Raymond James is wrapping up its employee-advisor conference, which took place recently in Orlando, Florida, and drew about 700 financial advisors and about 1,500 other guests. At the event, executives say, the topic of Netflix-like service plans was raised during a town hall discussion.
Like Raymond James’ expanding digital-advice tool, which clients access through their advisors, such innovation is set to play an important role in its advisors’ business, top executives of the firm say. But what that role and its associated fees look like remain unclear.
“Will the world go to a subscription-based, Netflix model?” asked CEO and Chairman Paul Reilly on a call with the media late Thursday. “What levels of service will there be — gold, bronze and platinum?”
Charles Schwab rolled out a $30-a-month plan earlier this year, which charges a flat $300 fee for a financial plan. This week, it said this service helped it bring in $1 billion in new assets and helped put its digital-advice services at $41 billion in total assets.
Reilly remarked that “you probably don’t get much advice” for plans with a price tag of several hundred dollars. “But how about platinum advice with long-term care or nursing home [planning], and multi-generational [plans]?”
There’s “curating of subscriptions” that firms, including Raymond James, could do over time, he explained, “and there may be demand for that.”
He and other executives see wealth management bifurcating into asset/portfolio issues versus more service-related areas, and the option of using subscription-based structures for such operations has caught advisors’ attention.
“We don’t see big momentum to do this [yet], but we are not closed to it. The market will dictate how, when and what we offer,” Reilly explained. Some services might appeal to millennials in the nearer term, while others could take longer to prove popular with higher net worth individuals, he added.
Robos Rolling Along
On the portfolio side, the innovation of robo-advice and its associated popularity can’t be minimized, Reilly said.
“It’s table stakes,” he said, referring to this week’s news that both JPMorgan and Voya were adding robo offerings. “You do see firms like Wealthfront and others plateauing. It won’t overtake the industry, but it will be a piece of it.”
(As of mid-July, Wealthfront had $16 billion in assets vs. $11.5 billion earlier in the year, before it rolled out a cash account that paid over 2.2%.)
Raymond James’ automated advice tools were rolled out for advisors, via Connected Advisor, in 2017. Now clients can use their own tool via an advisor’s opt-in.
“We have not done this direct to the client. You have to go through the advisor,” Reilly said. While there’s lots of room for automation and big data, these advances “are not replacing human advice.”
According to Private Client Group President Scott Curtis, an advisor at the Raymond James conference asked generally about how to structure fees when working with clients on non-investment issues, like possible relocation to an assisted living center.
“Advisors’ relations with many clients go well beyond investment management,” Curtis said. They are part of comprehensive, holistic advice “around longevity and planning.”
The PCG leader says advisors can work with a contract approved by Raymond James for services that can entail a consulting fee. “Very few do that as a distinct charge or separate fee,” he added.
“But if you dig deeper, you’ll find that many advisors do many more things that extend beyond investment management,” Curtis said, such as discussing car leases, donor-advised funds, charitable giving and so on.
Today’s digital advice and subscription services are more limited in scope.
“So this [addition of services and use of subscription and fee-based structures] is a work in progress and will continue to evolve,” he explained. “The focus is on creating a better experience for the client and helping them lead a more fulfilling life in retirement and before.”
For Tash Elwyn, president and CEO of Raymond James & Associates, the firm’s employee channel, a good jumping off point for such a discussion is its suite of longevity planning tools. These resources “extend the range of what advisors can offer clients in ways that transcend financial planning and asset allocation and take [their] opportunities to add value to a new level,” he said.
“This [also] extends the conversation to how to structure [advisors'] pricing mechanisms, and what the future of advice is — including subscription models,” Elwyn explained. “What it’s all about is Raymond James being innovative, so advisors can best serve clients and be properly compensated for that.”
Though the executives say the firm is “open” to such a model, advisors and industry watchers should not expect any announcement about such a development in the short term. “It’s part of a longer conversation,” Curtis said.