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Raymond James launches 'phenomenal' RIA-like pay structure to the $100 million set

The custodian hopes its keep-all-the-gravy pay scheme will keep its own advisors from defecting and win would-be RIAs

Author Lisa Shidler March 19, 2013 at 7:52 PM
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Scott Curtis says the payout changes were made with RIA custodians like Schwab, TD Ameritrade and Pershing in mind more than broker-dealers.

Stephen Winks

Stephen Winks

March 19, 2013 — 9:27 PM

Very interesting compensation model conducive to advisory services, if accompanied by large scale support for fiduciary standing, atypical for a brokerage format,—this could be profound.

SCW

Jeff Spears

Jeff Spears

March 19, 2013 — 11:02 PM

Size matters!

Wonder what an apples to apples payout comparison is?

Paul Clarke

Paul Clarke

March 20, 2013 — 4:33 PM

I’m confused. At the top of the article it says advisors with Raymond James (over $100M AUM) will get to keep 100% of their advisory fees. Then later in the article it says advisors can keep 100% of their advisory fees and pay a quarterly fee to Raymond James. Then at the end of the article it outlines a fee structure where the Advisor must pay Raymond James. I’m certain this deal is an improvement at RJ, but I’m not sure if the advisory really gets to keep 100% of their advisory fees???

Lisa Shidler

Lisa Shidler

March 20, 2013 — 4:50 PM

Hey Paul, I understand your confusion. Of course, there’s no free ride but basically what is happening here is Raymond James is trying to set up the structure more like an RIA – and less like a BD – which deals in “payouts.” So, on one-hand, yes advisors do get to keep 100% of the advisory fees, but yes, they must too pay quarterly fees to Raymond James.

We tried to get an apples-to-apples comparison using Raymond James’ current structure with the new structure and couldn’t get that. It doesn’t seem like it’s better for the bulk of advisors since 90% moved to this new structure.

These numbers are in the story. But advisors who use their own RIA will pay Raymond James 6 basis points, or $60,000 annually, on the first $100 million in discretionary management. Then, on the second $100 million in assets, those advisors will pay 3 basis points, or $30,000. Then, the fee goes down to 1 basis point, and advisors would not pay anymore than $100,000 in fees annually— even if they manage more than $300 million in assets, Curtis says. There is no incremental fee over $300 million in assets.

In this case, if an advisor managed $1 billion in discretionary assets, they would pay no more than $100,000 annually.

For advisors who utilize Raymond James Financial Services’ corporate RIA, the firm will charge an additional annual fee of 2 basis points on each advisor’s first $100 million of discretionary AUM, and 1 basis point on the next $100 million, up to a maximum of $30,000 annually. Again, if an advisor managed $1 billion on Raymond James’ RIA the annual fees would be no more than $30,000.

Paul Clarke

Paul Clarke

March 20, 2013 — 4:52 PM

Thanks Lisa!!!!

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Mentioned in this article:

Raymond James Financial Inc.
Asset Custodian
Top Executive: Bill Van Law

Finetooth Consulting
Consulting Firm
Top Executive: Ryan Shanks

Diamond Consultants
Recruiter
Top Executive: Mindy Diamond

FA Match
Consulting Firm, Specialized Breakaway Service, Recruiter
Top Executive: Ryan Shanks



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