Speaking at the 16th annual Women’s Symposium Oct. 8 in St. Petersburg, Fla., Raymond James Financial Chairman Tom James and two other executives told the audience of more than 100 female advisors that the firm had several competitive advantages over rivals and would, at least in the independent channel, like to boost annual sales 15% a year over the next five years.
The executives also pointed to other possible changes at the firm, including a product-neutral grid and the elimination of the $30 transaction fee on mutual funds for RJFS advisors.
“We expect to be the least impacted by new rules among all the broker-dealers and banks,” said James. “This is because we are mainly retail oriented and are committed to doing what’s best for clients.” He added that this is also why Raymond James—which has about 5,335 advisors, 625 of whom are women—survived and even thrived during the peak of the financial crisis.
Dennis Zank, president of Raymond James & Associates, the firm’s employee-advisor channel with about 1,270 advisors, reminded advisors about the origins of the firm, which was formed in 1962 to provide clients with financial advice—which trumps expensive IT and other systems.
“There are arguments over our business model, including the need for a global platform,” he said. “But most clients want someone they trust, who is skilled, answers the phone and is very responsive to their needs.”
As for the notion that a broker-dealer must have 15,000 advisors to survive, Zank asked, “Really? Then how is it that Raymond James has had 14% compounded annual returns, excluding dividends for so long?”
He also disputed the need for a “massive balance sheet.” “The private client, or retail advisor business, is not a capital-intensive business. We do need some funds for technology upgrades and back-office operations, yes—but not massive capital. That was needed at some firms to fund billions in proprietary trading.”
“This is not a business you can sterilize; it’s a relationship business,” said Zank.
Zank pointed to the “latest craze” at some rival firms to impose fees on clients with less than $1 million to invest. For some advisors, these types of clients are very important, and “even huge teams with large $1-million-plus accounts have lots of people with $400,000 rollovers,” he explained.
The fact that private-client work is Raymond James’ main business should give it an important competitive advantage vs. rival firms going forward, Zank says, and he communicates with prospective advisors who visit the firm.
He also reminded the audience that 75% of Raymond James & Associates’ advisors have more than 100,000 competency points, which measure their continuing education, professional designations and similar attributes. “We are hugely proud of this,” he said. “We measure our advisors on something other than production.”