Raymond James reps bullish on Thomas James’ successor

Many Raymond James Financial Services Inc. representatives and financial advisers would like to see Thomas James stick around forever, but they clearly understand the need to have a successor in place.

But unlike the 66-year-old Mr. James, who still works with a limited number of clients, the successor, Paul Reilly, has never sat in a registered rep’s seat, even though he has a background in the financial services business.

Last Monday, the board of Raymond James Financial Inc., the parent company of independent broker-dealer Raymond James Financial Services, tapped a replacement for Mr. James, who has been chief executive of the St. Petersburg, Fla., firm for 40 years.

The board, however, in selecting Mr. Reilly, 55, decided to tap an executive from outside the closely knit firm, which prides itself on its culture.

The selection was the talk among the more than 1,600 advisers attending last week’s national sales conference of the broker-dealer in Las Vegas.

“I know people hate Tom making that step, but what if something unexpected happens to him?” asked Bill Carter, president of Dallas-based Carter Financial Management.

He sat near Mr. Reilly at a dinner of top producers on Wednesday night, and said that the future chief executive was personable, a good listener and a “real observer.”

Mr. Carter said another important consideration in the transition, which begins in May when Mr. Reilly joins Raymond James Financial as its president, is the support of chief operating officer Chet Helck, who actually recruited Mr. Carter to the firm almost 15 years ago.

Some industry observers had considered Mr. Helck to be in line to succeed Mr. Reilly. The board, however, was looking for a candidate with prior experience running a public company, executives said.

“Overall, I’m very pleased,” added Mr. Carter, whose firm has about $600 million in client assets. “I knew the day would come, but my fears have been quelled.”

Mr. Reilly, executive chairman of Korn/Ferry International, will join Raymond James as president May 1, and after one year will succeed Mr. James as chief executive.

After May 2010, Mr. James will stay on at the brokerage as executive chairman of the board.

Mr. Reilly has experience with the firm.

He joined the board of Raymond James in 2005, and has served as chairman of the audit committee for the past year.

He began his tenure with Los Angeles-based recruiter Korn/Ferry as chairman and chief executive in 2001. Prior to that, Mr. Reilly was chief executive of Big Four auditor KPMG International of Amstelveen, Netherlands.

Reps and advisers are concerned about any changes to the company. “Usually, when you have someone new, they try to make the company over,” said Mal Makin, president of the Westerly, R.I.-based Professional Planning Group.

STRONG EGO

Mr. Makin, whose firm manages $469 million, thinks that Mr. Reilly’s lack of experience in the brokerage business may actually bode well for the future.

“Paul Reilly may have an ego strong enough to leave it alone, to understand it and help the company grow,” he said.

“No one can replace Tom James, said Mr. Reilly, who will look to the current management team for assistance. He has experience inheriting top roles at companies with strong managers, and doesn’t foresee any changes.

Meanwhile, the firm said it is enjoying a bonanza of advisers looking to leave wirehouses.

Raymond James Financial Services expects a record recruiting year, as reps and advisers flee struggling wirehouses to join the company.

In the first five months of the company’s fiscal 2009, which began Oct. 1, Raymond James’ independent broker-dealer arm saw a 251% increase over fiscal 2008 in the number of brokers who have joined or have committed to joining the firm. Raymond James doesn’t disclose the head count of brokers and advisers it recruits, but it says it is snagging big producers.

E-mail Bruce Kelly at [email protected].