It’s eight o’clock on a Monday morning when Montalbano, head of Royal Bank of Canada’s Global Asset Management division, ushers me into the company’s 21st-floor conference room – mid-morning for anyone whose day revolves around stock exchanges operating on Eastern Standard Time. Looking tanned and fit in a crisp white shirt and paisley tie, Montalbano groans theatrically as he eases into the padded leather chair. He and his wife were entertaining their kids – aged three and five – and seven of their friends on the weekend, he explains, and having kids in your 40s takes its toll. “You’re 45 thinking you’re 25, and you realize you’re 45 going on 55,” he says with a laugh.
Montalbano was president of Phillips, Hager & North Investment Management Ltd. (PH&N) when RBC acquired the firm in 2008. Although the independent Vancouver money management firm was dwarfed by RBC’s fund division ($68 billion in assets under management at the time, compared to RBC Asset Management’s $92 billion), the PH&N name carried such prestige that its Vancouver offices would remain intact, and Montalbano would be elevated to president of the newly formed RBC Global Asset Management division, uniting PH&N with RBC’s two previously existing fund-management divisions, headquartered in Toronto and Minneapolis.
Today Montalbano oversees 700 employees and $200 billion in assets under management, and spends about half his time shuttling between offices in Toronto, New York, Boston, Chicago, London and Hong Kong. Although he began his career as an equity analyst, these days Montalbano leaves the investment decisions to others. He describes his job as simply minimizing distractions for his money managers so they can focus on what they do best: making money.
The 2008 acquisition raised eyebrows in Canada’s investment community because, since its inception in 1964, PH&N had clung fiercely to its independence. Its founding partners often spoke out publicly, criticizing the broader industry’s marketing tactics and excessive fund-management fees. They could afford to rub against the grain because of their phenomenal success: PH&N amassed a loyal clientele by consistently outperforming its peers, with zero marketing budget and charging about half the industry-standard fund-management fees.
However, Montalbano explains, things had changed by 2008: exchange-traded funds were muscling in on mutual funds’ share of the retail investor market, banks were dominating the distribution of funds, and institutional funds – PH&N’s bread and butter – were seeing increased competition from U.S. money managers.
“We required a significant amount of capital in order not only to satisfy clients’ needs but to compete with the better-capitalized U.S.-based money managers,” Montalbano recalls. “That’s exactly when RBC came calling.”
Montalbano is quick to argue that not only did the merger go exceptionally smoothly, but clients reaped considerable benefits: PH&N locked in its pre-merger management-expense ratios; it increased its staffing by five per cent; and, most importantly, it continued to record exceptional results, winning a 2010 industry award for best overall fund group in Canada, based on the past three years’ performance. All this in the midst of the market crash of 2008-09.
The executive corner suite is a long way from Montalbano’s roots in Vancouver’s east end, where the son of Italian immigrants graduated from John Oliver Secondary School. An avid sports fan, he enrolled in UBC with the goal of one day becoming the physiotherapist for a professional sports team. That dream, however, proved short-lived; having to work his way through school, Montalbano couldn’t afford the hundreds of hours of volunteer work required for a physiotherapist designation. Settling for a degree in commerce, he landed a summer job at PH&N in 1987.
Montalbano, who worked his way up from equity analyst at PH&N to become president in 2005, retains close links to his childhood neighbourhood, where many of his classmates did not share his good fortune. “I saw a lot of great kids make it, and there were a lot of great kids who didn’t,” he says. “Some kids today are dead or they’re in jail.”
In an effort to give today’s hard-knocks kids a better chance at a fulfilling life, Montalbano signed on 10 years ago as a founding director of the Take a Hike Youth at Risk Foundation, a program run out of John Oliver Secondary that gives teens who have fallen into the vortex of crime and drugs a second chance at getting their lives on track.
Montalbano describes PH&N’s founding partners as his mentors, crediting them with the success he now enjoys. The simple investment philosophy that PH&N was built on – growth at reasonable cost – continues to guide investment decisions at RBC Global Asset Management. More importantly, Montalbano attributes his moral compass in an often-cutthroat industry to founding partners Art Phillips, Bob Hager and Rudy North. “They not only told you how to be a professional,” he says; “they just taught you how to be a human being.”
Today the receptionist’s desk welcoming visitors to the top two floors of Waterfront Centre still proudly displays the PH&N logo, and John Montalbano proudly upholds traditions born and bred here. “It’s kind of fun to think that here we are in Vancouver thinking about global expansion,” he says, ruminating on his newfound role as head of RBC Global Asset Management. “It’s a nice place to be.”
