Raymond James’ goal, says CEO Paul Reilly, is to be the “premier alternative to Wall Street.”
The advisors in its Private Client Group represent two-thirds of the parent company’s revenue, or 62%, even after factoring in the recent acquisition of Morgan Keegan. But its values, notably how RJ puts its client-advisors first, and its “integrity,” meaning its independence, are what sets Raymond James apart from its independent broker-dealer counterparts and the wirehouses, Reilly says.
The importance of advisors to the firm, Reilly said Wednesday, is demonstrated by how its revenue-from-advisors number compares with several of those wirehouses; the private client group at Wells Fargo accounts for only 14% of total firm revenue, while Merrill Lynch’s advisors account for 16% of Bank of America’s revenue.
Speaking at a media roundtable during the annual Raymond James Financial Services national conference for professional development in Orlando, Reilly also expressed satisfaction with its technology platform for advisors, saying that now it was benchmarking its tech offerings to Schwab and Fidelity in addition to wirehouse firms. He said that when he became CEO of Raymond James, he hired two outside consulting firms to evaluate its technology offerings; they found it already superior to its competitors, but since then he’s added staff to the technology team, noting that “we didn’t replace people.”
As for recruiting, he said that Raymond James had seen more movement to its employee-based advisor channel—one of five channels in the Raymond James Private Client Group. Growth in each channel, he said, “varies with the times” and the performance of the markets, and he suggested that part of the industrywide move toward an RIA model was attributable to “regulatory arbitrage.” Visits to Raymond James’ St. Petersburg home office—a requirement for prospective advisors so both sides can judge the cultural fit—have risen to nearly the levels of 2008-2009, Reilly reported. While Raymond James does pay bonuses—or “transition assistance,” as he called them—he said the firm does so at an “economically feasible level” that is lower than some competitors, but said representatives who do join “make it up” through Raymond James’ higher payout levels.
Those advisors who do join Raymond James, he said, do so because of the culture, such as the Morgan Keegan reps, who found themselves very comfortable with the similar corporate culture at RJ. Those coming from wirehouses, he said, were fleeing a more bureaucratic, product- and process-oriented culture for the more “advisor-oriented” atmosphere that prevails at Raymond James.