RJ says that RIA custody is a 'strategic imperative'

APR 13, 2012
Will Raymond James be able to cut off a bigger slice of the custodial pie? That challenge is now in the hands of William Van Law, former head of recruiting at the company's independent-broker-dealer operation, who last week was put in charge of Raymond James' Investment Advisor Division. Along with the shift in the division's leadership from Mike DiGirolamo, who will remain as a managing director and work with Mr. Van Law in building the RIA operation, the company reorganized its custody unit as a stand-alone division, separate from the independent-broker-dealer business. The spinoff should give the custody unit a higher profile and send a message from top management that the business is no longer just an accommodation to existing brokers at the firm. Raymond James needs to attract breakaways from other firms in order to build incremental revenue, Mr. Van Law said. “We feel we're the easiest fit for high-end wirehouse advisers,” he said. “Our secondary focus is the higher-end independents [at broker-dealers] who are ready to make the next step.” In announcing the changes, Chet Helck, chief executive of the global private-client group, called the RIA business “a strategic imperative” for Raymond James. With just $7 billion under custody for about 100 advisory firms, some think that the adviser division was lost within the much larger Raymond James Financial Services Inc. division, which has 3,200 independent registered representatives. In total, the firm holds $235 billion for retail clients. All the firm's retail businesses, including the Raymond James & Associates Inc. employee channel, now report to Mr. Helck. “If Raymond James feels it's worth Chet's time [to take on the RIA business], that's meaningful,” said Charles Goldman, former head of Schwab Advisor Services, who is a senior adviser to Bain & Co., where he does consulting for financial services firms. Putting Mr. Van Law in charge of the custody business wasn't surprising to industry recruiters. He “is the ideal choice to head this segment,” said Mindy Diamond, president of Diamond Consultants, who recruits for Raymond James. “He has a wirehouse background and very strong experience in the independent space,” she said. The reorganization positions Raymond James for growth, Mr. Van Law said. The independent-contractor area has been “relatively flat,” he said, while the number of hybrid advisers and independent registered investment advisers has been growing. The reshuffle recognizes custody as a distinct business model, which will allow for more investment and expansion, Mr. Van Law said. He declined to discuss specific growth targets, but “given trends in the industry, we have very significant opportunities,” Mr. Van Law said. Firm executives have floated a goal of $25 billion under custody, but he is thinking bigger. “That's an interim goal. Long-term, it's a lot bigger than that,” he said.

"SERIES OF CHANGES'

“There's been a whole series of changes around the firm to better allocate resources to improve growth rates,” said Mr. DiGirolamo, who described his own situation as a lateral move. Last month, Scott Curtis was named president of RJFS. He will replace Richard Averitt as chief executive of that division in May when the latter will take on a reduced role as chairman. In November, the firm appointed Dennis Zank chief operating officer, replacing Mr. Helck in that role. Divisional director Tash Elwyn replaced Mr. Zank as president of Raymond James & Associates. Mr. Helck was given responsibility for all retail segments, where Raymond James gets about two-thirds of its revenue. Raymond James executives recognize the challenge that they face in competing with the larger custodians. “We're planning to make a significant investment” in the custody business, with a focus on improving technology and service offerings for independent advisory firms, Mr. Van Law said. One of the first steps will be building up a dedicated transition team to help breakaways set up shop, similar to what the firm offers to independents on the broker-dealer side, he said. The firm also has looked at offering a turnkey compliance program for RIAs. More support services and better technology will help, but the firm needs to get more competitive on pricing, said Jon Henschen, president of Henschen & Associates LLC, a recruitment firm. Lower fees for financial advisers and their clients may be forthcoming, Mr. Van Law said. “There are a number of things on the table,” he said. Despite the challenges, Raymond James could do well in the custody area, observers said. “They have a brand that's well-known among wirehouse reps and other independents,” and has a recruiting force to go after them, Mr. Goldman said. Indeed, advisers who use the custody services of Raymond James like the fact that the firm is a full-service brokerage firm. “They can help with bond ladders or provide in-depth research on [money] managers [beyond] just the ones on a platform” such as the other custodians might provide, said Alan Goldfarb, director of financial services at Weaver Tidwell Capital LLC, which manages $350 million. The firm needs to do more to get the word out about the custody unit, observers said. Mr. Van Law said that he plans to give the RIA business a larger presence at industry conferences and do more advertising. Meanwhile, the existing recruiting team at RJFS will continue to work for the adviser division, but this year, the firm will put in place a new recruiting structure that better integrates the entire retail-business-development function, he said. It will be a “coordinated effort, with resources more properly allocated” to RIAs, Mr. DiGirolamo said. [email protected]

Latest News

Fintech bytes: Wealth tech firms target advisor productivity with new integrations
Fintech bytes: Wealth tech firms target advisor productivity with new integrations

Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.

Trump Account contributions to get boost from new employer rules
Trump Account contributions to get boost from new employer rules

New Treasury and IRS proposals would let employers add tax-free payroll contributions to the retirement accounts as advisors weigh the fit for client families.

Merit Financial snaps up $900M Bridgeway Group in California push
Merit Financial snaps up $900M Bridgeway Group in California push

The Atlanta-based RIA has now completed nine acquisitions in 2026, with six of those coming from Commonwealth Financial Network's former advisor base.

Generational wealth strategies are shifting as families and business owners eye Trump Accounts
Generational wealth strategies are shifting as families and business owners eye Trump Accounts

Half of small business owners want their company's success to fund generational wealth, says Guardian Life research.

Workers delaying retirement as economic anxiety grips employers
Workers delaying retirement as economic anxiety grips employers

New Principal Financial data reveals 69% of US employers say staff are postponing retirement, with inflation cited as the primary driver amid rising AI optimism.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income