“It had a significant financial impact,” admits Chet Helck, when asked about Raymond James’s decision last year requiring insurers that wanted to sell annuities through its advisors to simplify their offerings and cut their cost, even if it meant lower commissions and less revenue for the firm. However, says Helck, president and COO of Raymond James Financial, “the net result is we have annuity products that are very competitive,” and meet the clients’ needs. “I’m proud to be part of a company that has the courage of its convictions.” The exchange is pure Helck: incisive, direct, competitive, and idealistic, all at the same time. Helck took time out during an early October visit to New York to chat with Editor-in-Chief Jamie Green.
Who is your competition?
Is it Merrill, Schwab, LPL? We’re in different businesses. The competitor for our independent contractor business is different than the competitor of our employee [broker business], versus our investment bank, so it’s a complex answer. Clearly, in the independent contractor space, LPL is a very worthy competitor. They’re the biggest. They choose to chase size and growth rate–it’s a different strategy than we’ve chosen. But that’s okay. Someone’s got to be the biggest, and the fastest growing, and lead that charge. We’ve chosen to focus on becoming a high-quality advisory practice. We believe that you can’t achieve both of those simultaneously–if you’re going to be the best, you almost can’t be the biggest, because to be the biggest you have to reach deeper into the barrel, and dilute the best.
Has recruiting changed over the last few years?
It has caused us to be far more discerning. We were always pretty tight. Dick Averitt (Raymond James Financial Services’ chairman and CEO) calls it the “Mom” test–if you wouldn’t refer your Mom to him [the recruit], you shouldn’t associate with him.
But we’ve gotten more specific, digging deeper, learning more about how [prospective reps] do business, and making sure we’re better informed. There’s not this laissez faire attitude that the independent contractor world thought they could have. It was assumed that you hired good people and they ran their business and they took the consequences, pro or con. Now it’s clear that you take the consequences also.
I’ve heard there are many wirehouse brokers who, in the wake of the court ruling on the B/D exemption rule and repapering fee-based brokerage accounts, are looking to the independent model. Is Raymond James affected by the ruling? Are more wirehouse folks moving toward independence? We’ve seen that for 20 years, and it’s continuing, but yes, it’s the issue du jour. We decided two years ago to discontinue fee-based brokerage accounts. There was regulatory scrutiny of those accounts by NASD, which made it clear that they were not willing to acknowledge the fee-based brokerage account as an appropriate vehicle for offering advice. And that’s what we do! We weren’t going to be able to reconcile that with them. . . We’re in the advice business, we always had advisory accounts, what we do fits better in the advisory account world, so we made that move.