RBC Wealth Management capitalizes on crisis

Unlike most bank executives, John Taft — director of Royal Bank of Canada's U.S. wealth management business — can make a compelling case for the economic crisis being good for business. RBC Wealth Management of Minneapolis has spent a good portion of the past few months aggressively adding wirehouse advisers who, along with their clients, appear to be looking for a change of scenery from Wall Street. Mr. Taft and his team have been recruiting at a rapid clip, adding 215 advisers in the past five months alone. These representatives had about $110 million in combined annual production last year. The total number of advisers RBC of Toronto has lured this year is already well ahead of the 150 advisers the firm added in 2008. “And that was a record recruiting year for us,” Mr. Taft said in an interview, noting that RBC Wealth Management now has more than 2,300 advisers (or financial consultants, as the firm calls them), roughly 20% uptick from the end of 2007. The RBC recruiting figures stand in strong contrast to some of the staffing numbers reported lately by the big banks, many of which have seen their brokerage forces shrink significantly. New York-based Citigroup Inc., for example, said that its adviser head count declined 7% to 12,659 during the first quarter, while Bank of America Corp./Merrill Lynch & Co. Inc. saw an 11% decline to 15,822. BofA is based in Charlotte, N.C., and Merrill is headquartered in New York.

RAISING ITS ASSETS

“We're being selectively opportunistic,” said Mr. Taft, adding that RBC continues to be approached by scores of wirehouse advisers in search of a new home. The net result is that the wealth management unit in the United States was able to raise its assets under management to about $133 billion by the end of March. Mr. Taft noted that most of the largest U.S. banks' brokerage businesses and their reps have been affected either by cost-cutting measures or mega-mergers — or both — in recent months, prompting many advisers to feel displaced or disenfranchised. “A lot of our competitors have been facing, and continue to face, a number of challenges,” he said. “It's created a good deal of uncertainty that their advisers don't want to be a part of — and their clients want more stability too.” That was the thinking of Steven Spence, who moved to RBC last month with his eight-person team after nearly 40 years at UBS AG of Zurich, Switzerland, and its predecessor firm, PaineWebber Group Inc. of New York. “When the mandate is to do more with less, it tends to be in the firm's best interest, and not your clients',” said Mr. Spence, whose Portland, Ore.-based team managed more than $400 million in assets at UBS and generated more than $2.6 million in fees and commissions.

AVOIDING CUTBACKS

RBC Wealth Management has been able to avoid some of the major cutbacks that other firms have been forced to make in areas of support staff, marketing and technology, he noted. As a result, Mr. Spence said, he can devote the vast majority of his time to working directly with clients. For these very reasons, industry recruiters expect to see the wirehouse exodus continue for the rest of the year. “Some advisers will go independent, and others will go to a rival wirehouse for the recruiting bonuses,” said Mindy Diamond, president of Chester, N.J.-based executive search firm Diamond Consultants LLC. “Others will continue to head to regionals or boutiques that can represent the best of both the independent and wirehouse worlds.” To this end, Mr. Taft — who describes RBC Wealth Management as a “regional boutique” — said that he expects to add more advisers to his business, but he noted that he hasn't set a specific recruiting goal for the year. “There's an incredible amount of talent out there looking for a new home right now,” he said. “We have the ability to be quite selective and add quality financial consultants as we see fit.” E-mail Mark Bruno at mbruno@investmentnews.com.