Raymond James (RJF) CEO Paul Reilly says he’s pleased to “declare the Morgan Keegan integration over.”
“We can talk about it forever, but they’re now part of the family,” Reilly said in an interview Tuesday during the Raymond James Women’s Symposium, taking place this week in St. Petersburg, Fla.
As for its next deal, “Our focus is not on acquisitions,” he said. “Morgan Keegan was unusual. Yes, our focus going forward might include a niche firm or two. But we have not identified any firm like Morgan Keegan with the same values, though there are some smaller ones there.”
Instead, the firm’s focus in on the aggressive recruiting of advisors “who share our values,” the executive says.
The Morgan Keegan deal (announced in early 2012 and fully combined onto one platform a year later) led to a slowdown in the parent company’s overall recruiting efforts last year, Reilly says, especially within its employee channel, Raymond James & Associates.
“Our first job was to focus on Morgan Keegan … and then we went to a product-neutral grid taking the best of both systems,” he shared.
But with “only so much time in the day,” recruiting slowed down, Reilly says, and this was true across the industry due to the bull market.
A few months ago, however, recruiting shot up. The independent channel, Raymond James Financial Services, “is having a good run and picking up more robust teams,” he said.
“Teams with $1 billion are not uncommon to see coming through the door. They view us as a viable platform,” explained Reilly.
Raymond James’ main appeal, he says, is that it’s still a value-based, friendly firm for advisors specifically looking for a firm that culturally feels like regional broker-dealer.
“We pay a lot less in transition assistance [than other firms], but it’s a fair price. We want them to be where they want to be” or not make the switch, Reilly stressed.
While the firm has boosted its RIA platform and staffing over the past 18 months or so, it’s growing this channel with the same philosophy that guides all of its corporate strategies. “We want to be sure that [these advisors] fit our risk criteria,” the CEO noted.
For instance, Raymond James takes a conservative approach to products like variable annuities (in terms of the level of front-end loads), closed-end funds (in terms of their amount of leverage) and nontraded REITs.
“We do not sell nontraded REITs,” Reilly said. It’s not that they are bad products, it’s that they involve a liquidity discount, “which is not worth the extra yield.”
If the regulatory situation stays where it is, with rules bifurcated between RIAs and brokers, the RIA channel will continue to grow at its current pace, he says.
But if regulators choose to apply one standard to both brokers and RIAs equally, the pace of growth within the RIA channel could slow down somewhat, Reilly says, though “it will still grow.”
“My guess is that there will still be one standard, but it will be applied differently, so RIAs still should have some advantages,” the executive said.
And the firm is upbeat on the growing platform. “We’re still in the early days and feel good about it.”
Check out How to Best Help Grieving Clients on ThinkAdvisor.