NASHVILLE, Tenn. - Raymond James Financial is counting on expansion in the Northeast and the West Coast to fuel future growth, says CEO Paul Reilly.
“We’re not going to grow by acquisition,” Reilly said at a press briefing at Raymond James Financial Services annual conference. “Our growth is going to be organic.”
Reilly cited steady expansion by both the company’s independent and employee channels into the Northeast, California, Oregon and Washington markets where Raymond James has traditionally had a low market share.
In addition to the firm’s recent deal to purchase the U.S. Private Client Services unit of Deutsche Asset & Wealth Management and its Alex. Brown brand, Raymond James will be opening a number of small branch offices throughout the Northeast and West Coast, Reilly says.
“We have plenty of room to grow [in those markets if we get our natural market share,”
Reilly says. “We have scale and we’ll be very competitive with recruits. One of our holes has been ultrahigh net worth and with Alex. Brown we’ve now plugged that hole.”
BIGGER BETS, BIGGER ASSETS
He acknowledged that the famously fiscally conservative firm would face higher advertising and real estate costs in the new markets. “You’re making bigger bets,” he says, “but the assets you’re gathering are bigger as well.”
A rebooting of the Alex. Brown brand, once a dominant high-end firm in Middle Atlantic states, and an increasing emphasis on private client services will be key elements to future growth, Reilly says.
Raymond James will be rolling out more concierge services for high-net-worth and ultrahigh-net-worth clients nationally, in addition to offering its banking and lending services to high-end clients, Reilly says.
Deutsche’s Alex. Brown advisors have an average annual production of $1.5 million, he noted. About 90% of the 200 Alex. Brown advisors are expected to remain with the new firm, which is being rebranded as Alex.Brown, and will be considered a separate affiliation option for Raymond James advisors, according to Reilly.
The full integration of those advisors and completion of the Deutsche Bank deal is set for early September, he added.
Raymond James wants to maintain a “broad platform,” Reilly emphasizes, that incorporates smaller accounts as well as high-net-worth clients.
He also envisioned a future where both clients and advisors would have full mobile access to platforms. While Reilly expects millennials to be more digitally connected than older generations, he also says he is convinced that as young people age, they will begin to seek financial counseling from an advisor, which, he argues, will play into Raymond James’ strength.
‘STILL CAN’T INTERPRET’ DOL RULE
Reilly also expressed his unhappiness with the new Department of Labor fiduciary rule.
He noted the complexity of the 1,000-plus page rule and said that after three weeks the firms’ lawyers “still can’t interpret it.”
“What looked like a giveaway may not be so beneficial,” he says. “We still have some concerns.”
The rule is “impractical” and “not in the best interests of clients,” according to Reilly.
“We think there will be a cost to clients as the rule is structured,” he says.