“We do not see fee compression on our financial advisors,” Raymond James Chairman and CEO Paul Reilly said in an interview Thursday during the firm’s national conference for independent advisors.
“Clients say, ‘We will pay for what you do for me,’” Reilly explained. “Part of that is product selection, [though] asset allocation is almost a free giveaway.”
There’s the other side of the business, however, that supports advisors’ businesses. “Estate planning, financial planning, planning around kids … [and] next generation planning,” the executive said. “This is valued and really not under pressure.”
Such holistic planning and dynamic relationships between clients and advisors are critical to the business. “Not just work done as an investment advisor, but as a life planner [and] a trustworthy” source of information and advice, he explained.
“Those types of advisors are not under fee pressure,” Reilly said.
During the firm’s annual event in Orlando this week, Raymond James reported a nearly 20% jump in revenues to about $1.6 billion for the quarter ending March 31 vs. last year’s figure. Its net income, though, tumbled 10% to $113 million, or $0.77, from the year-ago period.
The firm’s private client results had a similar bifurcation. Sales soared 23% year over year to $883 million, but pretax profits dropped 65% to about $29 million.
Reilly says the firm had “a record start for the past six months, record client assets …, advisor headcount, and our recruiting is still at the top of market and retention, too.”
The firm’s attrition, 0.6%, is especially impressive, Reilly explains, acknowledging that a positive market environment and rising interest rates are helping too: “It’s really the best six-month start we’ve had, and we are continuing to” see positive results from these trends in the current quarter.
The attrition level, he says, “reflects our commitment to service.”