“Don’t overcomplicate your strategy and your focus,” said Raymond James (RJF) CEO Paul Reilly in a media roundtable on Tuesday during the Raymond James Financial Services National Conference for Professional Development in Dallas.
Speaking a day before the company released its quarterly results, Reilly was asked whether the company planned to grow organically or through additional acquisitions, like the deal to acquire Morgan Keegan which was closed in April 2012 and whose technolgoy integration was completed in late February. “With Morgan Keegan, we had such a good experience,” he said, “but that’s because the cultures were nearly identical.” As for future acquisitions, “if the culture doesn’t fit, we won’t do it,” he said, mentioning as well that any future deals would have to positively answer three questions: “Is it strategic? Can you integrate? Is the price right?”
While there might be some “smaller firms” in the industry that could meet those conditions, the problem is that “they’re private and not for sale,” he said, concluding that there weren’t “a lot of opportunities” for acquisitions. Instead, he joked that Raymond James would “go back to our boring old ways,” but also asserted “that’s why they [financial advisors] join us.”
Citing the average age of advisors, 58, Reilly said further that broker-dealers “can’t just go on stealing from each other.” So one of the alternative paths to growth for Raymond James will come in training prospective advisors, using the “good training group” that Morgan Keegan had and that Raymond James kept intact as part of the Morgan Keegan acquisition. The integration of Morgan Keegan’s 800 representatives and 500,000 client accounts “far exceeded our high expectations,” he said, though he admitted that “reducing headcount was the most difficult” part of the acquisition and integration.
On April 11, Raymond James said that following the completion of the Morgan Keegan integration, it was eliminating 160 positions, 115 of which are at its St. Petersburg home office, leaving 3,200 staffers at its headquarters. However, Reilly said in the interview that the “rightsizing” of technical and support staff was prompted by “some direct overlap” between Morgan Keegan and Raymond James’ employees, but that the company would be hiring 35 technology staffers, and said that operational support staff would rise 6% from pre-merger levels. Noting that those support staffers would be assisting in areas like account openings, he pledged “we won’t cut support.”
“Our focus of ‘client first’ hasn’t changed,” he said, and Raymond James’ intention to be the “premier alternative to Wall Street” remains intact as well. “We’re looking to grow the business five years out, not for the next quarter; our core values haven’t changed.”
Reilly then turned to regulatory issues, which Raymond James Private Client Group CEO (and current SIFMA chairman) Chet Helck addressed in a speech on Tuesday. On the Department of Labor’s planned redefinition of fiduciary under ERISA, Reilly said Raymond James, most advisors and even “Schwab and Fidelity” agree that “it’s a bad idea.” “We need a common set of regulations” from both DOL and the SEC.
He also addressed the issue of diversity, saying that the financial services industry’s overall record has been “poor,” and that particularly among African-Americans, the industry “has been pathetic.” There are two reasons for more diversity in financial services, he suggested: social justice, but also economic drivers.
While Raymond James has been an early (starting more than 18 years ago) and consistent advocate for bringing more women into the advisor force, he argued that women needed more role models to change the male-heavy advisor workforce. “We can target, recruit and train [women] ourselves, but it’s an industrywide problem,” he argued.
Read Raymond James Upbeat on Regulation on AdvisorOne.