{"id":215205,"date":"2025-10-15T12:23:07","date_gmt":"2025-10-15T12:23:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/215205\/"},"modified":"2025-10-15T12:23:07","modified_gmt":"2025-10-15T12:23:07","slug":"rbc-wants-wealth-management-to-be-its-next-profit-powerhouse-starting-with-a-big-u-s-push","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/215205\/","title":{"rendered":"RBC wants wealth management to be its next profit powerhouse, starting with a big U.S. push"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Neil McLaughlin, RBC’s head of wealth management, is photographed in the bank’s Toronto office, on Sept. 29. Mr. McLaughlin says the goal with the U.S. push is to replicate the financial planning model that RBC has had success with in Canada.Jennifer Roberts\/The Globe and Mail<\/p>\n

As Royal Bank of Canada<\/a> ushers in a new era of growth, its executives find themselves in an awkward, but enviable position. <\/p>\n

Over the past five years, RBC has cemented its position as the leading Canadian bank \u2013 thanks, in part, to troubles at arch-rival Toronto-Dominion Bank<\/a> \u2013 and investors have rewarded RBC with a premium valuation relative to rival Big Six lenders. <\/p>\n

Yet looking out over the next decade, the bank\u2019s obvious avenues for growth have either already been travelled (the acquisition of HSBC Bank Canada) or ruled out (expansion into retail banking in the United States). <\/p>\n

To keep growing, RBC has to get creative, and for the first time it is leaning on a division that has often impressed, but has not been the centrepiece of its strategy: wealth management<\/a>. The hope is that this business can deliver a good chunk of growth, particularly in the United States. <\/p>\n

RBC has a solid foundation to build upon. The bank has dominated in Canadian wealth management over the past decade, fuelled by financial advisers expanding their roles to offer a plethora of financial planning services, such as business succession advice, philanthropy guidance and estate planning. And in the U.S., RBC has successfully pivoted to serve a wealthier client base. <\/p>\n

Yet the U.S. arm, based in Minneapolis, Minn., hasn\u2019t quite been the same success story, RBC group head of wealth management Neil McLaughlin said in an interview.<\/p>\n

\u201cIn the U.S. there is great trajectory … but we want to catch up to Canada.\u201d <\/p>\n

Mr. McLaughlin, a 27-year veteran of RBC, came up within the personal and commercial banking division before assuming leadership of it for seven years. During his tenure running RBC\u2019s most profitable business, he managed the integration of HSBC Bank Canada, which was acquired for $13.5-billion in 2022. He then took the reins at wealth management last fall from Doug Guzman, who was just tapped by Prime Minister Mark Carney to lead Canada\u2019s new Defence Investment Agency<\/a>. <\/p>\n

The division Mr. McLaughlin inherited is formidable, with $2-trillion in assets under administration and $680-billion in assets under management primarily in Canada, the United States and Britain. These assets are spread across the bank\u2019s network of investment advisers; Global Asset Management, which creates and manages investment funds; and Direct Investing, the bank\u2019s online trading platform for do-it-yourself investors, among other businesses. <\/p>\n

In all, wealth management generated $3-billion in RBC\u2019s profit over the first three quarters of 2025, or 20 per cent of total earnings.<\/p>\n

For RBC, the hope is that expanding in wealth management will please investors \u2013 and regulators. Wealth managers often earn a percentage of their assets under management, whereas capital markets, another pillar of RBC\u2019s business model, often earns transaction fees for advisory work and from trading. Capital markets fees can be quite volatile, while wealth management fees tend to have flatter peaks and valleys.<\/p>\n

Open this photo in gallery:<\/a><\/p>\n

Adviser recruitment is extremely competitive in the U.S. and some companies have dangled big recruitment bonuses to lure talent. But Mr. McLaughlin says it is not ‘our model.’Jennifer Roberts\/The Globe and Mail<\/p>\n

But expanding in the U.S. comes with risk. For one, U.S. President Donald Trump<\/a> has taken a few swipes at the Canadian banking sector during his trade war<\/a>, alleging Canada has been unfair to U.S. lenders (in ways that aren\u2019t entirely clear). Yet the opportunity is also tantalizing. Rich Americans continue to spend and save, and RBC is increasingly a bank for rich clients. In wealth management, the bank has made its name serving high-net-worth clients – those with more than $1-million in investable assets.<\/p>\n

The key to RBC\u2019s growth will be amassing assets, and Mr. McLaughlin is on a heavy recruitment push, with plans to hire 600 more advisers in the U.S. \u2013 ideally, experienced financial advisers who manage large books of business. Currently, RBC has 2,200 advisers across 200 branches in the U.S., roughly the same number of advisers as in Canada.<\/p>\n

Yet recruiting in the U.S. can be more challenging for RBC. In Canada, the adviser business is run by long-time head David Agnew, who\u2019s spent the past decade poaching top talent across the country. When he phones, advisers take his call. In the U.S., RBC has name recognition as the sixth-largest wealth manager, but it\u2019s not yet in the upper echelon.<\/p>\n

Adviser recruitment is also extremely competitive in the U.S. and some companies have dangled big recruitment bonuses to lure talent. RBC doesn\u2019t like playing that game.<\/p>\n

\u201cIt\u2019s not our model,\u201d Mr. McLaughlin said. \u201cThere are players out there who seem to have a lot more appetite to pay beyond what we think is appropriate.\u201d<\/p>\n

Instead, RBC is pitching something it describes as respect, telling advisers, \u201cyour primacy with your client is something we take very seriously,\u201d Mr. McLaughlin explained. Often, banks or wealth managers pay big bonuses and then expect to dictate what advisers should sell or how they operate. <\/p>\n

Opinion: Why TD can get its mojo back by snapping up a wealth manager<\/a><\/p>\n

\u201cWe\u2019re here to provide the platform, the technology, the regulatory and compliance work, obviously the product shelf and the surrounding services, but we\u2019re not trying to get between the adviser and the client,\u201d Mr. McLaughlin said.<\/p>\n

It\u2019s a longer-term bet, and the goal is to replicate the financial planning model that RBC has had success with in Canada. \u201cThat\u2019s really where the business is going,\u201d Mr. McLaughlin said.<\/p>\n

RBC also plans on doing a better job of integrating its wealth management division with City National Bank, the Los Angeles-based private bank it acquired in 2015. Until now, the two have been quite siloed, but Mr. McLaughlin believes there are revenue and cost synergies that can come from bringing them closer together.<\/p>\n

The real test for RBC will be whether it can do it all profitably. It\u2019s relatively easy for the established bank to make money in Canada, but the U.S. market is extremely competitive. Canadian wealth management had a 32-per-cent pretax profit margin in 2024, while the U.S. equivalent was 10 per cent. <\/p>\n

RBC has also learned some lessons over the past few years from international expansion. In Britain, RBC bought Brewin Dolphin Holdings PLC for $2.4-billion in 2022<\/a>, but things haven\u2019t gone as planned so far. During the integration phase, RBC realized it needed to spend heavily to upgrade the acquisition\u2019s technology. \u201cIt was, frankly, more work than we anticipated,\u201d Mr. McLaughlin said.<\/p>\n

Economic conditions have also changed the short-term growth potential in Britain, where RBC targets mass affluent \u2013 or upper-middle-class \u2013 clients. When times get tough, \u201cthe $10-million client doesn\u2019t really waffle,\u201d Mr. McLaughlin explained. But for someone with $250,000 in their portfolio, they may take some money out to cover household expenses. \u201cThat\u2019s what we\u2019re seeing in the U.K. right now, and many of our competitors are seeing the same thing,\u201d he said. <\/p>\n

On the bright side, he added, there\u2019s ample room for growth because across the market \u201cyou can clearly see there is a lack of advice.\u201d <\/p>\n

Canada must ditch fear of mistakes to buoy economy, secure trade deals, RBC CEO says<\/a><\/p>\n

While international growth is the focus, RBC still believes there is ample opportunity to make more money from wealth management in Canada. The bank will continue to spend on advisers and asset management, and it is also putting money into its Direct Investing business for do-it-yourself investors that has been overshadowed in recent years.<\/p>\n

After meme stocks took off during the COVID-19 pandemic, companies such as New York-based Robinhood Markets garnered a lot of buzz and attracted a new wave of DIY investors, especially those who are younger, early-stage investors. During this evolution, RBC largely stayed quiet, despite having the second-largest direct investing platform in Canada \u2013 behind TD \u2013 with 1.2 million clients. That\u2019s changing, and RBC is ready to flex its muscles.<\/p>\n

\u201cThis is a highly profitable, growing and completely scalable business,\u201d Mr. McLaughlin said.<\/p>\n

While some competitors are dangling sizable transfer bonuses<\/a> to lure new clients of all ages, Mr. McLaughlin said RBC can lean on its massive retail banking network and cross-sell to existing clients, which lowers its cost of customer acquisition. Currently, 90 per cent of the bank\u2019s direct-investing clients originate from retail banking. <\/p>\n

Mr. McLaughlin acknowledges RBC was a bit flat-footed in this market for the past few years, but he chalks that up to being focused on the HSBC Canada acquisition. <\/p>\n

\u201cI will tell you, we are thrilled with the performance of this business \u2013 last year, this year and the trajectory,\u201d he said. \u201cAnd you\u2019ll see a lot of investment coming into the self-directed space.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Neil McLaughlin, RBC’s head of wealth management, is photographed in the bank’s Toronto…\n","protected":false},"author":2,"featured_media":215206,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[3793,3782,64,63,3794,1348,3774,3795,99,2065,3773,3787,3788,3784,3775,3772,164,2555,75,69,186,3781,3805,3776,3777,3786,3783,1625,2289,3796,3779,3800,3801,3803,3798,3802,3797,3799,184,185,3778,3790,3791,84,3789,2111,635,105,3792,3785,3780,1346,3804],"class_list":{"0":"post-215205","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-alberta","9":"tag-arts-news","10":"tag-au","11":"tag-australia","12":"tag-bc","13":"tag-breaking-news","14":"tag-breaking-news-video","15":"tag-british-columbia","16":"tag-business","17":"tag-canada","18":"tag-canada-news","19":"tag-canada-sports","20":"tag-canada-sports-news","21":"tag-canada-trafficcanada-weather","22":"tag-canadian-breaking-news","23":"tag-canadian-news","24":"tag-economy","25":"tag-education","26":"tag-environment","27":"tag-federal-government","28":"tag-finance","29":"tag-foreign-news","30":"tag-globe-and-mail","31":"tag-globe-and-mail-breaking-news","32":"tag-globe-and-mail-canada-news","33":"tag-government","34":"tag-life-news","35":"tag-lifestyle","36":"tag-local-news","37":"tag-manitoba","38":"tag-national-news","39":"tag-new-brunswick","40":"tag-newfoundland-and-labrador","41":"tag-northwest-territories","42":"tag-nova-scotia","43":"tag-nunavut","44":"tag-ontario","45":"tag-pei","46":"tag-personal-finance","47":"tag-personalfinance","48":"tag-photos","49":"tag-political-news","50":"tag-political-opinion","51":"tag-politics","52":"tag-politics-news","53":"tag-quebec","54":"tag-sports-news","55":"tag-technology","56":"tag-travel","57":"tag-trudeau","58":"tag-us-news","59":"tag-world-news","60":"tag-yukon"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/215205","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=215205"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/215205\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/215206"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=215205"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=215205"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=215205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}