Imagine that you go to work every day and look after $300 billion of other people's money.

Now you have an idea of what it's like to be George Lewis, chairman and CEO of RBC Asset Management (RBCAM) Inc.

Lewis doesn't look after all of RBCAM clients' assets by himself. But it's his job to hire, fire and manage the other members of his team who do.

Toronto-based RBCAM, which is an indirect, wholly owned subsidiary of Royal Bank of Canada (RBC), sells and advises investors on mutual funds, pooled funds and portfolios managed by other financial services companies.

Larry MacDougal, Business Edge
RBC Asset Management chairman and CEO George Lewis is also a history buff who has studied such political notables as Churchill and Roosevelt.

RBCAM has snared the largest market share of mutual fund assets - about 10 per cent - under Lewis, who moved into his current post in 2000 after joining RBC in the mid-1980s.

"The (Canada Pension Plan) might catch us one day, with their built-in sales plan," says Lewis. "But we're very privileged and we take that (privilege) seriously."

RBC, which he joined after obtaining an MBA from Harvard University, has "allowed me to have new challenges over the years. I feel blessed with a great team. It's a tremendously exciting position to have, because we have a great momentum in the marketplace and great business with our clients. When I get a chance to meet our clients, I always start by thanking them for their business, because it is tremendously exciting and gratifying."

Pending the next global recession, time will tell how grateful investors are to Lewis. An accountant by profession, he is also a history buff who gains inspiration from such notables as Sir Winston Churchill, Abraham Lincoln and Franklin Delano Roosevelt. And he believes that people - rather than market forces - revolutionize economies.

Meanwhile, as the RRSP season comes to a close, you may gain some insights in investment strategy from Lewis, whose firm emphasizes product performance, people and value for money.

1. Can you tell us a bit about your early years?

"Well, I was born in Pembroke. Both my mom and dad were from the Ottawa Valley, near Algonquin Park, and at the time Pembroke (had) the nearest hospital. So that was the only time I've been in Pembroke, actually. I grew up in Ottawa for my first five years and then my family moved to just outside Toronto. I grew up in Markham, which is just northeast of Toronto. It was a great community - and still is. I went to Markham District High School.

My wife Leanne lived not too far away, and we both went to the same school. We didn't really get together until the last year of high school."

2. What were some of your interests when you were growing up?

"I enjoyed sports, but was only good at a few of them, one of which was bowling. I still have the result of that part of my life, in the form of bowling trophies - which Leanne doesn't let me display - but they're in the attic somewhere. I played a little basketball and a little chess, everything from a recreational point of view. I concluded that professional sports was not a great thing for me to aspire to."

RBCAM's George Lewis

3. What did your parents do?

"My father was a professional engineer and worked for the federal government while we were in Ottawa and then worked for the Ministry of Natural Resources in Ontario when we were in Toronto. My mom was a teacher - and still is a teacher. I had her as a teacher when I was in Grade 3. It taught me the importance of delivering on expectations and performance early on."

4. Since you felt that you weren't going to get into sports, what career did you dream of following?

"I enjoyed all subjects in high school - the math and science and English and history - so it was difficult for me to choose what to take at university. I chose (commerce) as an area to focus on in my undergraduate studies at the University of Toronto. It was more being interested in something that I hadn't had exposure to, rather than a pre-determined view that I wanted to travel down a certain career (path.)" 5. When did you develop an interest in accounting?

"That really came during university. I initially thought that I might choose law as a career. When I got into the university program of commerce and finance, law was very interesting, because that was part of it. But I was very interested in accounting and auditing because of the importance that it has throughout the economy. Going back in time, to the Middle Ages and early parts of developing economies, ownership and management were one. Accounting and the auditing of financial statements allowed owners to have confidence in, and a way of administering, the people who were managing their businesses for them. It's a wonderful early career. It could be a wonderful late career for many people. But it's a wonderful early career, because you get exposed to a number of different businesses as an auditor. I found that (experience) very valuable."

6. What was it like trying to get into Harvard?

"It's an interesting story, because I was enjoying being a public accountant. It was my wife who asked me to go back and get an MBA. It was really on a spur of the moment that I applied to Harvard and Stanford. I viewed it as a once-in-a-lifetime opportunity to study in a very interesting place and meet a lot of very interesting people. It was before Leanne and I had children. We've had a lot of special times. We've been very blessed, but that was a time that we look back on with particular fondness."

7. Who were some of your prominent classmates?

"Susan Decker, who is chief financial officer of Yahoo Inc., which is now a major business. I noticed they reported good results (recently), so good for her. In addition to my classmates, I was fortunate to have a number of professors who were very interesting. Michael Porter, a very important person in terms of competitive strategy, was there at the time. One of my professors for corporate finance was a gentleman named Stephen Fenster, who unfortunately passed away some time ago. He was a partner at Lehman Brothers, and he was instrumental in getting me interested in the capital markets and corporate finance business - which ultimately led to RBC."

8. How did you end up joining RBC?

"It was very interesting. I joined Dominion Securities Pitfield from Harvard. It was, and still is, Canada's largest investment dealer. At the time, Dominion Securities had grown through acquisitions for the previous five years, and therefore had not hired people into its investment-banking area. It came down to Harvard in 1986 and three Canadians joined from the class - myself, Peter Busey, who remains the head of the firm's mergers and acquisitions, and Stuart Burton. All three of us are still with RBC. As you may recall, Canada's commercial banks - I think it was in 1986 or 1987 - were allowed to enter into other businesses, such as investment banking and trust services, so RBC purchased Dominion Securities Pitfield in 1988."

9. What was it like working on mergers and acquisitions with RBC Capital Markets?

"It was great. About 50 per cent of my time at RBC Capital Markets was spent in the mergers and acquisitions area, working very closely with two gentleman, Bob Matthews and Gary Sugar - Gary remains with capital markets - on mining mergers. One of the great experiences I had was the ability to work with them and advise on the merger of Placer Developments, Dome Mines and Campbell Red Lake Mines to create which, at the time, was the world's largest gold producer - Placer Dome."

10. Why did you become an analyst?

"RBC made an investment in New York in the merger and arbitrage area, and I was sent down to learn that business and work with the team that we invested in. We ultimately concluded that we would not stay with that investment. RBC Capital Markets wondered whether I wanted to be in investment banking, or the equity or research area. I enjoy writing, I enjoy analysing and I enjoy reading - all three things you need to be a good analyst - and I had, over the years, gotten more comfortable with presentations. So I joined the (research) area in 1990. Richard Stovell, who became the director of research at that time, was our utilities analyst. So they were looking for a pipeline and utilities analyst and I fit the bill."

11. What prompted your move to RBC Asset Management?

"I've been very fortunate with RBC in all the parts, capital markets, wealth management and banking, to get a new opportunity every three or four years. I was an analyst with RBC Capital Markets for a few years and then was director of research for that firm. In the late 1990s, I had a great opportunity to lead our institutional-equity business and that gave me a sense of (how that business works.) In 2000, Reay Mackay, who was the head of RBC Investments at the time, and Gord Nixon (president and CEO of RBC Financial Group) asked me to take on the leadership of our asset-management business - to move to the buy side, if you will. It was a wonderful opportunity and I was very pleased to take that on."

12. How does RBC Asset Management's distribution system work?

"RBC Asset Management is one of the businesses within the overall wealth-management group of our Canadian business and is Canada's largest single-fund company. The teams within asset management are basically divided into four areas. The (sales) group is handled by our president Brenda Vince. They deal through a number of distribution partners, the biggest one of which is our financial planning and branch investment people in Royal Bank branches across the country. We have 1,500 dedicated financial planners - some in-branch and some mobile - and another 7,500 people who are licensed to sell mutual funds across the country and who (sell) other products as well. Five years ago, we began to market our funds with (the goal of) improving investment performance and (offering) new products (through) external channels to brokers and certified financial planners. That now accounts for about 30 per cent of our sales. Our branch investment businesses report through the wealth management business line. But we don't directly manage those 7,500 people, they're managed by our regional presidents' teams and we work very closely with those teams. So we're responsible for the product development, the sales support and content around training. We come out and do client events with the sales people (in) the field, but we look to our regional president partners to really be our market leaders and managers of those sales people."

13. How did RBC Asset Management get such a large market share?

"We're very pleased with the confidence that Canadians and advisers have shown in us. We have led the industry in net sales for the last, I think, 40 consecutive months. I can point to three reasons. One is our product and investment performance. We are focused on portfolio solutions that are tailored for clients' particular risk tolerances and do automatic diversification into not only Canadian markets, but also foreign markets. Those (foreign markets) have been very well received by our clients and by our salespeople. Part of our portfolio are our cashflow products, which have become very important as Baby Boomers age and there's more focus harvesting one's portfolio. Our investment performance has been excellent. (In terms of) our five-year investment record, I think 90 per cent of our clients are in the top two quartiles. Secondly, we have focused a lot on the development of our branch investment salespeople ... to give training around advice and the ability to handle all of the clients' financial-services needs. The third is value for money. I know that there's a lot of appropriate focus on management-expense ratios, as well as the fees for Canadian mutual funds. Ninety-five per cent of our funds' (charges) are below the industry average and, in most cases, significantly below. Whenever there is a focus - and there's a continuing focus - on value for money, we tend to do well. Those three things (have been the keys): Performance, people and value for money."

14. What do you think this RRSP season will be like?

"We are optimistic about the current season. It tends to start earlier and earlier. November and December were good months for us and January is continuing (at the time of this interview.) We're speaking about two themes. One continues around the portfolio approach to investing and how important that is. The second theme is global investing, and (we're) highlighting the fact that we do have global solutions for our clients. The Canadian market is very concentrated by sector, so 76 per cent of the Canadian stock market is energy, materials and financial services. What we've been advising people is, simply from a risk-diversification perspective, you can add U.S. equity investment or global equity investment and get exposure to leading companies in sectors like consumer stocks, information technology, industrials, health care. Canada has been the best performing of the G7 stock markets over the last five years.

"So one of the messages for advisers and clients, simply from a prudence point of view, is it's a good time to be looking for non-Canadian equities."

15. What do you look for when investing in a company - whichever side of the border it's on?

"I can't speak for all the portfolio managers. Dan Chornous is our chief investment officer and a member of my team. About a few months ago, we had an opportunity. One of our portfolio managers left the Global Titans Fund and I applied to Dan for the job of co-managing that fund and he agreed. I told him he could fire me whenever he wanted to, without any repercussion. We're looking for leading companies with a sustainable competitive advantage in attractive industries, where they have pricing power and where there's mutual growth in demand. We look at valuation criteria quite closely, not only price-to-earnings ratios, but pre-cashflow yields and other valuation measures. Currently, we have a discipline, which Dan has developed over time, called the three-discipline scoring process. It's a combination of fundamental research, quantitative research and technical research. It scores all the stocks in all the markets around the world, and that's available to our portfolio managers, including myself. What it really helps (do) is to screen out stocks below a certain level that tend not to perform over time. It doesn't tell us what to buy, but it tells us what not to buy. We found over time that avoiding mistakes is a key to performance. Yes, it's important to have good-performing stocks in the portfolio, but the way to really add value is to avoid the real bleak negative experiences."

16. What types of stocks do you think will be performing well in the next few years in Canada?

"Our message is primarily around one of diversification and investment in a value-added portfolio approach. So we don't provide research news on individual stocks, but RBC Capital Markets does. Our overall view of the capital markets is a positive one. Dan Chornous, for example, chairs the RBC investment strategy committee, which is a global committee of people in the wealth management businesses from around the world for RBC. He sets our outlook for interest rates, inflation, equity markets. For the last three years, they've been able to add considerable value to not only the asset-mix decision between equities and bonds, but also the decision as to what geographies or what sectors to be invested in. Their view, which is our view, means over-weighting in equities. Our typical recommendation for a balanced portfolio would be 55 per cent equities and 45 per cent bonds and cash. Right now, we're at 62.5 per cent equities, so we remain quite constructive on the markets. It's basically driven by a view that the central banks have been successful around the world in engineering what we would call a soft landing - in other words, containing inflation but not putting the economy into a recession. So we look for low and moderate levels of inflation, and low and moderate levels of interest rates, and continued growth in corporate earnings. When we look at the valuations of the markets around the world, for example, the U.S. market is only trading at 16.5 times earnings right now. It was, at the peak of the bubble back in 1999-2000, trading at 35 times. Given our constructive view of the economy and inflation and interest rates and corporate earnings, we still think there's significant potential driven not only by equity expansion, but also by expansion in the price-to-earnings multiple."

17. What's your advice to investors this RRSP season, when they're considering what to put in their portfolio?

"No. 1, speak with (your) adviser, because every one situation is unique. Examine your existing portfolio. (You) may find that (your) agreed-upon asset mix has changed because of market moves. So rebalancing the portfolio would be the No. 1 message, back to an asset mix that you're comfortable with.

The natural conclusion from that would be: Look for opportunities to diversify outside Canada."

18. What do you want your legacy to be with RBC?

"A legacy of commitment to our clients. Of high performance and excitement. Of setting goals that are worthy of the people and worthy of the organization ... RBC is one of the most diversified financial-services companies, certainly based in Canada. We have many cultures. What we've found over the years - and this really speaks to me because I've had the opportunity to work in different parts of RBC - is the five common values are there, and I've seen this in all parts of RBC. One is commitment to excellence to clients, the second is teamwork, the third is personal accountability for high performance, and the fourth is diversity for growth and innovation. That's a particular goal and value, not only particularly of Gord Nixon but also of myself. The fifth one is very central to a wealth-management business, which is trust through integrity in everything we do. If my legacy could be that people look at my career and say that I demonstrated those values, that would be great."

19. If you couldn't work for RBC anymore, what would you do instead?

"I think it would be difficult for me to contemplate that. But I suppose that I would enjoy reading for a while and, at some different points in time, I'd probably entertain the thought of writing a few books or getting into another aspect of service. I know many of my colleagues from Harvard Business School and others have gone on to careers with charitable organizations, not-for-profit groups or public service. That would probably be something that I would turn my mind to at that point in time."

20. What would you write about if you wrote books?

"I've been very fortunate to have a career in business, but (I'm) also interested in public policy and politics. (I'm) very interested in religion and work with our Anglican Bishop of Toronto (Right Reverend Colin Johnson) to chair a group that works on his behalf. What strikes me is how democracy and the free-enterprise system can be mutually reinforcing forces. Sometimes, they're perceived to be in conflict. The individual human soul, in most cases, is really central to our belief in democracy and essential to our free-market system. Those are not new messages, but they're ultimately (messages) of tolerance and diversity, that I think are (among) the strengths of Canada. That might be the theme around what I would be writing about."

George Lewis

* Title: Chairman and CEO of RBC Asset Management Inc., vice-chairman of RBC Wealth Management.

* Born/raised/age: Pembroke, Ont./Ottawa and Markham, Ont./46.

* Education: Commerce degree from University of Toronto, master of business administration from Harvard University. Chartered accountant, certified financial analyst, certified by Institute of Corporate Directors.

* Family: Wife Leanne, son Elliott, 20, daughter Julia, 17.

* Career: After obtaining a commerce degree from the U of T's Trinity College in 1982, Lewis worked as an accountant and auditor, first with Arthur Andersen & Co., and obtained his chartered accountant designation. In the mid-1980s, he enrolled in Harvard's prestigious business school. After obtaining his MBA, he joined RBC Capital Markets and assisted with mergers and acquisitions. He became a financial analyst and research director, and was promoted to managing director and head of institutional equity. In 2000, he was appointed to head RBCAM. He also serves as vice-chairman of RBC Wealth Management, which oversees the Canadian full-service brokerage business, RBC Dominion Securities, RBC's self-directed brokerage business RBC Direct Investing and personal trust-services business Royal Trust.

* Moonlighting: Member of the board of directors of Toronto's Centre for Addiction and Mental Health Foundation, member of the cabinet, former board member of Operation Springboard (which is an Ontario youth-employment program), board member for Ontario Power Generation Inc., past member of boards of the VISA Canada Association and Moneris Solutions Inc.

* Passions: History, reading, religion, politics.

RBC Asset Management

* Brass: George Lewis, chairman and CEO; Brenda Vince, president; Dan Chornous, chief investment officer.

* Profile: RBC Asset Management (RBCAM) Inc. is a wholly owned private subsidiary of Royal Bank of Canada. RBC Asset Management Inc. provides a broad range of investment services to investors through mutual funds, pooled funds and portfolios managed by third parties.

* Stats: RBCAM manages more than $300 billion worth of client assets. The firm distributes its investment products through 1,500 in-branch and mobile financial planners and another 7,500 licensed mutual fund sellers.

* Website: www.rbcam.com

* HQ: Royal Trust Tower, P.O. Box 7500, Toronto, M5W 1P9

* Phone: 1-800-769-2599

(Monte Stewart can be reached at monte@businessedge.ca)