Regulators may have something to say about maintaining the protections advisors and clients enjoy from the recruitment protocol, according to Raymond James Financial chief executive Paul Reilly.
“We’ve raised [the protocol issue and] I know some of the regulators are looking at it,” Reilly said.
“I know at one point regulators were looking at it when the industry came up with the protocol” in 2004, Reilly told analysts on an earnings call Thursday. The recruiting pact was started by several big firms due to “regulatory concerns, [that] clients have the right to choose their advisors and know where their advisors are going [so] there may be some regulatory intervention on this” as firms pull out.
He dismissed concerns that Raymond James’ recruiting could be impacted by firms leaving the protocol.
Transitioning some recruits might be slower, “but so far, so good. I don’t see any drastic change,” Reilly said. “We recruit from non-protocol firms today, and it doesn’t seem to get in the way.”
In contrast to the wirehouses, the firm’s employee channel has a book-ownership policy that allows departing reps to take their clients, Reilly added, which the firm believes helps attract advisors.
“People have always said our book-ownership policy was going to hurt our retention, and our retention has been world class,” he said. “When you lock people in, it gives you an excuse not to perform well [so] it hasn’t hurt us so far.”
Raymond James Financial Services, the independent channel, ended the year with 4,499 advisors, up from 4,143 a year ago. The higher figure this quarter was due in part to 126 reps who were reclassified as full-time advisors. The unit landed about 70 advisors in the latest quarter, according to Jeff Julien, chief financial officer.
The employee channel, Raymond James Associates, ended with 3,038 advisors, flat from a year ago. RJFS and RJA both had “decent” recruiting years, Julien said, but the employee channel saw a larger-than-normal number of retirements and some people switching divisions.
The total number of financial advisors at Raymond James reached a record 7,537.