Speaking at the 16th annual Women’s Symposium in St. Petersburg, Fla., on Thursday, Raymond James Financial CEO Paul Reilly said the firm is tackling issues, including auction-rate securities, and positioning itself for further growth. He also told the audience of over 100 female advisors that expected regulatory changes should not have much impact on how Raymond James does business.
“These are interesting times,” Reilly said at the symposium sponsored by Raymond James and held where the company is based. “We’re in an amazing position to really grow and establish ourselves in this industry.”
The balance of auction-rate securities held by Raymond James clients has fallen from $2 billion to $580 million. “We were not able to redeem $2 billion,” Reilly said. “But the balance is moving down, and we should be able to do more. Between our work with Nuveen and other solutions, we should be able to solve the problem soon.”
While the larger banks could borrow money to pay clients back for these holdings, Raymond James was not able to do so, given its smaller size.
Reilly, along with other Raymond James and industry executives, has met recently with regulators in Washington and Atlanta. “We see very little impact on us from the new regulations. Most of it just pushes the industry to do what Raymond James has always done,” he explained. “We put the client first, do don’t do proprietary trading, are well capitalized, low leveraged and look long term.”
He acknowledged that with the many laws being drafted, the company, with 5,300 advisors, 600 of whom are women, would be experiencing some change. This is why the company is actively involved with the SEC, SIFMA and other groups in the writing of the legislation. “But this will impact us much less than others,” Reilly said.
In terms of the changes to 12b-1 fees associated with mutual funds, the SEC “doesn’t see trailing fees as fair,” Reilly says. As a result, the regulatory body wants to cap these fees, break them up and spread them out over the first four years of a mutual fund’s life (or ownership period). However, since the average life a fund is three years, this plan could prove difficult.
“We want to disclose the fee and not eliminate it,” said Reilly, who took over as the firm’s chief from Chairman Tom James in May
While Raymond James continues to top a survey as the firm advisors would most like to join, it has seen some decline in its client-satisfaction rating with J.D. Power & Associates. “And we want to drive this again to be the clear leader,” Reilly said.
Recruiting and Compensation
The company remains very focused on recruiting and retaining advisors, he said, and is getting especially active in some markets.
Some advisors at other firms who want to move to Raymond James are locked into retention programs, so the firm wants to “find more ways to extend loans to people to overcome this,” said Reilly. The company should make an announcement about this issue in the next few weeks, he adds.