eliane Chavagnon Editor - Family Wealth Report 10 November 2014

INTERVIEW: A Look At The Structure, Strategy Of RBC Wealth Management - US

RBC Wealth Management's Ward Ring talks to this publication about the firm's structure and hiring strategy in the US.

With over $278 billion of assets under administration and 1,900 boots on the ground in 42 states, RBC Wealth Management has been very targeted in its approach to recruitment and execution of services generally.

To give an idea of how the firm is structured, each member of its advisor force works within a branch, of which there are around 200, and each of those is led by an individual who serves as branch director.

Those branches are then clustered into 27 complexes, overseen by a complex director. The complexes are divided into three divisions, representing the east, north-central and west-south parts of the US, and those divisional directors report to John Taft, chief executive of RBC Wealth Management – US.

Ward Ring, director of wealth management consulting, also reports to Taft and is a member of the management team that sets national goals and objectives for RBC in the US. While RBC Wealth Management also has a deep footprint in the UK and Canada, the way in which it operates and its strategic priorities in the US are quite distinct. 

Given the sheer size of the US, there are of course clear regional trends, which is one of the main reasons why the firm has such a strong emphasis on local execution.

“It's about understanding that what works in Portland, ME, is going to be different to what works in Portland, OR,” Ring told Family Wealth Report. “We need to have the flexibility to help our advisors execute at the local level.”

While growth was, perhaps seven or so years ago, concentrated in the New York/New Jersey area, for example, Ring noted that this is no longer the case. Technology innovation on the West Coast, an energy “renaissance” in places like Texas and Pennsylvania – to name just two factors – are creating new pockets of wealth, and in turn demand for financial planning.

The recently-launched US Wealth Report, compiled by RBC Wealth Management and Capgemini, highlighted a number of industry trends which it said could help wealth managers improve their value propositions by aligning their offerings with certain investor demographics that are driving these shifts.

Hiring strategy

In terms of RBC Wealth Management's target client base, Ring said the firm is neither “prescriptive nor restrictive.” With that said, the majority of clients have investable assets of around $500,000 to $5 million (although the firm does also have clients with north of $10/$20/$30 million).

RBC has “continued to grow through recruiting,” Ring said, adding that the firm has intensified its focus on hiring advisors that are of a higher producing level – and are in turn likely to bring with them more clients.

Indeed, the firm has boosted revenue per advisor by just under 70 per cent in the last five years, and this fiscal year alone has recruited 83 new financial advisors with more than $8 billion in assets under administration and $59 million in production.

Besides being more targeted, growth through headcount is also being driven by more advisors operating in teams. (As reported elsewhere on Family Wealth Report today, RBC has added a new advisor team in Indianapolis.)

“We see that as growth for the future,” Ring said. This is particularly relevant today given the industry's heightened focus on succession planning and advisor training, for example.

Alongside this, RBC is looking for individuals who are more holistic in their wealth management approach, which Ring said the firm has intentionally gravitated towards in recent years.

“And we do particularly well in the fixed income sector,” he added. “So if people have a tilt in their business toward that, we're attracted to those individuals.”

Ring also highlighted RBC's enhanced focus on making its advisor teams more diverse by recruiting more female advisors.

Indeed, it has been argued that women are under-represented across the industry, even though they account for nearly two-thirds of the US workforce. Pershing, a BNY Mellon company, has argued that shifting demographics – on the client and enterprise side – means that old formulas for success “no longer add up.” Women advisors can help unlock a variety of new market opportunities, it said.

Wider areas of focus

As part of its push toward more holistic wealth management, Ring said RBC has invested heavily in helping its advisors broaden their knowledge and hone their skills.

“We decided we need to help educate our advisors on an ongoing basis,” he said. “The second piece of that is around resources and tools. If we're going to be more holistic, we need access to more financial planning tools, such as in the areas of insurance and trusts.”

Meanwhile, for those advisors working with clients at the higher end of the wealth spectrum, RBC has cultivated a group of around 40 consultants across the US with expertise in fields such as estate planning, asset management, insurance, trust, credit and lending.

Specifically, the firm is also doing a lot of work around retirement income planning, tapping into the US' growing Baby Boomer cohort.

“That requires such a different mindset for both the client and as the advisor, who may be used to working on accumulating wealth to then working with a client who is focused on managing that wealth and passing it on,” Ring said. “There's about $250 billion a year rolling out of 401(k)s and into individual IRAs. There's a lot of complexity in that.”

According to figures from Cerulli Associates published in June, Baby Boomers have helped drive the size of the IRA sector to $6.5 trillion, with so-called “rollovers” last year adding $324 billion to the total.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes