Canada's RBC aims to double assets under management in Asia
Increased compliance cost is one of the greatest challenges facing wealth management firms
The wealth management division of Royal Bank of Canada aims to double assets under management in Asia within the next five years.
Regulation is one challenge to achieving the goal, said Andrew Turczyniak, head of Asia at RBC Wealth Management. Higher inflation in the region was also driving up costs and hurting the revenue of private banks, he added.
The complexity of regulation and the increasing cost of compliance and non-compliance are the greatest challenges facing wealth management firms, according to a private wealth report by RBC Wealth Management and management consultancy Capgemini.
Increased costs and the slowing of the economies of the United States and European economies has prompted consolidation in the business of private banking, the most recent example being the acquisition of the non-US wealth management business of Merrill Lynch by Julius Bär last year.
RBC aims to grow organically, rather than by making acquisitions, Turczyniak said.
Wealth managers, including RBC, might respond by raising the minimum level of assets required to qualify for entry, he said. RBC currently requires a customer to have at least HK$8 million to qualify for its wealth management service. Some firms might have to move upmarket in search of better returns or leave the industry entirely, resulting in less choice for some high-net-worth individuals, the report, published last month, said.
Capgemini said some clients may be served by standardised services, while face-to-face advice services may be limited to clients with large, complex portfolios.
RBC Wealth Management's assets under management amounted to US$353 billion in the first quarter, putting it in the top six of global wealth managers. Business from Canada and the US contributed the most, with just 1.5 per cent of its AUM coming from Asia.
Turczyniak said the firm had set up the infrastructure to do more business in the region, adding that it had embarked on a hiring spree. The firm has 190 staff in Hong Kong and the same number in Singapore. It plans to hire more staff.