Raymond James (RJF) released the details of its new payout grid for employee advisors on Thursday, which executives and advisors say is more “product neutral” and “simpler” than the grid in place since 2010. It also includes more payout levels.
“The new grid creates many more production levels for payouts … so we have created many more opportunities for advisors to be incentivized and rewarded for growth,” said Tash Elwyn (left), head of Private Client operations for Raymond James & Associates, in an interview.
“Also, we have eliminated discount[ing] penalties, for instance, which reinforces our cultural belief that our representatives are professionals. We should entrust them to price their products appropriately and not penalize them for discounting,” Elwyn explained.
The payout schedule applies only to the roughly 2,200 financial advisors affiliated with Raymond James & Associates and who have at least seven years of work experience in the industry. It becomes effective at the start of the company's new fiscal year in October.
The new grid includes 15 payout levels, starting with compensation of 20% for those advisors with $200,000 in trailing-12-month fees and commissions. It tops out at payouts of 50% for those with between $5 million and $100 million in trailing-12-month production.
Regardless of an advisor’s production level, payouts for all collar transactions are 50%, and payouts for investment-banking referrals are 70%.
Trades with a gross commission of $100 or more receive full payout, while those between the client minimum and $100 receive are given a 25% payout.
(The minimum is currently $75 for equities and fixed income products and $60 for options).
Raymond James advisors were involved in redoing the grid both informally and formally, Elwyn says, over the past 18 months. “We wanted their feedback and input as to how best to create this, which helped make this a simpler, more transparent and a better cash grid,” he explained.
The grid is “cost neutral” to the company and overall should be “compensation neutral” in the aggregate to advisors, he adds. Plus, it is more competitive at higher production levels than the old plan.
Advisors seem to welcome the changes.
"In my case, my payment should go up slighly going forward," said Todd Knickerbocker of RJ&A in Northville, Mich., who has been with the firm for five years and is a member of the firm's Chairman's Council.
As for it being "product neutral," "This is ablsolutely a big deal," the advisor explained. "That is what counts about the new grid—its fairness to all involved."