At a CEO panel at this year's Financial Services Institute conference in late January, Raymond James Financial Services (RJFS) CEO Dick Averitt related a story of how the independent contractor grew from a relatively small base 25 years ago to the largest part of the brokerage firm's business today. He then told attendees that Raymond James executives now wonder if the RIA business won't someday emerge as the firm's largest business unit.

Scott Curtis, who will succeed Averitt this spring, acknowledges the big St. Petersburg, Fla., broker-dealer is planting seeds in every retail channel and hedging its bets. In effect, the firm is letting the evolution of the retail advisory business dictate its growth over the next decade. 

Because Raymond James offers advisors virtually every type of model from the employee format at Raymond James & Associates (RJA) to the independent contractor and RIA business structures, trends within the firm provide a window on the direction of the entire industry. "Over the last couple of years, the number of advisors affiliating with RJFS and RJA has been pretty close," Curtis says.

The employee-based model held the special appeal of security during the financial crisis as many brokers fleeing wirehouses frequently favored stability over starting their own business. The acquisition of Morgan Keegan should add about 1,000 reps to its RJA employee division.

Curtis continues to see evidence of continued dissatisfaction among brokers at the largest firms as well as brokers affiliated with mid-sized firms like Wachovia, Advest and Smith Barney that have been acquired by behemoths.

Meanwhile, Raymond James must manage technology and keep up with changing regulations. Many of its monitoring and approval systems are being modified to evolve from a suitability standard to a fiduciary world, Curtis says.

In a sign that Raymond James is expanding its commitment to its RIA platform, the firm named Bill Van Law president of its Investment Advisor Division (IAD), the business that Averitt said offered the fastest growth going forward. "You can see some pretty significant upside when you look at trends," Van Law says. "The wirehouse world is shrinking and the independent contractor business is flat, although firms like us and LPL continue to gain share. The big growth is in the RIA and dually registered businesses."

Van Law declares he plans to spend the next two or three months closely examining the RIA business, interviewing newly formed firms that have affiliated with Raymond James and other firms. In addition to commissioning a study of these advisors, Van Law plans to go out in the field and conduct his own interviews.

Interest in the RIA model is increasing among higher-end wirehouse advisor. Van Law believes the chance to build equity is appealing, particularly to brokers who saw their incentive compensation equity evaporate during the financial crisis.

Raymond James custodies about $7 billion in assets for around 100 firms, but Van Law reports the average firm has between $60 million and $70 million in total assets, giving the IAD unit a chance to increase share among existing clients.