As Canada’s large financial institutions step up their efforts to woo the lucrative high net-worth market, National Bank of Canada is joining the fray.
This past September, National Bank, the smallest of Canada’s Big Six banks, launched Private Wealth 1859 — a new division dedicated to meeting the needs of clients with investible assets of at least $1 million — on its 150th anniversary.
And, like other bank-owned wealth-management operations, National Bank is introducing changes, such as centralizing services, for that client group.
National Bank’s affluent clients now represent $24 billion of assets under management, says Eric Bujold, senior vice president and managing director of wealth management at the bank. He would like to see that figure grow by 8% annually.
“We’re trying to centralize the clients we have in different units of the bank,” Bujold says, “and we want to give another twist. If we consolidate all our services and people into the same group, we would have better synergies, a better offering, we could grow more efficiently and faster — and that would benefit our clients.”
Although high net-worth clients make up a tiny portion of the overall market, Bujold says, the sector is a fast-growing and profitable one.
“It’s only 3.2% of the Canadian market, but it represents more than 60% of the assets under management,” he says. “We expect the number of high net-worth clients to double within the next eight years and [their assets] will represent more than 74% of AUM. We have to be there.”
National Bank research indicates there are 471,000 high net-worth households across Canada, representing two-thirds of the country’s total wealth. By 2016, industry experts estimate that the number of affluent households will top one million.
Figures from Toronto-based research firm Investor Economics Inc. tell a similar story. A report by the firm says the vast majority of high net-worth households in 2008 — the most recent year for which numbers are available — has between $1 million and $10 million in investible assets. The report also estimates that approximately 25,000 households have at least $10 million in investible assets — a group made up of top corporate executives and highly successful entrepreneurs and their respective heirs.
By 2018, the report predicts, the term “millionaire” will become much more commonplace, with more than 900,000 households meeting that threshold. Combined, the report predicts, that group will have almost $3 trillion in investible assets.
National Bank, of course, is far from the only player targeting this lucrative market. High net-worth business is a major focus of a growing number of institutions, led by the Royal Bank of Canada. Although RBC defines high net-worth clients as those with $1 million in investible assets, that bank also targets a submarket of “ultra” high net-worth individuals who have $20 million in investible assets and net worth of $50 million.
David Agnew, CEO and national director of RBC Dominion Securities Inc., says an unprecedented opportunity lies around the corner. His company estimates that between $80 billion and $140 billion will be transferred from one generation to the next in the coming decade.
“It’s the money in motion, and it’s a great business opportunity,” Agnew says. “Baby boomers are already starting to retire, and many people are starting to think about succession plans for their businesses. Approximately 50% of high net-worth Canadians are business owners. We’ve allocated significant resources and expertise to help our clients prepare for the future.”
Bujold predicts National Bank’s biggest growth surge will come from its entrepreneurial clients who have been with the bank since it first hung out its shingle.
“We financed them and were partners with them,” Bujold says. “Now, a lot of our clients are arriving at a point [at which] they’re considering selling their businesses or transferring them to another generation. We want to tell them we’re still there for their personal needs. We were their most trusted advi-sor for their commercial enterprises, and we will be their most trusted advisor for their wealth-management needs.”
Private Wealth 1859 has 70 advisors in its Montreal, Quebec City and Toronto offices dedicated exclusively to National Bank’s high net-worth clients, according to Bujold, with a fourth office, in Calgary, in the offing.
The bank has an additional 700 advisors who have affluent people among their client lists, and 300 financial planners at National Bank branches who will be able to tap into Private Wealth 1859’s high net-worth expertise.
@page_break@Royal Bank has more than 80 people dedicated to wealth-management services, according to Agnew, helping clients with their specialized needs in investment planning, tax planning, philanthropy, business succession and estate planning.
“All these people, their No. 1 job is to support the advisors by providing the best advice, strategies and solutions to their clients,” Agnew says. “We’re adding to this group all the time. It’s all complementary to our clients and our advisors. It’s a huge advantage that helps all of our advisors build and solidify their relationships with their present and future clients.”
The bank’s wealth-management division, which includes DS, RBC Phillips Hager & North Investment Counsel Inc. and RBC Estate & Trust Services, has about $170 billion in assets under administration.
Independent firms are also taking the high net-worth market seriously. In July, Toronto-based GMP Private Client LP and Winnipeg-based Richardson Partners Financial Ltd. announced a merger of their respective firms.
James Werry, CEO of Toronto-based GMP Private Client (and soon to be CEO of the recently merged Richardson GMP Ltd. )believes Richardson GMP could grow to almost $30 billion in AUA from $11 billion in the next five years.
The deal, which is scheduled to close in early November, will create a combined entity with 17 offices across the country, 114 advi-sor teams and AUA of more than $11 billion.
For its part, National Bank offers its Private Wealth 1859 clients and their families access to an extensive list of high net-worth services under one roof, Bujold says. These services include access to portfolio managers, private bankers, tax lawyers, succession lawyers, financial planners, insurance brokers, concierges, trust officers and even advice in non-traditional areas such as private equity.
As for the name, Bujold says, “1859” refers to the year National Bank was founded.
“We’re making the connection with our history,” Bujold says. “We want to make sure clients will remember the name. National Bank was founded in 1859 by seven business people in Quebec City who wanted to have more personalized service and be closer to their bank.” IE
National Bank steps up its quest for HNW clients
Financial services firms, both bank-owned and independent, increase efforts to attract the assets of Canada’s millionaires
- By: Geoff Kirbyson
- November 2, 2009 November 2, 2009
- 10:53