WASHINGTON - Raymond James is seeking organic growth and niche deals this year, despite having plenty of  "excess capital and liquidity," according to Paul Reilly, chief executive of Raymond James Financial.

The St. Petersburg, Fla.-based firm -- whose Private Client Group is parent to both Raymond James Financial Services, an independent broker-dealer, and Raymond James & Associates, an employee advisor channel, as well as a custodial operation and two non-U.S. broker-dealers -- is on track to reach $5 billion in revenue and $450 billion in assets this year, Reilly said at a press briefing at the annual Raymond James Financial Services national conference. 

The company has been earning a 12% return on equity along the way, he added, and still has $1 billion in cash to spend, Reilly said. Yet he stressed that the "very, very conservative" company is looking for niche deals, not major acquisitions.

"We're not doing things for short-term returns," Reilly said during the briefing, which was framed as a preview of his general session address to more than 1,600 advisors. "Our long-term focus hasn't changed."

The company's 2012 acquisition of Morgan Keegan was exceptional because of that firm's unique regional and cultural orientation, according to Reilly. Raymond James isn't looking to buy another large advisory firm simply to achieve scale, he stressed: "There has to be a cultural match."

HUNT FOR SMALLER FIRMS

Instead, he said, Raymond James will be looking to buy smaller firms in areas where it is "under-invested," such as asset management. Meanwhile, the advisor side of the business will "have to grow organically" by retention, recruiting and increased productivity, Reilly said.

Raymond James plans to expand its advisory operations most aggressively in the Northeast, California and the Pacific Northwest this year. The Northeast is an especially inviting target because of the region's large concentration of assets, Reilly said.

Reilly said Raymond James lacked the brand name and capital to compete in the Northeast in the past -- but argued that is no longer the case. "We have a ton of capital," he said. "There's no reason not to leverage it."

Over the next five years, Raymond James Private Client Group will also continue to invest heavily in technology, support for advisors and practice management, especially succession planning and transitions, Reilly said.

'DIFFERENT WAYS TO COMPETE'

Asked about the competitive impact of RCS Capital's recent spate of independent B-Ds acquisitions -- and the company's professed goal of doubling its number of advisors to 20,000 -- Reilly replied "there are different ways to compete. That's not what we do."

(Reilly also made a point of saying that company doesn't allow some alternative investments it perceives as too risky or opaque -- such as nontraded REITs, an RCS specialty -- to be sold to a majority of clients.)

Nor did Reilly express concern about the proliferation of online-oriented "robo-advisors." That segment of the market is "not where we compete," he said. "That's not who we are. Our model is advisor-centric. We want everything to go through the advisor."

Raymond James has begun to implement "adjustments" in fee schedules, which Reilly declined to specify. The fee changes were the first in 10 years, he said, describing them as "very competitive, very fair to the client and the advisor and also profitable to the firm."

Asked about the firm's banking business, Reilly said the firm took an almost schizophrenic approach to its lending activity. While Raymond James doesn't actively incent advisors to push its banking products on clients, it also wants the business if clients are going to get a mortgage anyway. "We're kind of weird about it," he said. "We're not pushing bank services, but we view the bank as a product service for clients that can be a conservatively underwritten profit center for the company."

Reilly also said Raymond James is ramping up its diversity recruiting efforts for women, young people and African-Americans this year. The firm was making progress increasing the number of women in the firm, he said, but he expressed disappointment at the paucity of African-Americans.

"I wish we had better numbers, and it's not good for the whole industry," he said. "But it's not for lack of desire and we're working on it."

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