At 7:45 on a cold and wet Tuesday morning last December, a lone figure could be seen trudging south up Burrard Street, oblivious to the commuters streaming out of the SkyTrain station.
Fighting to angle his umbrella against the driving rain, John Montalbano was deep in thought.
Within minutes, a press release announcing the end of his 28-year career in the investment industry would be distributed to newsrooms across the country.
The CEO of RBC Global Asset Management, Canada’s biggest asset-management firm, had told his employers two weeks previously that he would be stepping down as of May this year. After today there would be no turning back.
“It was my choice as to the dates and times and announcements and everything else, and yet I felt miserable all the way through it.”
Nevertheless, Montalbano felt honour-bound to live by a decision he had reached early in his career.
“After analyzing thousands of companies as a fund manager and an analyst, I came to a pretty hard view that CEOs have a due date of eight to 10 years,” Montalbano said.
“After that, they run the course of either becoming stale or starting to close doors for those people around them who are ready to step forward.”
So last month, just a few months shy of his 50th birthday, Montalbano felt he had no choice but to step aside.
“It didn’t feel good, but it felt right. To me, that’s how leaving should feel: it can never be about you; it’s got to be about your business.”
If misery is what he was feeling on that grey December morning, it would prove short-lived.
“I got to Georgia Street and I thought, ‘What the hell are you doing? Only losers walk in the rain thinking about their life,’” Montalbano said. “I turned around and came back to work. The announcement was made and I sat down and said, ‘OK, this is it; it’s real. Now get over it and make your retirement happen.’”
Montalbano’s career began in 1987 when, fresh from a University of British Columbia (UBC) commerce degree, he landed a job as an equity analyst at local investment firm Phillips, Hager & North (PH&N). The son of Italian immigrants, he had originally dreamed of one day being the physiotherapist for a professional sports team, but unable to afford the hundreds of volunteer hours required for physiotherapy accreditation, he had switched to commerce. A summer job with Phillips, Hager & North would morph into a 28-year career.
When Montalbano was tapped to head the firm in 2005, PH&N was a local success story: with $69 billion in assets under management, it was the biggest independent investment firm in Canada and had earned a reputation for delivering exceptional returns while charging fees well below the industry average.
But amidst upheaval in the financial industry, the local firm faced considerable headwinds. Banks were fast cornering the market on mutual funds, exchange-traded funds promised formidable competition to the low-cost retail model PH&N specialized in, and rapid advances in technology would require huge investments in infrastructure.
“The world was shifting underneath our feet,” Montalbano said, adding that if it wanted to compete in the increasingly global investment world, PH&N would need a cash infusion beyond the means of a trio of the firm’s partners.
“To improve our equity platform, to become increasingly relevant in fixed income, to globalize our business, to put in the proper infrastructure for technology, it probably would have required between $20 million and $40 million of investment for about five years.”
So, in 2008, Montalbano approached the partners with a proposal to sell the firm. The sale to RBC would be consummated later that year, and Montalbano became CEO of RBC Global Asset Management, the bank’s asset-management division. He would continue to work out of the Vancouver office of Phillips, Hager & North, now a wholly owned subsidiary of RBC.
In addition to overseeing a handful of acquisitions that have expanded RBC Global Asset Management’s footprint around the world, Montalbano has seen the firm continue the PH&N tradition of beating benchmark returns.
RBC Global Asset Management has consistently been recognized with awards for top performance, including the Best Funds Group Overall award from Lipper Canada seven times since the award’s inception in 2007.
Montalbano takes particular pride in passing on to his successors a corporate culture that can be traced back to the commitment of PH&N’s founding partners to the local community.
“I look back now and can say we’ve taken this experience that was really unique at PH&N, and we’ve expanded it. I am really proud of our people, all 1,400 around the world now, who come in to work because they want to do what’s right for their clients but they also want to make change in their community.”
The words catch in his throat momentarily as Montalbano described a recent charity run organized by RBC Global Asset Management’s office in London, England. The London office had consisted of a staff of four after RBC Global Asset Management acquired BlueBay Asset Management in 2010; today it has a staff of 400.
“Doing community runs for the sake of certain initiatives in London, and the feeling of pride that the London office is big enough now to support the community,” Montalbano said, pausing for a moment before continuing: “That’s something I’m proud of.”
From the day he was named president of PH&N 10 years ago, among Montalbano’s top priorities was putting a succession team in place. One of his first moves was to hire Damon Williams, who oversaw global investments for Aon Consulting and at the time was considered a rising star in the investment community.
When RBC Global Asset Management acquired BlueBay Asset Management two years later, Montalbano saw further leadership potential in that firm’s CEO, Alex Khein, whose proven track record in global markets would complement Williams’ investment acuity.
When Montalbano steps aside in May, he will hand leadership over to Williams and Khein, who will share the CEO title.
Although he has no immediate plans, apart from spending more time with his wife, Dana, and their two sons, aged seven and nine, Montalbano prefers to think of his transition not as a retirement, but as an opportunity to redefine himself.
He’ll maintain ties to RBC as vice-chairman of RBC Wealth Management for at least 12 months, advising on potential acquisitions and other initiatives and making himself available to the new leadership team. He’d like to one day head another company outside the financial industry, but he admitted that’s a long shot, given the scarcity of big head offices in Vancouver.
Failing that, he finds fulfilment in advising a number of local startups, is involved in local charities targeting disadvantaged youth and finds plenty to keep him busy as chairman of the UBC board of governors.
“At the worst, I have the wonderful downside of being with my family,” Montalbano said. “And at the very best I’ll be able to strike a balance of re-creating another successful business while spending a lot more time with my family. That would be the holy grail, but we’ll see. Maybe it’s one time lucky.” •