TORONTO — RBC Wealth Management would like to see its 2,000-plus U.S. brokers raise their individual annual production to US$1 million, a target the head of its wealth unit sees as reachable in five years.
The push for higher revenue per broker follows a string of acquisitions to add muscle to asset management operations and comes amid plans to bolster Royal Bank of Canada's fund distribution unit.
RBC Wealth Management's advisers in the U.S. now bring in an average $600,000 yearly in fees and commissions. George Lewis, who heads RBC's wealth unit, is leading the effort to boost that figure.
His campaign is reminiscent of the March to a Million initiative nearly a decade ago at Smith Barney, which was then under Citigroup and led by Sallie Krawcheck.
Times have changed: Smith Barney has merged with Morgan Stanley and Krawcheck is running the wealth unit at Bank of America Corp., which owns Merrill Lynch.
RBC is a small player compared with Merrill Lynch, which has more than 15,600 brokers, and Morgan Stanley Smith Barney, which has 17,800.
"If you look at our top three competitors, they don't have 2,000 advisers — they have 20,000," Lewis said in an interview. "We'd rather have the highest-producing 2,000 advisers rather than the average 20,000."
That still would require leapfrogging the competition: Merrill Lynch's annual revenue per adviser is $931,000 and Morgan Stanley's is $767,000.
Lewis also said RBC will continue opportunistic hiring of advisers in the U.S., but not at the pace it did in 2009, when it snagged some 300 brokers from major competitors. The focus now is on helping advisers land more high-net-worth clients and develop a more holistic approach to wealth planning.
RBC Wealth Management consists of the firm's wealth management operations in Canada; the U.S., U.K. and emerging-markets regions; and the global asset management unit. Overall it claims C$308.3 billion in assets under management ; it aims to increase assets by more than 10% yearly. That target is largely driven by the strength of its retail funds business in Canada.
RBC has made a handful of key acquisitions of asset managers recently, including Phillips, Hager & North of Vancouver, British Columbia, in 2008 and BlueBay Asset Management of London in December.
Its competitors, on the other hand, have purchased broker-dealers. Bank of Nova Scotia acquired DundeeWealth, which manages funds and has a brokerage arm. National Bank of Canada has agreed to purchase the independent brokerage firm Wellington West.
RBC Wealth's asset management unit now generates 40% to 50% of the wealth segment earnings with only a little more than 5% of the wealth unit's employees.
"It's a very high-margin business for us," Lewis said.
RBC "continues to look for opportunities" for asset management acquisitions in Asia, he said, but it does not plan to acquire a retail brokerage or fund distribution house.