When bringing on new clients, standards such as the minimum of investable assets are easy for firms to qualify, but ethical issues like where a client's money came from can be harder to define and uncover.

At the same time, the Dodd-Frank reform legislation and recent accusations of money laundering at HSBC and Standard Chartered have brought client selection front and center. As firms continue to expand into new and perhaps less familiar markets, they will have to be even more vigilant when choosing clients.  

"With Dodd-Frank and with the financial crisis of the last several years, there's a heightened focus not only with the national regulators, but also with the state regulators," said Mary Zimmer, head of the U.S. division of international wealth at RBC Wealth Management, in an interview with On Wall Street. "We as managers have to help our client-facing people understand that's the environment we're in and why it's in their best interest that we are getting a little tighter and maybe looking in and asking more questions. We've always asked a lot of questions, but let's face it: It's a new level."

Over the past two years, RBC has been actively extending its reach into countries in Latin America and Europe, and that makes the risks associated with adding new clients something that Zimmer must "live with every day," she said.

But having the right branding, a strong risk management culture and perhaps most importantly, a personal relationship with the client can help to avoid taking on bad apples, Zimmer said.

"Let's take Latin America as one of the examples and probably certain parts of Eastern Europe and other places," Zimmer said. "You just have to be very careful. And there's a number of ways we do that."

Step one is to focus on building up a brand with a positive message. That will be the guiding force of the risk management culture and it will also set the tone for the clients you're attracting, Zimmer said.

"I was on a two-hour call yesterday where we did some training with [anti-money laundering] and they kept reinforcing the point that the front office particularly is where you set the tone for respecting the risk management mindset," Zimmer noted. "We want to get the business done, but we also definitely care about the brand of RBC and who we work with."

On that note, George Lewis, group head of RBC Wealth Management, announced to more than 100 female advisors at RBC's Women's Association of Financial Advisors conference last week in Minneapolis that he was sending out a "special communication" on the firm's values and code of conduct to all wealth management employees, "just emphasizing the fact that we're all in this together as well."

A strong mission statement alone is not enough, however. As Lewis noted, "I'm sure many businesses such as Standard Chartered and HSBC would have said the same thing I just said, 'we have quality businesses and quality people,' and yet they ran into tremendous difficulties on this particular issue and others."

Zimmer said she insists on having a strong compliance team on hand when making deals. In one deal she closed last week, it "took everybody and their brother to get it done," she said. To that end, Zimmer regularly works side-by-side with the head of risk management at RBC, Ian Crook, when opening new accounts. "He helps us either say no in the right places or if we say 'yes,' we're going to cover all the boxes," she said.

In the end, vetting clients often comes down to intangibles, according to Zimmer. "Say we bring on new client, there's a whole new account opening process, a whole compliance process, but at the end of the day it comes down to business judgment," Zimmer said. "There's nothing better than getting to know the client."

For example, if a prospective client claims to be involved in five businesses from running shopping malls or farming or other industries, then you should go see those businesses, Zimmer explained.  It's about being able to spot a red flag. "If all the sudden you get a bunch of calls from people in a certain country or from a certain firm, you have to have your antenna go up a little bit," she said. "That's great, but why? How did you get to us? What's going on? And it's the same thing with certain advisors."

Just be sure, that when you're asking questions of your clients, you maintain an 'innocent until proven guilty' attitude and not only ask questions in the right way, but also explain why you are asking, Zimmer said. "We always want to take the approach that our clients are doing good business, not assuming they are doing bad business and being proven differently," Zimmer explained. "It's all about approach. It's all about style. It's about how you ask the questions."

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