Helping clients to avoid worry about their investments is a key to the success of RBC Wealth Management in the Asia-Pacific region, one of the Canadian firm's top executive tells this publication.
This is the first
instalment of a two-part interview with one of the top men at the wealth
management business of Canada’s
Simon Ng, head of wealth management and trust at RBC Wealth
Management, Hong Kong, could be
crowned the “King of Caution”. Labelling Canada’s
largest bank by assets as “very prudent”, and its clients as “conservative”,
one wonders if a bit of fire is missing in the quest to take on Asia’s yield hungry high net worth clientele.
However, given the current unpredictable climate, Ng
exclusively told WealthBriefingAsia
in an interview that helping clients “sleep at night” has been fundamental to its
success, placing the bank within the top 10 ranking of wealth management
companies in the world.
According to recent quarterly results, as reported
previously by this website’s sister publication, WealthBriefing, net income
at Royal Bank of Canada's wealth management business rose from $157.1 million
in the third quarter to $210 million at end-October - up 16 per cent
year-on-year and 33 per cent on the prior quarter.
While RBC’s clients may be enjoying peaceful slumber, Ng and
the Asia team are fully aware of the growth
potential of their division. With wealth management such a significant part of
the RBC business, and Asia being home to vast wealth, Ng spoke of excitement
bubbling just around the corner, in 2013.Growth Plans
Ng spoke of “aggressive” hiring plans in Asia
for 2013. But first, the bank must “fix” any shortcomings and “build” a robust
platform from which the wealth management arm can grow in Asia,
and ultimately, globally.
Listing Mainland China,
Taiwan and Indonesia as key areas with increasing wealth
preservation needs, Ng said: “We have a very ambitious plan in Asia; we would like to grow our current assets under
management of about $11 billion to about $25 billion in above three year’s
This means more than doubling the client facing head count,
which is currently at 65, evenly split between Singapore
and Hong Kong. This is part of the “growth”
stage of the “fix, build and grow strategy” that RBC Wealth Management Asia is
judiciously following, with the view of creating a scalable business, said Ng.
With regards to “building”, Ng said that in response to
demand from its global clients: “We will have a new system in 2013, we are
changing our business model and adding to our product range in 2013.”
The extended product range will include
“accumulator/de-accumulator” products , also known as share forward
accumulators, which NG said sounds “scary”, because of the financial crisis
but, “It’s not a bad thing, it’s just had a bad experience and it’s actually a
good vehicle to enhance return.”
RBC Wealth Management will also be offering its Asian
clients equity options, which are not currently available via the firm’s
But for now, RBC Wealth Management is concentrating on fixed
income, and forex – areas that that are very important asset classes to its
clients, said Ng.
In an environment plagued with uncertainties including the
ongoing Euro-crisis, the looming US
“fiscal cliff” and the speculation as to whether China will achieve a hard or soft
landing, “wealth preservation”, over “high growth”, is the primary goal for the
majority of RBC’s wealth management clients.
In the search for steady growth, Ng said: “At RBC Wealth
Management, at least for the
last year, we see almost half of the (wealth management) transactions are
related to fixed income.”
Does he see this changing any time soon, surely there is a
glimmer of hope for riskier investments? Discounting the three mentioned
headwinds, or assuming they don’t have disastrous results (RBC predicts China
will have a soft landing), Ng said thinks his clients will be open to a bit
more risk, saying that he believes people are at least “less pessimistic than
In fact he is already witnessing investors reducing cash
holdings and developing a taste for equities. However, structured products are
still a no-no, deemed too risky for the moment. And in terms of alternative
asset classes, demand for hedge funds remains “very low” at RBC Wealth
But what Asians do love are natural resources, anything from
agriculture to precious metals, said Ng. And RBC, with its roots in a country
plentiful in natural resources, Ng believes the global brand can boost the
related equity offering to the Asian wealth management division.
The second instalment of this interview will be run