Doug Guzman, head of wealth management at Royal Bank of Canada’s RY-T Group, is eyeing future acquisitions in the UK and the United States as the bank looks to further build its global wealth after closing its recent acquisition of Brewin. Dolphin Holdings PLC.
Last month, the bank bought London-based Brewin Dolphin for $2.4 billion, adding $97 billion in assets under management and 80,000 clients, making RBC the third-largest wealth manager in Britain, Ireland and the Channel Islands.
RBC’s UK expansion has been on the radar for years, Mr Guzman said, with bank executives talking to a number of potential partners. The acquisition of Brewin Dolphin, which closed on September 27 and was renamed RBC Brewin Dolphin, increased RBC’s international wealth management assets to more than $104 billion. But Mr. Guzman wants an even bigger piece of the pie.
“We think the area has more potential,” Mr. Guzman said in an interview in his Toronto office. “We like the industry structure and we’ve been watching it for a while.”
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RBC’s wealth management division currently includes operations in Canada, the United States and Europe, overseeing nearly $1.3 trillion in assets under administration as of August — up 48 percent from five years ago.
“Wealth is a compelling set of dynamics, consumes very little capital, and it serves a really important need for clients,” he said. “For the last 15 years, the markets have been very favorable for clients, but we think they will need more advice over the next five to 10 to 15 years.”
In recent years, the bank has invested heavily in its business in the United States. Los Angeles-based City National Bank, along with RBC Private and Commercial Bank, acquired in 2015, the US wealth segment accounts for more than half of RBC’s total wealth assets at $683 billion.
In early 2022, Mr. Guzman’s role was expanded to include head of US wealth management and chairman of City National Bank, which grew from $36 billion in 2015 to $91 billion.
While there is no list of specific U.S. prospects in the pipeline, Mr. Guzman says the excess capital RBC currently holds allows the bank to act quickly if something comes up.
Over the past decade, banks have increasingly focused on wealth management as $1 trillion of personal wealth is transferred into the hands of the younger generation. But “people businesses” like wealth management companies are hard to buy, especially ones that have been independently owned for decades.
You have to be patient, said Mr. Guzman.
“The concern about a sovereign wealth firm being bought by a bank is whether or not it will change what the bank does for clients. Will they be forced to sell products only in the interests of the bank?”
“Our success in the U.S. and Canada has been reversed.”
For the Brewin Dolphin deal, he said, that trust-building involved flying the leadership team at RBC Dominion Securities – a Canadian full-service securities broker with 1,900 securities advisers and 110 investment advisers – to meet in person with the UK team.
“Dominion Securities has fostered this investment advisory culture at a large bank and has done so since we acquired it in the 1980s,” Mr. Guzman said.
One segment of the US wealth management industry that RBC is not considering entering is registered investment advisory firms. In the United States, an RIA firm typically follows an independent business model—meaning it’s not part of a larger brokerage—and advisors have a legal fiduciary duty to act in the best interests of clients. It’s an industry with more than 17,000 companies nationwide, but has seen a wave of consolidation in recent years.
“We have no interest in getting an RIA,” Mr. Guzman said, adding that it is still a very fragmented industry. “If you start building RIAs, as some have done, you buy into all kinds of different cultures, which can be a difficult way to maintain consistency for your clients.”