Raymond James Backtracks on Chargebacks

Raymond James has reversed a decision that would have required some advisors to cover fund fees and charges being refunded to clients after getting pushback from advisors.

“After continued dialogue with advisors, Raymond James will absorb the cost of mutual fund sales charges and fee rebates to clients with eligible retirement plan and charitable trust accounts, and not require advisors to return commissions received on the mutual fund purchase transactions,” the firm said in a statement in February.

Raymond James had said some advisors would be required to refund certain fees associated with these fund sales. It said the refunds affected less than 1% of client accounts and that the median rebate would be roughly $200.

The firm recently sent a memo to branch managers and advisors to outline its policies going forward, after recognizing a $10.5 million adjustment associated with fund commissions in its latest quarterly earnings report.

“The fact that [Raymond James’] management made a quick change shows they take our views seriously,” said one veteran advisor who declined to be identified. “They managed it well.”

The matter, the advisor noted, is not straightforward: “There is some rationale behind the pushback, though the firm hasn’t really made a mistake. It’s really that the fund prospectuses are not that clear and don’t have a standard language when it comes to waivers for small plans and trusts.”

Raymond James shared a similar view in its extended statement on the matter.

“Given the complexities of the subject—including policy variations among fund companies, lack of clarity in prospectuses and a gap in the industry’s and Raymond James’ abilities to systematically identify waiver availability, we felt this [new policy] would be the best way to limit distraction for advisors and minimize confusion for clients,” it stated.