POSITION: Chief administrative officer, head of Independent Business Channels atWealth Management
EDUCATION: BS, Finance, San Diego State University; Executive Management Program, Kellogg Management Institute, Northwestern University.
There is a new RIA custodian in town and it's not the least bit intimidated by the likes of, Fidelity, Pershing or TD Ameritrade. RBC Advisor Services was born in June after RBC acquired it from JP Morgan — which inherited the old Bear Stearns custody unit.
Mike Kavanagh, who is heading the unit, says he's not trying to get as large as the leading custodian giants but he is going after coveted advisors. RBC Advisor Services is geared toward RIAs with at least $200 million in assets. (The average Schwab RIA has $100 million in assets.) “We're not planning to be a custodian for every RIA out there. We are looking exclusively for RIAs that serve high-net-worth clients,” Kavanagh says. The firm would not disclose the number of its RIA clients.
RBC could not be getting into the space at a better time, says Steve Winks, principal at srconsultant.com, an FA consultancy in Richmond, VA. “The Achilles heel of the RIA custody business is that the existing players are not in the advice business. Existing custodians can only offer their RIAs so much in terms of support. They are anti-liability and very neutral in terms of the technology, services and products they offer their RIAs,” Winks says.
That's where Winks says RBC can distinguish itself. “RBC can assist its RIAs in portfolio construction and management, for example. Other custodians can offer something like that, but can't assist you with it. RBC has existing intellectual capital that it can leverage,” he says.
Kavanagh is banking on just that — using the already existing infrastructure of RBC wealth management business to attract and retain RIAs. “The intellectual capital and expertise that we have built over the years is a differentiator for our firm as a custodian. It translates into sophisticated product offerings like lending, estate planning, trust and capital markets products. But more importantly, a team of experts who know how put together and implement a solution for the complex needs of high-net-worth clients and their advisors,” he says.
RBC is not the first broker/dealer to enter the RIA custodian space.launched its RIA custody unit in October 2008. The difference, Kavanaugh says, is that RBC Advisor Services is backed by loads of cash thanks to its parent Canadian company. “The potential for a company like RBC to change the custody game is certainly there. It just depends on how this is all executed,” says Winks.