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Featured Q&A
By Michael Decker, bda
Q&A with Matt Boardman of RBC Wealth Management
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RBC Wealth Management, a division of RBC Capital Markets, LLC, registered investment adviser and Member NYSE/FINRA/SIPC.
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Michael Decker, BDA:

Describe RBC’s retail fixed income business and your role and history at the firm.

Matt Boardman, RBC Wealth Management of:

RBC Wealth Management provides advice and services to individuals, families, businesses and institutional investors through a network of more than 2,100 financial advisors located in offices throughout the United States. The fixed income business is part of a suite of overall wealth management solutions offered to clients. Our strategy and our mandate is to service all the fixed income needs across all available asset classes for all of our clients, both transactional and fee based. For transactional accounts we have trading desks located in Minnesota, New York, New Jersey, Maryland, Texas and California. Each of those desks has a specific asset class or portion to trade, balance sheet to own inventory of potential interest to our clients, authority to approve risk and contemporaneous trades with a priority to service our clients’ needs. We also have a complete, all-asset class Advisory trading desk in Minneapolis that is dedicated to the fixed income needs of those clients choosing to pay for services through a fee arrangement. RBC Capital Markets, another RBC business line, is a separate trading organization that enhances our capabilities to serve clients through a close working relationship.
I have been in the fixed income industry since 1977. In 1983, I joined a smaller firm in New Jersey that was acquired by RBC in 2003. So my official tenure with RBC is just under forty years. I have been head of fixed income at RBC Wealth Management since 2005, a role in which I have broad responsibility for all of our related business across all products.

BDA:

It’s a challenging time to be in the fixed income business. Inflation and the Fed’s response are driving up yields. Investors are seeing the values of their portfolios drop. Issuance forecasts are being revised downwards. How are your customers reacting? What advice are you giving them on how to respond to current market conditions?

Matt Boardman, RBC Wealth Management:

Especially for individual investors, fixed income is a longer-term outlook with a certain future date and price. That is not to say that market movements are not important, but if properly advised and purchased the variability of pricing and markets is not nearly as consequential as it is for the equities markets. Our fixed income team works closely with our advisors to create and maintain bespoke portfolios of individual bonds that are tailored to the clients’ needs and reflect appropriate suitability. We then monitor every position, every day, though advanced technology that alerts our advisors and traders to any significant change in every security. An extension of that capability creates portfolio reports so clients can see an overview of their holdings as well as drill down to specifics. Our response to all market conditions – not just the current challenging market conditions – is to consistently review, analyze and position the individual portfolio to help confirm that it continues to meet the objectives of the investor.

BDA:

Has the reversal in yields caused RBC to do anything differently in terms of where and how you seek and provide liquidity? Are you maintaining similar inventory levels to recent periods?

Matt Boardman, RBC Wealth Management:

We maintained the same risk limits for our trading desks all throughout the early days of COVID when markets were incredibly volatile, and those same limits are in place today. Our inventories are for client service, not proprietary trading, and every security we purchase is with the thought that it will be attractive to some segment of our client population. If we are wrong and clients show no interest, we manage risk by moving out of the position fairly quickly, moving on to the next opportunity we perceive for our investors.
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BDA:

How do you make the case to customers that bonds are an appealing product in the current market environment?

Matt Boardman, RBC Wealth Management:

The breadth and depth of the fixed income markets makes the case for that appeal. Regardless of the day, our approach is to tailor fixed income investments to the client’s needs. Our strategies are developed in direct conversations between advisors and clients with a view to the total well-being of that client. That personalized approach results in as many strategies and diverse solutions as there are clients. And because of all the asset classes we trade and the number of opportunities in each of those classes, we are able to find solutions for the current need. Education, diversification and flexibility are foundational to how we conduct our fixed income business.

BDA:

What’s your outlook for the retail fixed income markets and business for the next year and next five years?

Matt Boardman, RBC Wealth Management:

I leave economic forecasting to the qualified analysts, so I will not offer an opinion on interest rates or the shape of the yield curve. However, I am confident that volatility - in both directions - will continue until the public becomes convinced of the outcome of variables like inflation, Fed actions, geopolitics and other risks. Those times are generally associated with less liquidity and that creates opportunities for investors who receive good advice, do their homework and have a long-term plan. As I said earlier, fixed income should be a longer-term outlook for individual investors.

BDA:

How has RBC adapted to work from home, hybrid work, and similar alternative work arrangements?

Matt Boardman, RBC Wealth Management:

RBC fixed income adapted almost immediately to the pandemic, seamlessly moving all of our trading team to work from home in a matter of days. Advisors dialing the trading desk in March 2020 were greeted directly by the same people who maintained consistent capabilities all through the uncertainty and most challenging days. We started returning to premises in February of this year, and by March we arrived at our current hybrid schedules with both “office” and “flex” days. I believe we do our best work when we are together and can be in closer proximity to our colleagues, but I also recognize the various benefits of flexible working arrangements. This remains an evolving dynamic, subject to changing conditions and keeping in mind our employees’ health and well-being.

BDA:

What keeps you up at night?

Matt Boardman, RBC Wealth Management:

Stress. The stress of the unknown, third party uncertainty, and other variables. Questions abound – What new regulations will be created, how relevant will they be to the wealth management fixed income business, and what will they mean for our clients? What new technology will be introduced and what impact will it have on our business and how we conduct it?
What keeps me restful is knowing that RBC Wealth Management is fully committed to the fixed income business as a differentiating capability for our clients and knowing that our fixed income team is valued and supported. I sleep well knowing that the team is well-positioned and well-prepared to continue to diligently support our advisors and clients.