As the competition for high net-worth clients heats up, deposit-taking institutions are relying more than ever on collaboration — rather than competition — among their brokerage, investment-counselling and banking arms to cater to affluent clients’ financial needs.
“It’s not so much a matter of ‘Is the client better served in a brokerage environment?’ or ‘Is the client better served in an investment-counselling environment?'” says Andrew Auerbach, senior vice president and chief operating officer of BMO Harris Private Banking, Toronto-based Bank of Montreal‘s wealth-management arm. “We’ll certainly get there in providing the best solution for the client. But for us, it’s all about looking after the high net-worth client who has the complexity of needs that go beyond any one line of business.”
In Auerbach’s opinion, there’s no such thing as a single need for these clients; their financial situations are always complex. They may own businesses or be involved in world markets. So, BMO’s financial services — wealth management, investment management and private banking — inevitably complement each other.
At Toronto-based Bank of Nova Scotia‘s wealth-management division, Scotia Private Client Group, bringing investment services together for high net-worth clients is the crux of its success, as well.
“In our effort to deliver an integrated service, we have a primary relationship manager who co-ordinates a team of experts for the client based on his or her needs,” says James McPhedran, Scotia Private Client Group’s head and managing director. “Through needs-based analysis, the manager can provide the client with one-stop shopping for all of his or her financial needs across all of our divisions, including: wills and estate planning; investments through either or both of our investment-counselling and brokerage firms; insurance; estate and trust administration; private banking; and tax preparation. The client has a single point of contact with his or her primary relationship manager, who heads a team of experts.”
The Private Client Group will also introduce a third-party investment services provider if that works best for the client.
Likewise, Eric LaFlamme, president and CEO of Montreal-based National Bank Trust, the asset-management subsidiary of National Bank of Canada, is seeing more collaboration among the bank’s various divisions to serve clients with investible assets of $2 million or more.
“We have a joint offer that combines various services within the National Bank group,” he says. “We have to put the client first, see what the objectives are and, in the end, the clients will be better served.”
National Bank does this by offering 3,000 custom investment combinations for a client’s portfolio, including high-yield accounts and hedge funds, LaFlamme says.
For Toronto-based Royal Bank of Canadas RBC Global Private Banking division, ensuring that it has an investment strategy for high net-worth clients that co-ordinates experts from all segments of the bank — including brokerage arm RBC Dominion Securities Inc. and discretionary investment-management arm RBC Private Counsel Inc. — is the No. 1 mission. But Royal Bank also prides itself on the quality of its advice, says Michael Walker, vice president and head of branch investments for Royal Bank.
“We’ve made a significant investment in advice and financial planning — including tax planning and wills and estates planning,” he says, “because we recognize that advice really underpins our whole high net-worth strategy.”
This collaborative approach to taking care of the high net-worth client is paying off handsomely for each of the banks that implements it. For example, National Bank reports that discretionary investment management is its fastest-growing sector, with more than $10 billion in assets under management. And, according to Toronto-based financial services research and consultancy firm Investor Economics Inc., BMO Harris is the fastest-growing investment-counselling firm in Canada, with a client retention rate of 95%.
A culture of collaboration also works for Vancouver-based Vancouver City Savings Credit Union, one of the few credit unions in Canada to offer discretionary portfolio management for high net-worth clients.
“The more business a client has with us and the broader the range of products and services,” says Alan Pankratz, vice president and director of Vancity Investment Management Ltd., the credit union’s discretionary-investment arm, “the higher the member dividends and profit-sharing, depending on the annual profitability of Vancity.”
Vancity’s target client has significantly fewer assets than the clients the banks’ target; $450,000 vs $1 million, respectively. But Vancity’s clients are still assigned their own portfolio manager to oversee their investments. IE