The pandemic, and all the changes it has prompted, has shown that managers cannot claim exclusive "ownership" of clients and need to operate as a team. This philosophy was already in play before the crisis struck, and has proven itself over the past 12 months, the wealth management house said.

The global pandemic has changed many wealth management business practices and it has reinforced the wisdom of not making clients the sole property of individual relationship managers, Royal Bank of Canada says.

RMs and other professionals working with high net worth and ultra-HNW clients at RBC Wealth Management haven’t been jealous of sharing their clients or been afraid to refer their clients to colleagues when tackling tasks, according to Juan Aronna, new head of investments for the firm’s International and Asia business. (This news service reported on his appointment here.) Aronna is responsible for leading the bank's investment teams in London, Jersey, Singapore and Hong Kong. Previously, he was head of investments and products for Asia only.

There isn’t a “silo” mentality at RBC in terms of bankers “owning” clients; in fact that mentality became even less prevalent because of COVID-19, he told this news service in an interview. “We have a One RBC approach rather than being concerned about losing clients if they are referred to a part of the business overseas.”

This collegiate approach to clients was already in place before the virus struck, he said. 

The comments come as wealth managers have wrestled with how to manage clients – as well as trying to find and onboard new ones – during the extraordinary events of 2020. With so many RMs and others forced to work from home - handling clients via video tools and the phone - how they collaborate with colleagues over business has become even more critical. 

Such challenges are also clear in a region such as Asia where wealth management is moving towards a more discretionary approach and away from the traditional transactional model.

Aronna noted that discretionary wealth management is getting more important in Asia. “We have seen a big shift in Asia from transactional products into more much fee-based advice.”

COVID-19 aftermath
In the UK, about a third of HNW individuals that RBC Wealth Managers look after are entrepreneurs. A third are also resident but not originally from the UK.

How did Aronna think the pandemic, and government responses to it, change the landscape that RBC’s wealth business works in? Aronna said that he expected certain changes to discretionary mandates if there were tax hikes in the UK following the pandemic.

As for the expanding world of family offices, this publication asked how RBC is working in this space. “We think family offices are becoming increasingly important. We have seen the emergence also of FOs in Asia and they are becoming very popular in Europe. They are using banks more as a partner in delivering some advice and investment ideas,” he said. 

“It is important that banks partner with family offices so that there is mutual benefit in the relationship. We see value in working hand-in-hand with family offices, for example by providing research and asset allocation advice to service the families. However, if the relationship is structured such that all of the regulatory responsibilities fall with the bank, then it is left with much of the risk and cost, and little upside,” Aronna cautioned. 

A long-standing issue in wealth management is how firms could or should segment clients. Aronna believes that segmentation based purely on a client’s wealth is missing the point.  “Some banks segment clients by size (of AuM) and I think that is a tremendous mistake,” he said, adding that the needs of clients are often not linked to how much AuM they have. 

Risk tolerances also don’t necessarily track AuM, he said. 

In fact, Aronna said that it made more sense to consider splits such as those clients who are entirely self-directed, those who want advice with their own trading, and discretionary, and those requiring planning advice, etc. 

“By segmenting clients by their needs, we can spend time understanding their priorities and objectives in order to provide meaningful insights and the best possible service. Segmenting clients who think and invest in a similar way also means that we can assign the right specialist or the right investment solution,” he said.