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Damon Williams is on a mission to shoot down the asset management industry’s chorus of naysayers.
As the industry faces a barrage of criticism over its treatment of clients, with regulators and campaigners accusing fund houses of prioritising profits while ignoring investor needs, the president of RBC Global Asset Management is determined to show a different side.
During an hour-long meeting in the company’s London offices on the banks of the Thames, the head of the $323bn asset manager owned by Royal Bank of Canada uses the word “client” or its plural an impressive 73 times.
The 47-year-old seems acutely aware of the reputational problem the industry faces, after concerns about bad performance and high fees dented trust. A survey by PwC, the consultancy, in 2014 found that only 12 per cent of consumers polled said they trusted asset managers, compared with 32 per cent who trust retail banks and 76 per cent who trust medical doctors.
Mr Williams is reluctant to comment on the practices of the wider industry, which oversees the savings of hundreds of millions of people. But throughout the conversation he talks about the need to deliver “very good value” for clients, how asset managers should develop products that clients need rather than ones that generate the most money for fund houses, and the challenges facing clients in the low interest-rate environment.
“If we don’t deliver investment performance to our clients, ultimately, our right to exist as a business disappears,” he adds.
Born in the UK, Mr Williams has lived in Canada since he was four. He was named co-chief executive of RBC GAM, which includes Bluebay, the alternative fund manager, and Phillips, Hager & North, the Canadian retail asset manager, in 2015 and has since become the sole chief executive.
These are turbulent times for the asset management sector. The industry has grown rapidly in the wake of the financial crisis, with PwC predicting assets under management could hit $145tn by 2025.
But swift growth has prompted much soul searching. In the boardrooms of investment houses around the world, executives are grappling with difficult questions about the future of their businesses.
Many fund chiefs worry whether their companies are big enough to survive in a sector that is increasingly dominated by global houses that oversee hundreds of billions and sometimes trillions of dollars. The rapid rise of passive funds has also sparked questions about the role of active managers.
“There are pressures on the asset management industry. Technology is causing pressure on fees. New competitors are causing pressure on fees. I think it gets harder [in the future], particularly for smaller asset managers,” says Mr Williams.
Some asset managers, such as Janus and Henderson, and Aberdeen and Standard Life, have responded to the changing business landscape by merging, hoping their increased scale will allow them to compete better.
Mr Williams, in contrast, is on the hunt for companies to buy. “We’re opportunistic when it comes to acquisitions,” he says. “We are very interested in continuing to build out our array of capabilities to continue to meet client needs.”
He declines to comment on whether RBC GAM is currently in talks to buy a company, but admits there have been many discussions. Its last big acquisition was Bluebay, which it bought in 2010 for £963m.
“Through RBC, we have the financial capacity to make very large acquisitions. RBC is Canada’s largest and most profitable firm. Asset management and wealth management are core to RBC’s business. So we have the ability and the financial capacity to look at both large and small, and over the years we have done both,” he says.
The asset manager is also looking at how technology is disrupting the industry. Last year, it set up a so-called innovation lab, to investigate topics such as blockchain, the technology that underpins bitcoin, the cryptocurrency.
Mr Williams believes blockchain, which is a giant, online public ledger, has the “potential to radically change the whole concept of asset management”. This includes near-term changes predominantly focused on cutting costs by making the industry more efficient.
But the potential longer-term impact of blockchain is the most exciting, he suggests. He thinks blockchain could allow for the “tokenisation”, or slicing up, of assets. This would allow investors easier access to a far greater range of asset classes than just listed equities and bonds.
“We’re working on exploring that and trying different things in that market to make sure we’re learning with the market, we are able to bring our clients with us, and we don’t, one day, wind up realising that we are the taxi company that’s just been Uberised, too late to do anything about it,” he says.
The conversation turns to Europe. Mr Williams is visiting London partially because of his love of sports: he lists mountain biking, road cycling, running and boxing among his favourite activities. The weekend before we met, he took part in a relay marathon in the Channel Islands, completing his 10km leg in less than 40 minutes.
In Europe, one of the big topics is whether the UK’s departure from the EU will result in upheaval for the continent’s asset management industry. Many asset managers base their staff in London, while their funds are domiciled in countries such as Luxembourg or Ireland. Brexit has put this model under threat.
RBC GAM has already put plans in place to deal with potential problems. It is in the process of increasing the number of staff it has in Luxembourg from eight to 20.
Mr Williams says: “We’ve done a lot of work on thinking about various Brexit scenarios and how we might accommodate it.
“One of the things that comforts me on Brexit is that RBC has some very substantive operations across Europe, so if we need to shift people as a result of hard Brexit or something like that, we can and we will. But there’s a lot of uncertainty yet as to what Brexit will actually mean as far as distribution of the workforce.”
As the meeting comes to a close, Mr Williams reveals a competitive streak. Asked how his team, which was made up of staff from RBC’s asset management arm, did in the relay, he shrugs off the question. “It’s a friendly competition,” he says.
But a couple of seconds later, he adds: “Well, we won the RBC team division.”