In a press briefing late Tuesday, Raymond James (RJF) CEO Paul Reilly defended the recent changes the firm made to its fees while stressing that the rest of the company’s operations are unlikely to change.
Reilly, who has led the company for five years, came on board when the stock markets were at deep lows. “People should remember it,” he joked, while discussing the talk he will share with advisors on Wednesday at the independent-channel’s national conference in Washington, D.C.
“The risk for any firm can be to do something new, something different or cool,” the CEO said. “That’s not our strategy.”
Still, Raymond James did shift some client pricing “for the first time in over a decade,” he notes, starting late last year. “We asked what is fair to clients, advisors and the firm, and what’s best for [client] support … then we did a rollout.”
The executive notes that the fees on “many accounts did not cover some costs,” he explains. “We used an outside consulting firm to look at this … and we had to keep in mind the long-term profitability of the firm.”
Some fees were added for accounts of certain sizes, while others were removed. “It was a give and take. We dropped some fees in asset management and simplified some fees to be cost effective for advisors.”
When it comes to banking, the CEO says Raymond James can be “schizophrenic.”
“We limit products with leverage,” such as some closed-end funds, he pointed out.
Yet, it does sell home mortgages to clients through Raymond James Bank. “But we have no quotas, as some wirehouses do,” Reilly said. “We track them, and we want to clients to be with us.”
Since he became CEO, Raymond James revenue has nearly doubled to $5 billion a year from $2.7 billion five years ago. Assets under management have more than doubled, hitting $450 billion vs. $175 billion.
As for technology, “I think we’ve accomplished more than anyone thinks we could have,” Reilly said.
In terms of the next five years, expect more of the same, he notes.
“We will focus on technology, getting more people into that area and more spending” on IT, the CEO said. “We still have more to ramp up and are committed to the best [technology] in the industry, including support.”
Reilly said niche acquisitions are possible, especially in asset management. “We are trying to find good managers to fill out the style boxes,” he explained.
When it comes to the advisor space, “We do not want to make transformative acquisitions,” he explained.
Geographically, the firm hopes to expand its private-client footprint in the West and Northeast, in particular.
“It has to be a similar culture, strategic fit and the right price, or we won’t do it,” Reilly said. In terms of size, “Morgan Keegan was unusual.”
There are some private firms for sale, he says, that are attractive. “We just keep saying, if you choose not to be private, we would be pleased if you would be part of us.”
Beyond acquisitions, organic growth will be the firm’s focus. “And we have to keep good advisors. We don’t just recruit to fill [slots], Reilly said. “We recruit those who will fit it.”
Recruiting is going well, he adds, thanks to the fact that the firm “is still one of the last places with a regional feel.”
Plus, while some firms are streamlining support to cut down on costs, Raymond James is maintaining its “high-support” approach.
As for who may fill the shoes of retired Private Client Group CEO Chet Helck, Reilly says the “next generation” are stepping in and stepping up: Scott Curtis, president of the independent advisor channel, and Tash Elwyn, president of the employee-advisor channel.
“Our goal is to get Scott and Tash to run the firm,” Reilly said. “That was the plan, and my goal as I joined the firm has been to get people to take my job and keep the culture. I really believe my job is to have succession in place.”