Headhunters say they believe the new plan, which will allow dually registered financial advisors with at least $100 million in discretionary client assets under management to retain 100% of their advisory fees, will help Raymond James retain and attract top hybrid advisors.
“Every time you innovate in this business, it will grab some attention,” says Danny Sarch, president of Leitner Sarch Consultants. “The new plan gives advisors another reason to look at them. It’s another arrow in their quiver.”
One Raymond James advisor who would be affected by the plan gave it a thumbs up. “I don’t want to leave the firm, and I don’t want to leave the hybrid model,” says Dudley Barnes, a 35-year Raymond James veteran and hybrid advisor based in Clarksdale, Miss., who manages more than $100 million in discretionary client assets. “This plan gives me more flexibility to keep my Series 7 and also have a fee-based business that’s highly profitable.”
Under the new compensation model, Barnes notes, once an advisor reaches $108,000 in fees, he or she doesn’t have to share more profit with Raymond James. Under the old plan, he said, the firm would continue to receive a share of the advisors’ revenue, without limit.
Advisors considering going independent who want to maintain a hybrid status “certainly will be attracted to what Raymond James is offering,” Barnes says.
TOUGH RECRUITING FIELD
Intense competition for breakaway brokers forced Raymond James to introduce the compensation initiative, which also re-directs mutual fund 12b-1 trail commissions to clients instead of the firm.
“I think their reason for doing it was primarily driven by more competition," says Mindy Diamond, president and chief executive of Diamond Consultants. There's "more interest in brokers who want full independence and can go to other models, which will pay them more than what Raymond James had been offering,” she adds. “It’s a defensive measure to stave off attrition at the higher end, but it definitely improves their chances.”
But some industry executives don’t think the new model, which will affect fewer than 2% of existing Raymond James Financial Services advisors, will make much difference in attracting advisors.
“I think [the new plan] is a yawner,” said Michael Stier, president and chief executive officer of Adhesion Wealth Advisor Solutions, a technology and service provider for wealth management firms. “Welcome to the RIA party. It started five hours ago, and Raymond James is showing up at midnight with the same bean dip others brought when the party began.