RBC to Ease Small Accounts Away from Brokers
RBC Wealth Management plans to wean its brokers in the U.S. away from small accounts by offering them small cash bonuses for referring households under $100,000 to call centers and significantly reducing payout on the accounts that they continue to service.
Details of the new program, which will be unveiled to the firm’s approximately 1,800 U.S. brokers by the end of June, are still being finalized, said managers who received preliminary briefings earlier this month. The program will be marketed as RBC Advantage and become effective at the start of RBC’s fiscal year in November, a spokeswoman confirmed.
The strategy of focusing full-service brokers on wealthy individuals and families has long been followed by larger U.S. broker-dealers.
Merrill Lynch, for example, does not pay its advisers on accounts with less than $250,000 at the firm, and incentivizes brokers to refer smaller accounts to “financial solutions advisors” at its parent Bank of America’s no-frills Merrill Edge unit. Morgan Stanley brokers get no credit or pay for servicing accounts with $100,000 or less of investable assets.
“We believe that money management shouldn’t be a one-size-fits-all approach,” RBC spokeswoman Nicole Garrison said in an e-mail. “The RBC Advantage model relies on a team of professionals who are dedicated to serving the specialized needs of this household segment….This approach allows our advisors to have the peace of mind that all accounts at RBC Wealth Management, regardless of segment, are benefiting from our client-first approach.”
RBC Wealth Management-U.S. is an amalgam of regional broker-dealers with roots in servicing primarily mass affluent customers. It is owned by Royal Bank of Canada, which entered the U.S. retail brokerage market in 2000 with its purchase of Minneapolis-based Dain Rauscher Wessels and subsequently added San Francisco-based retail brokerage Sutro & Co. and Boston-based Tucker Anthony to the mix. RBC Wealth-U.S. now has 200 offices in 40 states servicing about $336 billion of customer assets.
The firm does not disclose the percentage or number of client households with less than $100,000 in assets, Garrison said.
The people briefed on the plan said executives have variously discussed paying brokers between $50 and $200 for each account that they help migrate to the RBC Advantage program. Migration will not be mandatory, but RBC’s stick will be a cut in payout on the small accounts.
Brokers who today receive from 25% to 54% of the fees and commissions that customers pay the firm will get closer to 10% on small accounts, according to briefings that managers have received.
RBC executives are still deciding whether to permit brokers to continue serving small households that are in fee-based managed account programs, said two managers. Like many other broker-dealers, RBC has been encouraging brokers to shift customers from traditional transactional accounts that charge commissions to accounts that assess a fee based on assets held in an advisory account.
RBC will continue to provide “proactive advice, [a] focus on holistic wealth planning and….a high level of support and accessibility” to customers using the Advantage model, the spokeswoman said.
Clients first. LOLOL Right, as long as they can make the firm money. Otherwise, your 20 year relationship with your advisor and the absurd fees we charge to run you off and the numerous referrals you have provided over the years are all worthless now. Hit the trail your pauper with 249k. We are too good for you.
What a bunch of crap. More CYA from the glass towers.
Rich clients first …….. big producers first…….everyone else get lost!
My bet is that MS will take the number up to $250 to match ML, then ML will up the figure to $500 not to be outdone by MS. Then 5 years from now, all the firms will be st $1 million. There’s just so much extra profit for the firms to steal accounts from Advisors that greed will, and always has, gets the best of them.
The changes at RBC are sickening. In the past few years they have eliminated the company 401k contribution, raised the cutoff for deferred bonuses several times in order to exclude most brokers, slashed payouts on small tickets hugely and now cut payouts to 10% on all accounts under 100k. They have betrayed their clients and their advisors and then lie by telling everyone that they haven’t “touched” the commission grid. How can we tell clients to trust a company that treats us like this? By the way…they told us we needed to give up small accounts because they claim small account holders make most of the complaints and that we’re doing ourselves a favor if we dump them! They only care about HUGE producers and ultra high net worth customers! TIme for a brokers’ UNION at RBC!
Come on over to Baird!
RBC barely communicates with advisers except when slashing their pay. They think just because they say so an adviser can suddenly acquire billionaire clients. Current leadership is ruining the culture.
So RBC announces this at 4:30 in the afternoon so that few people will tune in. Most RBC’ers still haven’t heard the news. The whole thing is a disaster.
RBC has been singing the siren’s song about what a “refuge” for advisors it is for a while now. Baloney. RBC is no better or worse than any other bank to work at as an FA, and this latest action clearly proves it. Anytime you are an employee, you have to accept the fact that you are not, ultimately, going to be able to call the shots. At some point, you get fed up enough you’ll grow a spine and go independent. There are recruiters out there that can help you with that, but they can’t graft backbone.
Let me get this straight. RBC has been recruiting like crazy, telling advisors they are better and different from the big wirehouses while touting their “superior” culture. Now, after getting all those suckers to sign contracts, they pull the rug out and completely change everything and introduce 10% payouts! They played an awful lot of brokers for fools! They must be running out of money after wasting millions on their conviction that DOL was a sure thing! I even hear that RBC is still mandating the annual reviews they dreamed up because of DOL!!!!! Must be hell on earth over there.