Hello and welcome to The Download. I'm your host, Dave Richardson, and we've got a special edition of the podcast today. Over the last several years as we've been doing the podcast, many of you have come up said, look, we love the portfolio managers, we love the way you're providing education around investing, the right way to invest, insights into the way some of the top investors in the world are putting together portfolios. But one of the other things we know, when you're an old guy— I turn 60 next month— and you've been in the same organization for 35 years, a pretty good organization, you must have come across some people who are exceptional leaders and fantastic business managers— because this business is arguably the best business in Canada— and so, I thought, that's a great opportunity to highlight some opportunities around leadership, business management. And the first name that came to mind was Neil McLaughlin, who is the Group Executive of Wealth Management and Insurance at RBC. And I've known Neil forever. If you're watching on YouTube, you’ll notice that Neil has aged much better than me. That's something that everyone says to me. But he's a phenomenal leader, someone I've learned a lot from. And I think you'll really enjoy listening to his career path. And then, he's running an enormous business at a global scale. And we can talk to him about some of the challenges of that. And of course, it's a dynamic business. It's always changing. It's always interesting. We help a lot of people, which is what we hopefully do on this podcast. So, Neil, first of all, thanks for saying yes and taking the invite. And welcome.

Thanks for having me. I'll have to play that intro to my kids because they'll never believe it.

So, maybe run through quickly what you've done, where you come from, and how you got into this role before we dig a little deeper into what you're doing now?

Yeah, sure. When I joined the bank, I was like a lot of folks, it was never the plan to join a big financial institution. I kind of fell into it. I just met one leader I thought would be great to work with. But I joined in 1998. I joined the credit card group. I progressed through the credit card business, ended up running that for a period of time. I went from that to run consumer lending. I reported to Dave McKay earlier in my career. I learned a ton working beside Dave, just how he thinks about the business, how he thinks about levers of the business, competition, different things. And then I went completely outside my comfort zone. I'd say one thing people should take away is your biggest development and growth comes when you take on big changes. And yes, there's some risk with that, but like everything I'm sure you're talking about here: no risk, no reward. So I worked in distribution, got to really understand what are the people doing on the street corners? What are the planners that you would spend a lot of time with? What's that like across the country?

Yeah, and I think one of the reasons I thought of you first to come on to talk about some of these topics is that you have such a breadth of experience across the organization. As people now know, having heard your career path, you've been everywhere, you've seen everything. Do you think that's a really important thing for people to do as they're trying to develop their career in whatever organization they're in?

Listen, I would be a big advocate for this idea of breadth. And my experience was, if you're willing to take on those challenges and put yourself in really uncomfortable positions where— and I've said this a couple of times in my career— you will go within one calendar year or one quarter from being the person who knows everything about everything for this corner of the business— which comes with a lot of confidence— and then you switch over and suddenly you know the least about this thing you're supposed to be accountable for and you're going through. But the other side of this is that's the steepest learning curve you could get on, and that's where growth comes from. You've got a large knowledge base and you're building on it. You're not starting from zero. What are the pieces you don't know? How do you translate old learnings into new learnings? And then trust people.

You've talked about in terms of not walking in as if you know everything about the business day one. But how do you work through that with the different leaders who are also pretty senior people at the time?

Get to know the people, get to know the dynamics. Who are your competitors? Who are the clients that are most important to the business? What are the risks that the business is dealing with? Build your foundation. Then you start to become credible and acknowledge that you need to do some learning. But resist the urge to put your thumbprint on something just because you're that new leader that comes in. I think that's a dangerous thing. But you are seeing this pattern of hey, I'm coming in, what's my 90-day plan? When do I feel like I really have a point of view? And it's not until past that 90-day in my opinion. You want to see patterns and proof points that really reinforce your hypothesis coming into something.

We'll finish off on the leadership piece and talk more about how you're managing the business and the challenges in that space right now and how you're evolving it and getting things flowing even better. But one of the things I remark about your leadership style— because I've seen you out and about— is that you're not just good at the senior levels but you also take a lot of time to make sure that people know you at the grassroots. Right out in front of the customer. But how do you manage to bridge that gap? It seems like a challenge for a lot of people.

I think it's probably just innate. Are you a people person? And I'll tell you, the best place you want to understand how your clients are feeling is you go talk to someone who's talking to 25 clients a week. Even better in a contact center, they're talking to 40 clients a day. If you want to know what's really going well and not going well, these people will tell you. You need a few trusted sources to connect you with how your clients are feeling or which competitors are giving us a challenge.

So, Neil, it is an incredibly dynamic business. What are the things you're looking at as the key challenges that you're facing in the next few months, the next few years, and the direction of the industry overall that Canadians would be interested in hearing about?

In some of the economies that we're most exposed to, where's unemployment? How are we thinking? How's the consumer doing? Where do we see businesses investing. So obviously the core macro elements are something we're always spending time on. More, I'd say, secular trends. Artificial intelligence. And we were chatting about this just before the call. This is going to change every one of the businesses we're in in a significant way. I saw some charts. Just a technology adoption. What was the time it took to get 100 million users to an iPhone or the internet usage and search and Google? AI has just eclipsed all of these. And it is having a profound effect. I'd mentioned to you earlier, blockchain was not the same. It was touted as a transformational technology but it has been slower to be adopted. The use cases and the impact on our businesses have been slower. AI is not that. And so, there's a number of ways we're thinking about it, both in terms of tailwinds to our business, but then also, I'd say, the risk of it disrupting our business and sideswiping some of the ways we've run it. A couple of things there. We talked about, if one of the core things we do as a business is sitting down with clients and really walking them through a planning conversation, a discovery conversation, what's important to them, what are they trying to save and invest for, and clients of every profile. The reality is in those conversations, we've hired people, and they have decades of training to really make sure they're providing that peace of mind and the advice. AI is changing those dynamics. And we are going to be dealing with clients who are going to be using AI to come in and ask us much tougher questions. They're going to be more educated consumers of what we've been providing them. At the end of the day, we'll need to adapt. We'll need to make sure we're showing them how we continue to add value. It's not just about the things that are going to come out of a simple AI prompt. And so building advice and value and peace of mind beyond that is going to be something we need to adapt to. How we use AI in our own business. So an advisor is staying ahead of that curve. They're making better use of their time. We're taking down the low-value parts of their day and week they can reinvest it into high-value time and hopefully spending more time with clients. But there are other things about really secular trends. The rise of digital assets is something we're spending a bunch of time on. And it's remarkable if you look by demographic, the appetite to invest in digital assets. And that's linked to our self-directed investing business, which is hypercompetitive. Very high growth. But it's combining all those things with a great digital experience and a brand and a value proposition. It's a different business than it was 5 years ago and almost unrecognizable versus 10 years ago.

As you say, the adoption of new technology has accelerated through history and you're seeing this younger cohort of investors approach things very differently. I imagine leading a business, you're not just thinking about the assets that are here now but the assets that ultimately end up in a wealth management business. You need to build to attract those assets and that self-directed platform would be a big part of that right now.

Yeah, absolutely. If you look at the new client acquisition coming into those businesses. Yes, these businesses are being marketed and it's timely and there's a profit pool that you're seeing competitors all vie for, but you can't deny there is an updraft client interest. Consumers are more interested in this category than we've seen them before. Whether it's Canada or the US, you're also seeing an investing culture. If you go to some other markets, for example the UK, you don't have young people that know the ticker symbols for the top 5 ETFs. But young people here, many of them do. And they're quoting them off. At the end of the day, this is a really good sign.

So, Neil, let's finish off with this idea. We talk about all this technology, we talk about the dynamism, the change in the geopolitical scene. But particularly as we look at AI and the impact that that's going to have. The business that we're ultimately involved in is a people business. It's an advisor. It's a customer. There's a relationship. Do you believe that that's going to always be the case? Is there any way that we're going to see that technology disintermediate that relationship between customer and advisor?

And that model has been changing. We're putting a lot more advice and planning into those businesses than we ever have. I think that actually sets us up really well. The complexity of an ultra-high net worth client and just the value at risk— and we're seeing the research— investors of every age want the confirmation of a human in the loop. So when you have a large portfolio and your family situation is very complex, that model is going to have staying power. But as you go through, does it mean that those advisors aren't going to have a really strong imperative to use AI? Of course it will. The short answer is those models will continue to be there, but there'll be a segment of consumers who are already having an appetite to do it themselves. They're going to adopt these new tools and they're going to be able to bring things that they couldn't do. They could execute, they could make investment management choices by themselves, execute those trades by themselves, monitor a portfolio. But the integration of really doing sophisticated planning was outside that realm. We're going to either see through changes like open banking, some of these AI modules. You're going to start to bring some of those things in and connect them. And I do think that, over time, some of those models will start to morph and fragment, and we'll probably have new models sitting in between the ones we have now.

Yeah, I'm ultimately optimistic in a broad sense because I think technology is actually making markets more approachable. As you say, young people are much more engaged than when I was in high school or university at a young age. The knowledge they have, the interest they have, which is ultimately a good thing to get them investing. And some will carry on in a self-directed path, but the role of an advisor I think is still going to be absolutely critical.

If you look at the trends we're talking about, there is an emotional requirement, a peace of mind, a confirmation bias that's going to continue to be there. So they may work up some of these things and they're going to come in with better questions, but they want our advisor to make sure that, you know what, you can trust that advice. Or you've gotten further along in this this journey by yourself that I used to have to help you with, but now let's talk about it and let's take it one step further than we couldn't have got together. So this idea of human in the loop is absolutely going to be a critical part of an awful lot of these AI applications, and I think especially in financial services.

So important that point around better knowledge, better questions coming in. You know what I do, I'm out talking to investors all the time. And I say at the start of any presentation, the idea of this is to give you information so you can have a better discussion with your advisor. You start with better information, you start at a different level.

For sure. 100% agree with that. A more educated customer is a better customer, right? And when we're moving this up and they can come in, and we'll be more challenged and the answers we're going to have to provide are going to be more sophisticated. But I think net-net, that's a really good thing.

I know you're all about better outcomes for clients. Better educated clients are better clients. We both believe that. And the customer is always right. And the customer said they wanted to hear from leaders of the business about leadership style, their career progress. We covered that. But also, how a leader thinks about managing an enormous business in this incredibly dynamic and ever-changing environment. And the customer was right. This is a fantastic conversation, Neil. Always enjoy. I just learn so much when I spend time with you, and I really appreciate it. I know how busy you are to take the time to come in and join us today. So, thank you very much.