Transcript A+ - RBC Wealth Management

The evolution of wealth management
Mutual funds/pools
 Until the 1990s, most individual investors could only access
institutional-calibre money management through funds and pools.
 While convenient and accessible, they offer limited customization,
flexibility and control.
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The evolution of wealth management
The Separately Managed Account (SMA)
 Provides customized, tax-efficient portfolios each
individually managed by carefully screened worldclass managers.
 Limited ability to overlay a consistent high-level
asset allocation strategy across all the separate
portfolios in one account.
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The evolution of wealth management
The Unified Managed Account (UMA)
 The UMA builds on the SMA’s
advantages, accurately and efficiently
overlaying an asset allocation strategy
to all the manager portfolios/models in
a single custody account.
 It can also hold individual mutual
funds, pools and ETFs – and apply the
overarching asset allocation to these as
well.
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Welcome to A+ – the next level of wealth management
 A+ is a new portfolio management system that combines a professional investment
process, partnership and peace of mind.
 Your A+ Portfolio synthesizes the most current thinking of RBC’s senior portfolio
strategists with carefully evaluated investment ideas from elite money managers
worldwide.
 A+ is designed to replace the emotions and guesswork of investing with a strictly
rational and decisive approach suitable for your core investment assets.
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What are the key benefits of A+?
Professional process
 “Pension-like” portfolio management
Partnership
 Match your goals / preferences with your portfolio
Peace of mind
 Continuous oversight
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The importance of asset allocation
 The asset allocation between equities, fixed income and cash
is the main factor determining your portfolio’s risk/ return
tradeoff.
 Everyone has an optimum asset allocation range based on
factors such as their stage in life and their personal comfort
level with risk.
 Strategic asset allocation within these ranges can add
significant value over time.
 Your portfolio’s actual asset allocation can drift outside your
ideal ranges over time – if left unchecked.
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The RBC
Investment
Strategy
Committee
provides strategic
asset allocation
quarterly, which is
automatically
applied to your A+
Portfolio, both to
add value and to
keep you within
your optimum
ranges to reduce
risk.
The importance of Asset Allocation
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Varying asset class returns causes asset allocation drift
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Asset class diversification helps removes guesswork
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Subtracting emotions, adding reason
 A+ helps you avoid the guesswork and emotions that plague the common
investor.
 Benefit from a professionally managed, highly disciplined process that
employs purely rational criteria for all investment decisions made on your
behalf.
 This process is designed to provide consistent, long-term value, while
reducing risk through precise diversification and regular asset mix
rebalancing.
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The real cost of emotional investing
The real cost of emotional investing
Individual investors tend to underperform the markets, largely because they make
frequent changes in response to market fluctuations.
Average equity investor
1.9%
S&P 500
8.4%
Source: Quantitative Analysis of Investor Behavior (Dalbar Inc., 2009). Returns include reinvestment of dividends,
but do not assume any transaction costs, taxes, management fees, or other expenses.
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The A+ framework for success
The A+ Portfolios framework is
comprised of two key
components:
1. Aligning your portfolio’s overall
asset allocation with the most current
thinking of our RBC Investment
Strategy Committee.
The result – a
rational framework
for investment
decision-making
that removes the
emotions and
guesswork from
investing.
2. Populating your portfolio with
carefully chosen investments to
achieve your individual financial
goals.
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The A+ strategic framework
Your A+ Portfolio is aligned with the
recommendations of our RBC
Investment Strategy Committee.
Based on its outlook for the
global markets and economy,
the Strategy Committee
determines optimum portfolio
allocations between the three
major asset classes, sectors of
the economy and geographic
regions.
Using our next-generation UMA
technology, we automatically apply
the Strategy Committee’s findings to
your A+ Portfolio on a quarterly
basis to maintain your optimum
asset allocation.
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The A+ tactical framework
We identify the specific
managers for your A+ Portfolio,
in addition to funds, pools or
ETFs that may help round it
out. Finally, we utilize UMA
technology to align all these
investments with your optimum
asset allocation.
We invite a select group of
money managers from RBC’s
research universe to provide
model portfolios for specific A+
mandates. We continually
monitor these managers and, in
the event one no longer meets
our strict criteria, identify a
suitable replacement.
The RBC Global Advisory
Research Group conducts
ongoing independent research
on over 4,000 quality managers
worldwide.
A+ mandates meet
investor objectives such as
long-term wealth creation,
income generation and
capital preservation.
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The Results
Recommended Model Portfolios
 5 asset allocation models
 4 investment tiers
 Global, Canadian and Income subsets
 Total of 42 Models
Investment Menu
 All investments on the menu have been carefully selected
 On-going research
 “Worth Knowings”
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Portfolio Sample
Balanced Portfolio Example @ $1,000,000 CAD
ASSET CLASS
FULFILLMENT
Canadian Fixed Income
26%
Laketon Fixed Income
Cdn Short Term FI
6%
TD Short Term Bond Fund
Global Fixed Income
8%
RBC Global Private Bond Pool
Canadian Equity
42%
Parameters
Canadian
Equity
Jarislowsky
Fraser
Canadian
Equity
US Large Cap Equity
International Equity
Emerging Markets
10.5%
6.5%
1%
Earnest US Large Cap Core
Philadelphia International Equity
AGF Emerging Markets Fund
A+ account features
Reporting
 Receive an in-depth A+ Portfolio Monitor every quarter detailing your integrated
asset mix among multiple asset types, overall portfolio performance, as well as
transactions made during the quarter.
Tax benefits
 We can tailor your A+ Portfolio to accommodate your individual tax situation, for
example, by harvesting capital losses that can offset taxable capital gains and
reduce your taxes. In addition, we can hold securities with a low book cost in your
A+ account until you are ready to sell, thereby deferring potential capital gains
taxes.
Portfolio customization
 We can apply personalized screens to your A+ Portfolio to restrict certain
companies or sectors of the economy, such as tobacco, military or alcohol.
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Why A+?
Professional process
 “Pension-like” portfolio management
Partnership
 Match your goals / preferences with your portfolio
Peace of mind
 Continuous oversight
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Thank you
ACCESS+ accounts are not guaranteed by RBC Dominion Securities Inc. Since these accounts are not suitable for all clients, RBC Dominion
Securities Inc. needs to review your investment objectives, risk tolerance and liquidity needs prior to accepting an application to open an
account. ACCESS+ accounts are subject to minimum investment requirements. RBC Dominion Securities Inc.* and Royal Bank of Canada are
separate corporate entities which are affiliated. *Member–Canadian Investor Protection Fund. ® Registered trademark of Royal Bank of Canada.
Used under licence. RBC Dominion Securities is a registered trademark of Royal Bank of Canada. Used under licence. © Copyright 2010. All
rights reserved.
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