Many independent brokerages have thought Raymond James' recruiting strategies overemphasize wirehouse brokers. But the firm may turn out to be the biggest beneficiary of the 2008-2009 exodus from Wall Street.
Last year, the firm recorded a net increase of 750 advisors, bringing its total to about 5,300. More significantly, Bill Van Law, senior vice president of business development, says the number of new advisors affiliating with Raymond James who are generating more than $1 million in asset management fees and commissions tripled in 2009, as it also did the previous year.
Neither Reilly nor Van Law expect the pace of recruiting to continue expanding at that rate in 2010, although they say the pipeline remains strong. If the markets don't collapse, Raymond James could enjoy impressive top-line growth.
Still, Chet Helck, the firm's chief operating officer, voices concern about the lingering impact of the financial crisis in clients' trust and confidence in financial institutions. But he adds that all the research he has seen shows that most affluent Americans trust the integrity of their financial advisors, and the crisis has increased the demand for financial planning among all Americans.
ETFs Are Booming, But Examine Their Quirks
Exchange-traded products offer investors an entrée into sophisticated strategies and are increasingly popular portfolio management tools with financial advisors. Currently, there are 552 ETFs in registration, though experts acknowledge that some may never make it to market, while others may fold, as 50 did last year.
The product explosion is one reason why advisors need to look under the hood and understand how they're structured before selecting them for clients.
Those were underlying themes heard at last month's sold-out Inside ETFs Conference at the Boca Raton Resort & Club in Florida, which was co-produced by Financial Advisor magazine and ETFR.
The exchange-traded fund universe now comprises roughly 1,000 funds and more than $1.3 trillion in assets. Morningstar estimates they account for more than 30% of the trading volume on the New York Stock Exchange.
Many ETFs' underlying strategies are more complicated than simply tracking the S&P 500 index. Ken Volpert, principal and head of Vanguard's taxable bond group, said that when liquidity dried up the bond markets in 2008, there were large price gaps between the market price of the bond ETFs and the price of the underlying basket of bonds. That said, ETFs were one of the few places investors could engage in price discovery in late 2008.
Other conference speakers cautioned about the use of exchange-traded notes (ETNs), which often are promises by banks to give you the return of an index, less expenses. These relatively new instruments come with credit risk, counterparty risk and spread risk for shareholders.