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INTERVIEW: Regulatory Change Provides A Wealth Of Opportunity - Raymond James

Stephen Little

11 July 2013

Since the global financial crisis in 2008, the financial services industry has come under increasing pressure to improve transparency, which has resulted in wealth management firms facing a raft of measures.

Many experts believe that the volume and pace of change is the single biggest challenge facing wealth management firms, driving industry consolidation and creating significant and increasing compliance and non-compliance costs.

Despite these costs and changes, wealth management firm Raymond James believes the current regulatory environment provides the firm with a host of opportunities, Chet Helck, chief executive for Raymond James Financial's Global Private Client Group, told this publication in a recent interview.

Founded in 1962, Raymond James is a firm with its roots in the business of providing financial guidance and planning to individual investors and families - and this remains the firm’s primary business today.

In recent years, the Fortune 1000 company has gone from strength to strength. In 2012, the firm had revenues of $3.9 billion and total assets under management reached a new record of $52.7 billion in May 2013, up 32.1 per cent on May 2012.

Raymond James also has more than 6,200 wealth managers in 2,600 office locations throughout the US, Canada, the UK and elsewhere overseas.

Helck points to the firm's new compensation model for hybrid RIAs as one its many recent successes.

The model is aimed at financial advisors with at least $100 million in discretionary client assets under management. Advisors operating this new model will retain 100 per cent of their advisory fees and pay a quarterly fee to Raymond James based on each practice’s discretionary assets under management.

Helck said the new model had been "very well received " and advisors already with the firm had managed to adjust to it successfully.

"It has given us the ability to retain those people who might have been tempted to go to a more direct model. Offering advisors choice also allows us to retain our high-quality advisors as well as attract new ones," said Helck.


The Foreign Account Tax Compliance Act was implemented in 2010 by the US government to crack down on expat citizens who might be evading taxes by using foreign accounts. It requires all foreign financial institutions to report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest.  

Raymond James has opted for the inter-governmental agreement approach, whereby the firm will supply information to HM Revenue and Customs, which will then distribute it to the relevant authorities in the US.

“FATCA has not forced us to change our business model or walk away from services we are trying to provide. This is simply a matter of complying with the new cross-border reporting,” said Helck.

The fiduciary standard

In response to the financial crisis in 2008, the Dodd Frank Act authorised the Securities Exchange Commission to devise a set of new uniform fiduciary standards for brokers and investment advisors when providing advice that is in the best interests of the customer.

The SEC has been working on it for over three years and recently issued a request for information from the public and the industry about the potential impact of a fiduciary standard, particularly with regard to anticipated costs and benefits of reform.

Helck highlights how the fiduciary standard is currently the biggest regulatory issue being debated in the US market that is relevant to Raymond James's business.

"At the heart of the debate is who does the financial advisor work for? At Raymond James we have always expected our financial advisors to put the needs of their clients first. So whatever the outcome of the SEC's decision process, it will not create a massive upheaval in our business nor in our advisors’ practices," said Helck.


Following the 2008 financial crisis, customer trust in the financial services sector reached an all-time low. The turbulence in the sector means that expectations have changed and consumers are re-evaluating their relationships with financial companies. Branding is therefore more important than ever before to firms as they try to regain the trust of consumers and expand their growth in an increasingly competitive market.

In North America, the Raymond James brand is highly visible. In 1998, Raymond James purchased the naming rights to the stadium where the NFL's Tampa Bay Buccaneers play and is it is also well-known for its support of the arts.

“We manage the content part of our brand awareness very carefully. The perception of the firm and the number of people who know about us is done primarily through our financial advisors. In the UK, rather than going direct with an advertising campaign, we tell our story through the advisors, who re-tell it through their own marketing efforts,” said Helck.


According to experts, wealth management firms need to develop technology-friendly solutions to drive their business models to compete successfully. As the number of players that jostle for position in the industry increases, the firms that gain competitive advantage will be the ones that adapt their business and attune technology initiatives to meet the considerable challenges of compliance, security and servicing the different segments within the sector.

An important area of strategic IT development for Raymond James is communicating with wealth managers. In the US, the firm has made extensive investment in a portal where wealth managers can access all the information they need to run their business, such as policies and procedures and administration capabilities.

Helck explains that Raymond James is well positioned to compete with other firms due to the investment it has made in its IT structure throughout the company globally.

"We have increased our investment in technology significantly over the past two years, as we feel it is a point of competitive differentiation. Over 800 people in the firm are involved in IT and the costs of that can run into hundreds of millions of dollars. It’s a worthy investment – we believe the technology we provide attracts financial professionals and keeps them with us, as they cannot replicate the functionality and user capabilities we offer," said Helck.