RBC Wealth Management is on a recruiting tear in 2017, as its recruiting bonus remains one of the most attractive on Wall Street, according to industry sources.
According to data compiled by InvestmentNews, RBC Wealth Management successfully recruited 18 teams of financial advisers while watching seven move to other firms for a net gain of 11 over the first three quarters of the year.
And advisers moving to RBC this year through the end of September had almost $5.1 billion in client assets under management, while those that left had close to $850 million, according to InvestmentNews data, which is based on adviser moves this newspaper reports as well as those reported by competitors. That translates into a net gain of $4.25 billion in client assets for RBC Wealth Management.
In the wake of industry rules that have flattened commissions at many large firms, recruiting financial advisers has been turned on its head.
While the big four wirehouses, Merrill Lynch, Morgan Stanley, UBS Financial Services and Wells Fargo Advisors, have cut back on recruiting deals due to the Department of Labor's fiduciary rule, RBC Wealth Management is one of the few firms remaining to offer advisers deals at the level previously common, industry observers said.
Last October, the DOL said that hiring incentives risked running afoul of rules because they include sales targets that can pressure brokers to push expensive products on savers. In May, Merrill Lynch and Morgan Stanley said they were slowing down recruiting, which is expensive, and focusing more on training and investing in current advisers. And then at the end of last month, Morgan Stanley said it was exiting an industry agreement known as the protocol for broker recruiting, an indication that the firm is working harder than ever to prevent its brokers from jumping ship.
Industry recruiters said RBC continues to offer a recruiting bonus of 250% to 300% of a broker's prior year's fees and commissions, known as the "trailing 12" in industry shorthand. The four wirehouses are not currently offering such deals, recruiters said.
RBC Wealth Management has $310 billion in total client assets with approximately 1,800 financial advisers operating in 200 locations in 40 states, according to the company. On Tuesday, it said it had recently hired another team, the Langer Wealth Management Group, in Tucson from UBS. The team manages approximately $231 million in assets under administration, according to the company.
"In the last year, as the wirehouses have pulled back on deals, RBC has not," said Howard Diamond, chief operating officer and general counsel for Diamond Consultants, an industry recruiter. RBC is a client of Diamond Consultants, he said.
"It's one of the most aggressive deals on the street," he said. "RBC is looking to actively recruit advisers from the wires. They are sick and tired of the ever-changing pay grid and want to take their practice to a firm more focused on the adviser."
Industry observers noted that RBC had been adding to its senior executives of late, and that contributed to the firm's recent success.
Wall Street veteran Michael Armstrong joined the firm last year as CEO of RBC Wealth Management in the United States. He was formerly global head of wealth management at Jefferies and prior to that a wealth management executive at Morgan Stanley. A spokeswoman, Jonell Lundquist, said Mr. Armstrong was not available for an interview. And after seven years at Hightower, Michael Parker last month joined RBC Wealth Management as head of its adviser recruiting.
"RBC is a good example of how a firm with a great name and capital backing can take advantage of troubles at the wirehouses and be seen as a credible alternative," said Danny Sarch, an industry recruiter.