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CEO Paul Reilly at Raymond James Elevate 2022.

Industry Spotlight > Advisors

Raymond James Is Spending $500M on Tech in 2022, CEO Says

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What You Need to Know

  • Raymond James is investing heavily in its apps and other advisor tools, as well as cybersecurity.
  • Advisors are most concerned about the economy and excessive regulations, CEO Paul Reilly says.
  • Client satisfaction rates have grown again as advisors have returned to their offices in hybrid fashion.

Raymond James is investing about $500 million in technology during fiscal 2022 as it seeks to strengthen the capabilities of its advisors and improve the overall experience for them and clients, according to Paul Reilly, Raymond James Financial CEO.

The firm “invested a lot in technology in the last decade” since he became CEO, he pointed out Tuesday at the Elevate national conference in Nashville, Tennessee.

Those investments include dollars spent on upgrading its rebalancing platform and other current tech initiatives, cybersecurity, and future technologies including augmented and virtual reality that the firm is testing, he told ThinkAdvisor in a media briefing during the event.

Raymond James believes it’s had the leading desktop for several years but it is important to “keep investing,” he said, adding: “Now, we’re really investing in a client app” that is different from those of rivals that focus on the bank and the client. “Ours is developed to be between the advisor and the client.”

The Raymond James advisor desktop and client interface are where a large chunk of the company’s tech investment dollars are going. “We can add a lot of value on doing customized advisor tools and desktops and connections to clients, and that’s where we really focus the vast majority” of tech spending, Reilly said.

Also crucial is cybersecurity and the firm spends some of its tech dollars on that. Although Raymond James receives very good scores from external testers, “you’ve got to invest” in security to keep up with the threats that are continuously posed by hackers and pirates, Reilly noted.

People try to breach Raymond James’ systems, he said. “Cyber used to be about keeping people out” of your systems but now a lot of it is about, “if people get in how many layers do they have to [go] to find something, and then how many layers do they have to go through to get something out so you can catch them and stop them.” “We haven’t had to test that part” yet aside from internal tests, he added.

“It’s a challenge…. But I think we do a good job,” according to Reilly, who said the firm had yet to experience a major breach.

The firm, meanwhile, uses third-party artificial intelligence and machine learning for data mining and other areas, he said, including to weed out false alerts sent to advisors. The goal is to try and “keep the burden off the advisors,” he said. The firm also uses bots to remove manual processes between systems that take up too much time for humans to do manually.

The firm demonstrated the use of holograms during one of its sessions at the conference, while discussing AR and the metaverse and how they may affect advisors.

“I don’t think everybody’s going to wear Oculus glasses” for virtual reality meetings anytime soon, he said, conceding the technology’s “still coming” in terms of how it can be used by advisors and it’s “not ready for prime time” yet. But automated assistance using augmented reality is one of the many uses of tech that could help advisors in the future, in addition to the apps they now use, he said.

It’s important to show advisors that the firm is investing in the future and their relationships with their clients, and technology is part of that discussion, he explained.

“It doesn’t mean all of it’s ready today, or it doesn’t mean some other technology won’t jump” in front of these by the time they’re ready, he added.

Despite the heavy tech investments, Raymond James is “betting on advice,” not direct investments that robos focus on, he said.

After all, “the value isn’t in the trading…. It’s really in the holistic planning and advice,” he stressed. “And that’s where our advisors have done very well. We’ve led the industry, I think, in the last year and a half” when it comes to net new assets, he said, noting, “I give that credit to the advisors.”

The Return to ‘Normal’

Noting Raymond James hadn’t held its conference since before the pandemic, Reilly said “every seat was taken” for Tuesday morning’s Town Hall session with him and other company executives.

“It shows just the desire for people to be back together,” he said, adding: “They’re happy to be here. They’re happy to see each other. And all we can do is kind of mess it up on stage.”

Raymond James had already been planning to shift to flexible work before COVID and had already been using Zoom and introduced its advisor mobile app.

Unlike some rival firms that have demanded full office returns over the past year or so, with “our long-term cultural values, we told associates to try to come in two to three days a week,” he said, noting the firm’s management was aware that some advisors and others had child care issues.

The hybrid return to the office has been “pretty successful,” he said, noting that in-office work was at about 80% of pre-pandemic levels. Fridays, however, are “still noticeably a little less crowded” than the other four days of the week, he conceded.

“People remember the value of being together and being at the office and problem solving,” he added.

Getting Prepared

To prepare for any potential downturn as the pandemic started, Raymond James had decided to make sure it had “two and a half times the regulatory capital required to be well-capitalized,” he told ThinkAdvisor. “So we have a huge buffer” if the market turns bad, he noted.

Raymond James recently “finished our 137th quarter of consecutive profitability, including ’09, where we made money every quarter,” he also pointed out. “The only quarter we’ve lost money since” going public was the Black Monday quarter, in 1987, in which it closed its retail trading desks, he noted.

Reilly declined to predict if the U.S. will experience a recession. “I don’t think anyone can really read the economy,” he said. But he told ThinkAdvisor: “We’re well-positioned” regardless of what happens.

Top Advisor Concerns

Right now, the two biggest concerns among advisors are the economy and increased regulations, according to Reilly.

“On the positive side, consumer spending is good” and employment and wages are strong, he noted.

But inflation and rising interest rates that are intended to reduce it are challenges, he said. “Anytime you move something quickly, there’s often the unintended consequences and who knows what that will be” in this case, he noted, adding whether it reduces inflation or hurts the economy is yet to be determined. “No one really knows,” he said.

In terms of the economy and markets, he said, “we have learned one thing” and that is, “if you have capital and liquidity, you can get through a lot of things.”

Meanwhile, there is just a “barrage of regulation coming out” of the Securities and Exchange Commission with 12 proposed rules and 26 more under discussion, he said. They are “very complex rules that often overlap with each other” and are “all substantial,” he told ThinkAdvisor.

Raymond James is “very involved with the regulatory agencies” and staying on top of  regulations for its advisors, he noted.

Customer Satisfaction Rebound

Raymond James filled 1,900 positions in 2021 despite the “very tough recruiting environment” it faced, Reilly told ThinkAdvisor. Despite advisors and others working from home, the firm’s service remained “very good, but it wasn’t what we would consider a top standard,” going to the “high 80s” in client satisfaction, he said.

But service has improved in recent months as more Raymond James advisors and others returned to their offices, he said, adding: “We’re committed to be at that very top of service satisfaction. That’s part of our culture [and], already, since people are coming back” to their offices, satisfaction rates are “shooting way up again.”

After one quarter, “we’ve got half of it back and I think we’ll get the other half next quarter,” he predicted.

A Pickup From Janney

Raymond James announced Tuesday that it had recruited veteran advisor Dave Sprenkle to Raymond James Financial Services, its independent advisor channel, in York, Pennsylvania.

Operating as Sprenkle Wealth Management, Sprenkle was joined by senior client service manager Theresa Lehigh. They serve clients with a wide range of financial needs including business owners, retirees, families and individuals, as well as corporate retirement plans, according to Shannon Reid, RJFS Northeast division director.

They were previously affiliated with Janney Montgomery Scott and managed over $140 million in client assets, Raymond James said. Sprenkle has more than 30 years of financial services experience since starting his career at Merrill Lynch in 1990, according to his report on the Financial Industry Regulatory Authority’s BrokerCheck website.

“Raymond James has long been on my radar as one of the most advisor and client-friendly firms in the business,” according to Sprenkle. “It offers the extensive services, expertise and technology you’d expect of a large, global firm, while allowing me to maintain my independence to serve my clients’ financial goals and objectives how I see fit,” he said in a statement.

Just ahead of Elevate, the company announced it was rolling out a new affiliation option for independent financial advisors: a corporate registered investment advisor model for investment advisor representatives, or IARs, who run fee-only practices.

Pictured: CEO Paul Reilly at Raymond James Elevate 2022. (Photo: Raymond James)