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Raymond James Exec: No Big Merger

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“At a time of record debts and deficits, it’s not a surprise that we could hit record numbers, said Scott Curtis, president of Raymond James Financial Services (RJF) at the kickoff the independent broker-dealer’s 2014 conference in Washington, D.C., on Tuesday.

The event has some 3,550 professionals in attendance, including advisors, employees from Raymond James and those with partner firms. “We also have some 50 prospective advisors here,” Curtis said. “Let’s welcome them.”

In addition to spelling out the growth of the IBD’s operations, the executive shared its tech plans and legislative priorities. He also stressed that the firm is not looking to combine with any bigger entity.

“We know you are committed to your clients, and we treat you as our clients first and foremost,” Curtis explained. Part of that promise, the executives notes, means staying away from a large merger.

“We respect your independence and know you don’t want to be part of some larger firm, as so many of us already experienced before coming to Raymond James,” he said. “That’s what differentiates and distinguishes us from other firms and will continue to be the case as we move forward.”

(The company’s employee-advisor channel bought Morgan Keegan in April 2012 for $1.2 billion; at the time, it offered retention letters to about 600 of Morgan Keegan’s roughly 1,000 advisors.)

As for regulation, the Department of Labor is looking applying a fiduciary standard to IRAs, the Raymond James leader says, which would require that conflicts of interest be eliminated.

“This would mean that advisors cannot [have] commissions on IRAs,” explained Curtis, and instead would need fee-based arrangements for their IRA work.

“We do not think this is healthy for the industry and are working to oppose this,” he said. “It will require a grassroots campaign, if this comes out in fall as anticipated.”

FA Achievements

Independent advisors with RJFS now have roughly $200 billion in client assets, up from $182 billion a year ago and $135 billion in 2010. “This is a reflection of the collective efforts made by all of you. Congratulations!” the RJFS president said.

“Looking back, RJFS had client assets in July 2004 of $80 billion, when we met in Salt Lake City,” he noted. “So in 10 years, we are up about 2.5 times to $197 billion. And looking 10 years forward, and there may have been some doubters in the room, I would predict $500 billion in 2024. What facility will we be in? One that’s even bigger than this one!”

Annualized revenue for the organization for the current fiscal year should be $1.51 billion based on the group’s results for the first two quarters vs. $1.35 billion in fiscal 2013 and $1.16 billion in fiscal 2010.

“Unless the equity markets fall apart, we are likely to hit $1.5 billion and will have to celebrate then,” Curtis said.

The firm shared its current advisor headcount: 3,288, up 63 from four years ago and 13 from a year ago. “That could be a surprise to some … but look at the details,” he said. “The increase is for those who are north of $300,000 [in trailing-12-month fees and commissions], while the number of those below $300,000 has not risen. Our focus is on quality, not quantity, which is evident.”

RJFS does “not have a specific advisor count” in mind going forward, Curtis said. “We are much more focused on asset growth and helping you grow.”

Assets per rep are up 65% from four years ago, to about $70 million from $40 million.

Yearly production per advisor stands at some $490,000 vs. $370,000 in fiscal 2010 and $460,000 a year ago.

This growth pace meant that 10 years from now, the average advisor could be producing more than $1 million in yearly fees and commissions. “Sitting in the room today, that seems big. But the truth is we can get there. I am optimistic.”

Where do the reps stand right now?

About 240 RJFS reps have more than $1 million in yearly production, up from about 210 last year and 85 four years ago. More than 50 RJFS reps are earning more than $2 million per year.

“We have some really, really successful advisors,” Curtis said. “We have clearly made progress and grown.”

In terms of succession planning, RJFS has four full-time associates that have been working with advisors for about a year on catastrophic plans and other projects.

“Since 2013, we have helped with 70 acquisitions and many more plans,” he said. “And, about 52% of branch owners have succession plans in place,” up from about 40% four years ago.

IT Growth Steps

Information technology investments are on pace to be $212 million this fiscal year, up from $125 million a year five years ago. “This incredible investment focus is on making you more efficient,” Curtis said.

Several key steps taken recently include the February opening of a new data center in the Denver area, which includes a cyber-threat center. “We take the protection of client information very seriously,” Curtis said.

Every month, there are 120,000 malware-attack attempts, 6,000 phishing (or email fraud) attempts, 75 network-intrusion attempts and 30 wire-fraud attempts made on the RJFS network.

“In addition to hardware and network-server upgrades, we have done Client Center, Client Reporting and Money Movement progress,” the executive said.

“The next evolution of Client Center is coming at the end of August. It reflects input and feedback from you and your teams, and it has a better visual layout. This [version] shows all account inquiries, as requested.”

He noted that RJFS advisors generated 200,000 customized reports in April and of these, 30,000 were performance-analysis reports using a new IT tool.

“Coming next will be the ability to schedule reports in advance, select pages and customize blended benchmarks vs. a single benchmark … to take us to the next level,” the executive said. “These [features] will be available later this year – which is very exciting.”

Other developments on tap include client onboarding, which Curtis says is a “massive project.”

It will allow reps to reach agreements with clients regarding their data, so advisors don’t have to re-enter client information for different transactions.

“This is a multiyear project,” the executive explained, “and the first big step is the e-signature, as requested. We have it in pilot with 5 RJ offices and are working to expand this to 200 forms from 150 forms, which would be a vast improvement for you and your clients.”


Check out Raymond James IBD Loses Compliance Chief on ThinkAdvisor.


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