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‘No Evidence’ DOL Rule Is Hurting Recruiting: Raymond James

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While Morgan Stanley says the now-delayed Department of Labor fiduciary rule has put a damper on advisor movement, Raymond James says its independent channel’s recruiting efforts are going full steam ahead.

In fact, it has more than 85 prospects at its yearly indie advisor event taking place this week in Orlando – up from 75 a year earlier.

“We have seen no evidence that DOL has negatively impacted recruiting,” said Scott Curtis, head of Raymond James Financial Services, now hosting its yearly conference in Orlando. The event has drawn over 2,000 of the indie channel’s roughly 4,000 registered reps.

“Alternatively, in some cases, I’d say it has helped us – with [the approaches to the rule taken by] other firms, like some restrictions put on IRAs vs. our flexible approach,” Curtis explained in an interview on Wednesday. “We offer more options and are preserving flexibility” in terms of both fee- and commission-based accounts.

Earlier this month, Morgan Stanley CFO Jonathan Pruzan said DOL has “probably has had a chilling effect on recruiting, [and] attrition has been low.”

(Morgan Stanley had 15,777 reps as of March 31, down 111 (or 1%) from a year earlier but up 14 from Dec. 31.)

Raymond James’ employee channel recently recruited a Morgan Stanley advisor in Trinity, Florida, with about $106 million in client assets and over $1 million in yearly fees and commissions.

The fiscal year ending Sept. 30, 2016, “was our best year” yet in the independent channel, says Curtis, with about $150 million in trailing 12-month fees and commissions moving onto the platform. That’s up a third from $112 million the prior fiscal year, he adds.

What’s driving FAs to RJ?

“Employee firms especially continue to adjust compensation that rewards certain behaviors that benefits the firm …,” Curtis explained. “At some point, advisors say ‘enough is enough.’ There are also payout adjustments that happen yearly, some [compensation] is moved to deferred, restrictions on the size of client,” which in some cases are being moved to call centers for service.

For Wells Fargo, there is continued fallout from its fake-accounts scandal. Its headcount fell by 225 in the first quarter of 2017 to 14,657, after dropping by 204 in the final quarter of 2016.

Given the multiple channels, advisor headcount and “quality” of its reps, Curtis says, “There have been opportunities for us in recruiting … which is natural [given] the actions that occurred there and the [related media] coverage.”

Raymond James’ Advisor Select channel, for instance, added four advisors from Wells Fargo with about $700 million in client assets and had yearly production of of $3.8 million, earlier this month.

The prospects at the indie channel’s yearly conference, the executive explains come from across the industry: “All the big firms are represented, including independent ones and the wirehouses, as well as Edward Jones and Ameriprise.”

Existing reps are “rolling up their sleeves” and adjusting the new fiduciary standard. “They are determined to get throught it, [which means] … a lot of work … in a short [time] window,” Curtis said. ”They don’t want to risk not being in compliance.”


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