Raymond James’ recruiting reboot is working: Reilly

Paul Reilly, Raymond James Financial Inc. CEO, said in January that the company was boosting its 2021 recruiting bonus to experienced financial advisers who work as employees of the firm to combat increased competition and an industry-wide slowdown in recruiting desirable financial advisers during the Covid-19 pandemic.

Upping adviser compensation, called transition assistance in industry parlance, as part of a package of enticements for advisers to leave one firm and start working at another appears to have done the trick, according to Reilly, who made his comments Thursday morning to analysts during a conference call to discuss quarterly earnings.

When asked to describe the revamped “transition assistance” pay package for recruits, Reilly said that Raymond James in the recent past had been “not even close in the market, especially for large teams.”

“With those large teams, I would say now when we come in for the finals, we’re not the highest, but we’re in the ballpark,” Reilly said.

In January, Reilly had said that the gap between what its competitors and Raymond James were offering in terms of recruiting bonuses has recently grown “bigger and bigger” and was too significant for some advisers to turn down.

So-called recruiting bonuses are typically in the form of a percentage of an adviser’s annual fees and commissions, known as production in the industry, and employee advisers can command between two times to three times that number in the form of a forgivable note or loan that is worked off over time.

That means an adviser who generates $1 million in annual sales can command a bonus of $2 million to $3 million that is paid out over a period of seven to 10 years in many cases.

Large teams of financial advisers are willing to take a little less compensation as a tradeoff for the firm’s culture and values, Reilly said, attributes that Raymond James executives have routinely touted over the past decade, a time over which Raymond James has seen steady growth in recruiting.

The decision to boost recruiting pay, details of which he did not share, will lead to a surge this year, Reilly said. “We aren’t the highest. We are competitive.”

“That’s going to reflect in the numbers with a lot of high-quality teams and probably the largest number of large teams we’ve had, certainly within memory,” he added.

Raymond James reported 8,327 financial advisers at the end of March. That was a net increase of 179, or 2%, over March 2020 and 94, or 1% over December 2020.

Like its competitors, Raymond James is reporting new highs in a variety of metrics as the broad market continues its year-long rally. For example, the firm reported record private client group assets at the end of March in fee-based accounts of $567.6 billion, increases of 48% over March 2020 and 7% over December 2020.

The post Raymond James’ recruiting reboot is working: Reilly appeared first on InvestmentNews.

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