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Industry Spotlight > Broker Dealers

Raymond James Assoc. Signs Brokerage Pact

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In another push to let Raymond James & Associates’ brokers know that they “own their book of business,” the retail brokerage unit of Raymond James Financial has agreed to an inter-brokerage protocol that makes it easier for advisors to leave and for clients to go with them. “Our action falls right in line with that,” says Dennis Zank, president of RJA, which includes more than 1,000 employee advisors.

Initially set up in late 2004, the pact aims to protect clients’ account information, while giving advisors the chance to contact clients about transferring accounts when brokers switch firms. Brokerage firms that have signed the accord agree to transfer client account information within one day of receiving authorization from a client to do so.

Merrill Lynch, Smith Barney and UBS reached the protocol in August 2004. Wachovia agreed to it earlier this year.

“I think that all firms will buy in and accept it eventually,” says Chip Roame of the consultancy Tiburon Strategic Advisors. “It makes advisors feel they are working in a bit more of a free market. They may leave without harassment and are free to compete based on products and services. And it says that firms should pick up their game and try and retain advisors through better service.”

What prompted RJA to sign up this summer? “It’s a bit innovative, and we wanted to let it work for a time,” explains Zank. “The protocol has given the industry a clear path of understanding, and we’re now comfortable with it.”

In the past, many firms have used temporary restraining orders (or TROs) to stop advisors going to a rival firm from contacting their clients. But such intimidation tactics, Zank shares, “are not the way we want to run our business. If [advisors] are not happy with us, they should find a place where they are happier. For now, we have the lowest turnover in the industry.”

Observers say that Raymond James is experiencing strong momentum in its recruiting efforts, both through its traditional channel (RJA) and its independent channel (RJFS).

Howard Diamond, managing director and COO of Diamond Recruiters, says he recently placed five reps with Raymond James & Associates in one week. And over the past few months, he’s helped 15 advisors move to RJA and RJFS (the firm’s independent channel).

“It’s a great story. They are really getting aggressive about attracting quality people,” Diamond says. “They’re the only firm where advisors are able to own their book of business.” In addition, Raymond James is offering advisors good transition packages and support, he shares.

“We have about 30 to 40 financial advisors visit us each month to kick the tires,” says Zank. “We continue to attract people along the way and are pleased with our current activity levels.

And what about trying another growth tactic, namely buying another firm? “I’d like us to be more active in this area, though getting [a deal for the right price] sure is tough these days,” explains Zank. There are fewer and fewer opportunities as consolidation in the industry continues, he says.

“Are we interested? Yes. Have we looked? Yes. But our tactic is to continue to identify those opportunities within our existing footprint, as well as some new opportunities,” Zank insists.

“And as we’ve seen in the press over the past five years or so, some would question if there was appropriate consideration given [in past deals] to the advisors and employees and to whether or not this was going to be a good fit for them,” shares the RJA president.

RJA acquired the regional firm Roney & Company (with 320 FAs) in 1999 and the Canadian firm Goepal McDermid (now with some 300 FAs) in 2000.

“We try to be boringly consistent and identify those opportunities that are a good fit for our organization and a selective fit. That’s our acquisitions process.”

RJA has hired 300 advisors in the past two years. “Like with a firm doing an acquisition these days,” Zank says, “that’s a lot of advisors.”

“Over the past 18 months, we have been very lucky,” he explains.


Pact Participants

Major Wall Street firms that have signed an accord making it easier for advisors to defect and contact clients, without the risk of being hit with a lawsuit, include:

o Citigroup/Smith Barney (August 2004)

o Merrill Lynch (August 2004)

o Raymond James & Associates (July 2006)

o UBS (August 2004)

o Wachovia Securities (January 2006)



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