RBC plans to acquire low-fee mutual-fund manager

FWR Staff

3 March 2008

Merger creates one of Canada's biggest private-client counseling businesses. The Royal Bank of Canada plans to buy Vancouver, Canada-based asset manager Phillips, Hager & North for about $1.4 billion. Toronto-based RBC says the deal creates one of the largest private-client investment counseling businesses in Canada and extends its retail mutual-fund and institutional pension-plan plays.

"We want to be the first choice for every client in Canada with asset management needs," says George Lewis, head of RBC Wealth Management. "With this announcement, we have an even stronger team, a larger playing field, and a well diversified, stable business mix, with strengths and talent across all asset classes, client segments and distribution channels of asset management."

Well-rounded

Low-fee fund shop PHN managed approximately $70 billion for institutions and private investors on 31 December 2007. RBC Asset Management worked with about $90 billion at the end of 2007.

PHN's president John Montalbano says his firm's attraction to merging with RBC comes down to that fact that the Toronto-based bank "has the commitment and resources to leverage our strengths with institutional, private client and mutual fund clients."

PHN provides several levels of private-client service. Investors can buy funds through full-service or discount brokers at a $5,000 minimum. Self-directed investors who put up at least $25,000 can get advice on portfolio structure and investment strategy. With a minimum investment of $300,000 investors get access to a dedicated fund advisor during the portfolio construction and monitoring processes. Finally, clients with at least $1 million to invest can delegate the day-to-day management of their portfolios to PHN.

PHN "has put together one of the most complete and well-rounded management teams in Canada," Morningstar Canada senior fund analyst Mark Chow wrote in May 2007.

Word of RBC's plan to buy PHN comes about 10 days after RBC said its U.S. brokerage subsidiary RBC Dain Rauscher would purchase Baltimore-based broker-dealer Ferris Baker Watts.

Last month Montreal-based National Bank Financial said it planned to buy Montreal-based retail brokerage Groupe Financier Everest and Aquilon Capital, a Toronto-based investment advisory.

With about $500 billion in assets under administration and more than 3,600 financial consultants, advisors, private bankers and trust officers, RBC Wealth Management directly serves wealthy clients in Canada, the U.S., Latin America, Europe and Asia. -FWR

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