RBC Wealth Management boss: We’re not interested in big acquisitions

Despite talk of possible purchase of Morgan Keegan, Taft says bank not eyeing 'transformational deals'

When executive recruiters discuss potential buyers for a brokerage firm like Morgan Keegan & Co. — if and when it is put up for sale — RBC Capital Markets LLC is usually near the top of their lists.

This is hardly surprising given the firm’s track record over the last decade. After buying Dain Rauscher Corp. in 2000, the firm has made numerous — if substantially smaller — acquisitions since then. Tucker Anthony Sutro & Co, William R. Hough & Co, and Ferris, Baker Watts Inc, are among the firms RBC has acquired in the last ten years.

The wealth management firm, however, has switched gears, says CEO John Taft.

“Our goal was to get to a scale sustainable going forward,” said Mr. Taft, head of the wealth management division of RBC Capital Markets LLC. “We feel we’ve done that and our focus is now on organic growth.”

With 2100 financial advisers across 42 states in the U.S, the firm currently manages $220 billion. While Mr. Taft said he is always interested in good business opportunities, he also said RBC is looking more to boosting the productivity of its existing advisers rather than necessarily adding to their ranks. RBC is honing in on high-net worth investors with between $500,000 and $10 million in assets. “Our model works best for clients who have enough money that their life is complicated, but not so much that they’re going to Northern Trust or Bessemer Trust,” said Mr. Taft.

Those clients seem pleased with what RBC has to offer. The wealth manager recently topped J.D. Power & Associates’ ranking of customer satisfaction with their advisory firms.

A big positive from the point of view of financial advisers is that the firm’s deep-pocketed Canadian parent, Royal Bank of Canada, essentially leaves the firm alone. While other large banks usually attempt to sell more financial products through their adviser channels, RBC does not push its advisers to hawk mortgages and credit cards to their clients. “This company does not have a bank mentality,” said one RBC adviser.

Indeed, Royal Bank of Canada’s recent sale of its retail banking operations in the U.S. to PNC Bank led some recruiters to believe the parent would increase its investment in the wealth management operations. The purchase of Morgan Keegan and its approximately 1.200 advisers would certainly fit that bill, but it’s also unlikely.

“We’re not interested in transformational deals,” said Mr. Taft. “The kinds of firms we’re looking at have to represent where we want to go. We want fewer more productive advisers versus lots of less productive ones.”