During the second quarter of 2007, Raymond James Private Client Group recruited 71 new financial advisors, with 40 joining its employee channel — Raymond James & Associates — from 18 firms, such as A.G. Edwards, Smith Barney and Merrill Lynch. The FAs had average trailing 12-month production of more than $530,000, topping last year’s average of $500,000.
Jim McLean and Raymond Labuda, for instance, left Janney Montgomery Scott. Their practice in Allentown, Pa., which includes their daughters, had a combined trailing 12-month production of $1.5 million and client assets in excess of $210 million.
Incentives for Independents
Raymond James recently announced a new wealth accumulation program for its independent FAs affiliated with RJFS. The 2007-2008 program aims to provide 401(k)-like diversification and growth as a reward to top producers via deferred-cash bonuses and stock options.
o An initial bonus qualifying level of $450,000 in annual production, resulting in a $4,500 bonus;
o Incremental bonuses at 1% above $450,000, then 2% at $750,000, 3% at $1 million and so on — up to 10% over $3.5 million;
o At the highest levels, an ability to earn a 100% payout on many products; including stock options, payouts could exceed 100% at $3.5 million and up;
o Bonuses will be calculated at fiscal-year end and put into an account with a wide choice of mutual funds as investments;
o Each bonus will be vested after 5 years;
o After the vesting period, a check in the amount of the bonus investment plus its growth will be sent to FAs;
o A branch bonus structure will operate much like the FA bonus program, with an initial $5,000 bonus paid when the branch hits $1 million in gross production;
o Extra branch bonuses will be awarded at 1% for additional production of $1 million to $2 million, 2% for $2 million to $3 million and so on — up to 7% for $10 million to $20 million;
o Bonuses awarded to an FA in a branch are deducted from the branch’s bonus amount, and remaining amounts are credited directly to branch managers’ deferred account. The bonus will then be subject to the same vesting rules as the advisor bonus.
In the independent channel, 31 advisors from 16 firms, including Edward Jones, Morgan Stanley and A.G. Edwards, joined RJFS. These advisors had trailing 12-month production in excess of $300,000 on average and a total of $1.8 billion in client assets. Among this group are Christopher and Theresa Waddell, who left the broker- dealer Waddell & Reed that was founded by a distant relative.
Overall, the number of FAs with Raymond James declined to 4,648 in the second quarter of 2007 from 4,852 in the previous year. However, low-level producers in the independent channel are being replaced by fewer high-level producers, according to Chairman and CEO Tom James. And he sees further recruiting opportunities ahead from the planned merger of A.G. Edwards with Wachovia. “There are financial advisors that prefer to work in a small, family firm,” James told equity analysts recently. “We have worked very hard to retain this culture.”
Richard Averitt, chairman and CEO of Raymond James Financial Services, concurs. “Advisors we are talking to want a really good fit,” he says.As Raymond James rolls out more services and technology, it can promise them that they will be joining “a more effective organization,” he says.
To help FAs better grasp the organization and improve production, Averitt meets with them regularly via a series of regional meetings. He spent a weekend with 130-plus advisors in Denver, for instance, 25 percent of whom are women. “A number of these advisors have doubled their business in two to three years. I want to let all of them know this is possible with Raymond James.”
Raymond James’ private-client revenues rose 14 percent in the second quarter vs. a year ago. The independent FAs in RJFS have average production in the high $200,000 range. “RJFS has increased its team of recruiters, and home office visits have increased dramatically,” adds Tom James. And the employee channel, RJA, has recruited more than half of its objective for the year, 67.
Janet Levaux is the managing editor of Research; reach her at firstname.lastname@example.org.