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Catching up with... Dick Averitt

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Raymond James Financial Services’s (RJFS) national conference, in Washington in late August, drew an impressive 968 advisors. One of the hot topics at the conference was Raymond James’s new relationship packaging initiative, which is designed to improve the way advisors interact with the home office and refocuses client issues from specific products and services to one based on the overall client relationship. Part of that initiative says Dick Averitt, chairman and CEO of RJFS, includes RJFS’s new Freedom Retirement Income Solution, which enables advisors to design and offer to clients three separate income models–one based on early retirement, another for mid-retirement, and a third for senior retirement. Each scenario uses Monte Carlo simulations based on longevity risk, inflation, and distribution amounts. Later initiatives will likely include cash management, small business, and legacy solutions. Washington Bureau Chief Melanie Waddell chatted with Averitt at the conference about issuing affecting independent advisors.

What do you see as the biggest challenge for independent advisors?

Continually experiencing declining fee and commission revenue. There’s more money to touch but you get paid less to touch it. That’s a long-term [challenge].

What is the short-term challenge?

I’d say one of the issues that concerns independent advisors is that many have built their practices using C shares. There’s a great deal of conversation about eliminating, reducing, or tapping them. So advisors who have built a practice using C shares to service their clients are wondering whether they have to go into RIA accounts–in other words no-load accounts–so they can charge their own fee. That’s a transition for the clients, for the advisor, and is likely to be more expensive for the client. That point is not well understood by regulators.

What do you think of Treasury’s Blueprint for financial services reform?

It’s brilliant. We need a better integration of regulatory bodies.

I believe that there are three principal, well-thought-out thrusts in the Blueprint: A more coordinated and consistent regulatory approach, developed through an expanded President’s Working Group; a call for principles-based regulation–this means creating a regulatory focus on outcomes versus rules, and a focus on overall consumer protection, versus exercise of the authority embedded in individual regulatory fiefdoms; and a move toward prudential supervision–this is a call for a system embraced and implemented by all financial regulators to ensure ongoing, constructive dialogue to address problems before they become serious. It should rely upon the self-identification of issues and self-correction, in coordination with our regulators–as contrasted to a law-enforcement approach, in which violations of rules or laws are the subject of immediate enforcement actions.

I believe we have noted a shift in the recent year or so toward a more collaborative bias in supervision and enforcement, but there is room for continued improvement in the trust that regulators might have in the motives of securities firms. And the call for-consumer focused, outcome-based regulation could not be more clear than in the current merger of the old NASD and NYSE enforcement rulebooks.


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