From the July 2012 issue of Research Magazine • Subscribe!

Averitt Retires as CEO at RJFS Conference

Dick Averitt retired as CEO of Raymond James’ independent-advisor channel in late May. Averitt remains chairman of the independent channel through 2013, and the daily operations of Raymond James Financial Services, or RJFS, are now led by President Scott Curtis.

“I want to thank Dick for his service—besides being a great leader and CEO he is just a great human being,” said Paul Reilly, CEO of Raymond James Financial, the parent company of the independent and other channels, in a statement. “We wish him and [his wife] Sandi all the very best.”

In his remarks during the first session of the 2012 RJFS national development conference—held recently in Orlando, Averitt described his positive outlook for both the firm and the nation. “We do not have to live in fear of scarcity when there is such hope of abundance,” he said.

Now 67, Averitt joined Raymond James (then Investment Management & Research) in 1978 as an advisor from Merrill Lynch. In April 2002, Averitt took the reins from Tony Green as head of the independent-advisor channel.

The executive explained that he’d considered getting out of the business when he was in his mid-30s and realized that he wasn’t “driven to make money.” A natural problem solver, he chose instead to focus on his desire to help solve problems, including the portfolio issues facing a paraplegic client. “By working on his investments, this allowed him to—over about 30 years—to live a life better than he’d ever expected,” Averitt said.

In terms of the Raymond James independent advisors that he’s helped to lead, “Your production has soared over the past 10 years,” Averitt said, going from about $188,000 a year for average fees and commissions to $360,000. Plus, he said the number of million-dollar producers at RJFS “has increased nearly six-fold from 25 to 147” from 2002 to the present.

Averitt described the key concepts that have guided him, including the idea that everything and everyone counts—from the cleaning staff up to the top levels. “Possibilities are all in our own minds—they rest here,” he explained, “so ignore the boundaries and be unreasonable. Don’t limit yourself and don’t let others limit you.” Finally, Averitt said, “Integrity is the critical element … it protects our soul.”

A graduate of Duke University, Averitt spent nine years as a regular officer and naval aviator in the U.S. Marine Corps, serving in Vietnam as a Marine helicopter pilot, and another 20 in the USMC Reserves, principally in a reserve attack helicopter squadron in Atlanta. He retired from the Corps in 1994 with the rank of colonel.

Averitt’s decision to retire at this time, he noted, came after a rough day of sailing on Tampa Bay. “It put my choices into perspective,” he said. “Life is too precious to put off living.”

Other Milestones

Raymond James’ goal is to be the “premier alternative to Wall Street,” according to Reilly, who shared these and other thoughts during an interview that took place at the May RJFS conference.

The advisors in its Private Client Group represent nearly two-thirds of the parent company’s revenue, or 62%. But its values, notably how RJ puts its client-advisors first, and its “integrity,” meaning its independence, are what set Raymond James apart from its independent broker-dealer counterparts and the wirehouses, he says.

The importance of advisors to the firm, Reilly explains, is demonstrated by how its revenue-from-advisors number compares with several of those wirehouses, which have private-client operations that only account for about 15% of total revenue, he maintains.

The CEO is also satisfied with its technology platform for advisors, saying the firm is benchmarking its tech offerings to those at Schwab and Fidelity in addition to wirehouse firms. After he became CEO of Raymond James in May 2010, he hired two outside consulting firms to evaluate its technology offerings.

As for recruiting, he said that Raymond James had seen more movement to its employee-based advisor channel—one of five channels in the Raymond James Private Client Group. Growth in each channel, he said, “varies with the times” and the performance of the markets, and he suggested that part of the industrywide move toward an RIA model was attributable to “regulatory arbitrage.”

Visits to Raymond James’ St. Petersburg home office—a requirement for prospective advisors so both sides can judge the cultural fit—are now close to the levels of 2008-2009, Reilly reports.

At the recent conference, Raymond James’ independent channel President Scott Curtis, met with more than 50 prospective advisors. During these discussions, Curtis says, he assured them that their potential transition to Raymond James won’t be hampered in any way by the parent company’s recent purchase of Morgan Keegan and its roughly 1,000 employee reps.

The Morgan Keegan acquisition raises the question for some prospects, “Are you going to be able to support my transition as independent advisor coming over to Raymond James versus the other [acquired employee] advisors coming on board?” said Curtis, in an interview.

“We anticipated this,” the executive said. The answer to whether the acquisition will affect prospective reps joining RJFA, he adds, “is ‘No’ and should remain ‘No.’”

As for existing independent reps, about 1,600 of whom attended the weeklong Raymond James Financial Services event in Orlando, “We have to reassure those that have been with us for a long time that this does not mean a degradation in services to them,” Curtis said.

Both he and Raymond James private-client CEO Chet Helck also believe that the full advisor force—which now numbers about 5,500 across the firm’s different channels—stands to benefit from the deal. “We think our RJFS reps will get better fixed-income support and products thanks to the Morgan Keegan acquisition,” Curtis said.

As for the overall benefits to Raymond James from the Morgan Keegan deal, notes Helck, there will “be access to a much more prolific flow of fixed-income product for clients,” including municipal bonds, “which clients love and financial advisors do, too.”

By boosting its advisor force with the merger, Helck adds, the firm is also improving the economics for its technology infrastructure. “We now have 1,000 more advisors to help us finance more technology … and this gets us there faster and more efficiently.”

“We’re committed to making a deliverable transition of the Morgan Keegan advisors and employees, so that we do not disrupt the services we provide or slow down the tech enhancements,” Curtis explained. “If anything, we will be overstaffed for the transitions and then will take look at staffing.”

Technology Updates

Raymond James introduced a new desktop-software system to its U.S. advisors at its recent Orlando event. “I get it—you need better technology, and some things don’t work as you think they should,” said Helck, during a presentation at the conference. “The world of technology moves fast; it’s expensive to keep up, and we’re committed to addressing it.”

Helck then gave the stage to Vincent Campagnoli, senior vice president of technology, who was hired in October with 27 years of industry experience, including several years at Morgan Stanley and UBS.

“Like in sports, when you’re challenged, it’s best to simplify things—get a game plan and execute,” Campagnoli said in his speech. “The new desktop is simple and easy to use. It’s been built with the FA in mind, so that everything is pretty much one click away.”

The new desktop, which presents data based on client relationships rather than accounts, has been in the pilot stage with some 250 advisors across Raymond James’ multiple channels for several months. It will be shared with roughly 4,500 U.S.-based reps in June and July, not including those coming over via the Morgan Keegan acquisition; these reps should gain access to the new desktop software by early 2013 as part of their IT conversion.

“We could have set back and built everything over two to three years,” said Campagnoli, “but we didn’t want to do that. We decided to get some functionality out there now … we’re moving in the right direction. It’s not the end, but it’s a start.”

Raymond James executives stress that the new desktop is a work in progress, but it is robust and incorporates data from 25 systems. “You can get this all on one screen or with one click,” Campagnoli said in an interview.

The former wirehouse IT exec, who visited with branch offices and teams while he was working on the new software, says that while the larger firms were vigorous in their IT focus and spending, Raymond James could—and would—keep up.

Given that Raymond James is smaller than some Wall Street rivals, does its IT team have fewer organizational layers to work with in the innovation process? “Yes, absolutely, and this is an advantage,” Campagnoli said.

James J. Green contributed to this report.

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