With regulatory pressure mounting, Raymond James will alter how it compensates advisers in its independent channel, the company says.
Beginning in September, the firm will move to a product neutral grid, similar to what its employee channel has used since 2013.
Depending on business mix, some advisers could see a pay cut, according to a person familiar with the matter.
However a company spokeswoman says most advisers would see few changes.
Advisers in the employee channel at Raymond James were recently told that broker pay would be cut by 100 basis points for those producing $350,000 or more per year. Advisers generating revenues smaller than that would see slightly larger cuts.
"Any time you make any change to a comp plan, there's always a calibration issue," says compensation consultant Andy Tasnady. "Who's winning, and who's losing? What's the impact?"
The changes are the first significant alterations in decades, according to Raymond James.
"They were finalized only after receiving input from branch owners, considering potential impacts to existing branches and reviewing the competitive landscape," the spokeswoman said in a statement. "While some firms are responding to the new regulations by limiting financial advisors’ and clients' investment options and account types, Raymond James' focus remains on preserving flexibility and choice for advisors and their clients while complying with the DOL rule's requirements.".
Many firms in the employee channel have long since moved to product neutral payout grids in order to avoid appearances of conflicts of interests and for its simplicity, according to Tasnady.
Raymond James said it changed employee adviser pay in part due to rising technology and regulatory costs. In particular, the firm pointed to the fiduciary rule. Other brokerages have also said their costs have gone up as a result of Department of Labor regulation compliance.
Tasnady says there could be more compensation changes across the industry.
"Most firms have been increasing revenues and becoming more profitable. But as that growth slows, there's more pressure to handle increased costs in different ways," he says.
Raymond James has been steadily growing through aggressive recruiting as well as acquisitions. Raymond James' larger wirehouse rivals typically issue annual changes to their compensation plans, which has spurred some brokers to switch firms. By contrast, the last time the St. Petersburg, Florida-based firm amended broker pay in its employee channel was in 2013.
"No one is going to leave for a one time pay cut, particularly if there's a reasonable reason for it," Tasnady says. "What people get more concerned about is if there are other things going on the same time."
Outdated technology platforms and declining staff support are more likely to drive brokers to switch firms, he says.
RIAs affiliated with Raymond James' Investment Advisors Division are not affected by the compensation changes, according to the spokeswoman who declined to provide additional details.
Financial Advisor magazine first reported on details regarding the comp change.