Always Low Prices at RJ

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May 5, 2006 7:32 am


http://www.raymondjames.com/pr/060503.htm


Our annuities cost less than yours, buy from us?


So much for prospectus uniformity to the public. Remember, this isn't proprietary so when your clients (or a lawyer) ask you why your Hartford annuity costs more than another firms you can call RJ and thank them.


Revolutionary? Think about where this is going.









May 5, 2006 8:27 am

No more L share VA's?

May 5, 2006 10:33 am

I don't know what they will call it, but no the target was to lower commissions across the board so the L share and everything other than "C" are impacted. They'll get there soon.


There are many levels to it. You can research some of earlier comments with the search function, I wrote quite explicitly about the topic and caught plenty of flak from some of the corporate pretend brokers (I would suspect payroll staff and managers) who troll these sites. I think it's bad for RJ and worse for the industry if it flies.


May 5, 2006 11:34 am

Koolaid; you can follow one of the nastier board exchanges in my life by starting here on the topic;


http://forums.registeredrep.com/forumposts.asp?TID=1470&amp ;KW=farmboy&PN=0&TPN=1


My quick sheet on corporate motivations on this move;


30% loss of insurance soft dollars in the future.


30% steering into more money and controlled equations like "fee models".


30% bone throw to regulatory pressure. The mutual enemy, free thinker advisers.


10% other corporate drivel. I'm not going to quantify the stupidity of the action which might prove to be larger than all I've listed. 100's of good advisers could be lost overtime, many will skip RJ as a future destination and the industry is one more step toward the Walmart culture many corporate types desire. The hypocrisy of picking and choosing where price marketing will begin and end is worth noting in the future for all. Why not adviser fees for less? or Why not ban all generic investment prospectus items since dealer know best? How RJFS will pass itself off as an "independent" dealer deserves review. This is pure wirehouse evil, the fact that Rj house all the models (including a wirehouse) might be worth consideration of others. Despite some product plus in being larger it might be better to be in true independent firm that didn't have the capital to be this stupid, greedy or controlling.  


It has nothing to do with public or adviser interests, it's just a self-serving excuse. 








May 5, 2006 11:35 am

Actually, if this were a communist country it would be a great move.  Those guys love price-fixing...

May 5, 2006 11:36 am

I hope some RJ reps chime in on this. I'm VERY interested to know the thoughts of current RJ fa's.

May 5, 2006 12:01 pm
FreedomLvr:

Actually, if this were a communist country it would be a great move.  Those guys love price-fixing...


The prospectus system is price fixing in itself by the way. The point I make is that the regulatory and dealer community work hand in hand to keep all the arcane features and oversight on steroids to enhance their roles and compensation while they wrap their arms around Suze Orman, John Boggle and Walmart price hyperbole now on this point? Trust me, if it makes headlines RJ will be used as joke or a useful idiot in the conversation by all the natural anti-adviser groups.  Why would I give one nickel to those people and how do you feel when they show up at your firm or industry (they are everywhere but much larger today). The larger firms are packed with MBAs who have never produced and condescend to the very culture that makes it's way into their paychecks. Anti-production is mainstream and the business is consolidating in part to the subside to this new class of clowns who "serve public interest" with ideas such as this. So it's keep the regulations and expand them greatly "yes" but keep talking down prices at every turn against "greedy brokers" which is how they portray this and other debates?  


If we want a free market solution it would start with eliminating the firms "regulatory function" all together and go to direct regulated individual producer model, in short a license independent of the dealers. The corruption is simply too thick with falling margins to keep paying for stupid firm layers and the dumb ideas they come up with to counter the trouble they themselves created.









May 5, 2006 1:17 pm

Annuities are about10-15% of my business so I'm not too concerned.  The M&E's will be close to being cut in half in some cases--I'll just use C shares instead of L as it is consistent with my plan.


Some of the big annuity producers are pissed and some will leave over it I'm sure.  I'd bet that over the next few years the major indy firms follow. 


RJ will make alot less money from this as well.  There are no payout cuts.  Just the client saves $$$...and the commission is lowered. 

May 5, 2006 2:48 pm

I don't like when firms take the lead on things like this, reminds me of the firm I'm trying to get away from.

May 5, 2006 2:52 pm

When you have multiple channels the only customer can be the client. If your only customer is the representative then its up to the professional to make the appropriate determination as to what is suitable and what isn't.


Tossthekoolaid and I are with the same firm, and it does feel eerily similar. The only difference is the mutiple channels are the owners (GP's)and the customer!


Notice who is first!

May 5, 2006 2:59 pm

I don't know the whole story on this and may be off the mark given that....but  I had a conversation with one of the wholesalers that I do some business with on the annuity side.  One comment that caught my attention was along the lines of when all is added up on the cost side, there really isn't a whole lot of savings difference for the client and he also went on to say that with a cap on the commission and where the pricing is on the product there is payout leaving the vendor and not being received by the advisor.  I thought that part was pretty wirehouse to me.


Again though, I fully understand this is by third party and I have no clue if it's true or not but Farmboy do you have an idea on that?

May 5, 2006 3:29 pm

There is a subplot on revenue sharing, regulators on that topic and the timing of this move. Since you're not going to get this other than hypothetical conversation (it isn't really spelled out for the public or advisers is it?) I'll give you my take;


Assumption #1; revenue sharing is under pressure (NASD). That changes the economics of the VA sale from the dealers view. The move to push all assets "in-house" where there are more hidden profit increases can be found for the dealer in question (margin lending, mutual fund scaling benefits and future sharing from that side) hence the drive to kill VA sales share. When it goes VA it really is outside of the RJ universe, it's a shadow balance and they get a kick back that is going away but they lose control.


It's a subplot as I said. There is something worse going on at RJFS in general that reflects ideas like this move. In business it's money and control. I find I'm much more tolerant of flat out money greed than people who profess to delegate business control while they contradict themselves with actions like this. So it isn't money it's control being exercised. As sheep get culled here the future is set for even more power and money grabbing in the future. There's plenty of apathy and while there are people who understand what's going on there is always a stupid, "yes class" of modern brokers ( I suspect in house managers posing as brokers in many cases) that are well scene here. Just look at that Nov 05' thread I started. Pure corporate loyalty emotions over topical facts, logic or debate, the industry really has declined in many ways for brokers, expect pay to decline. 







May 5, 2006 3:53 pm

"...there really isn't a whole lot of savings difference for the client and...there is payout leaving the vendor and not being received by the advisor."


If that's true, it sucks.  I hope LPL doesn't get any idea about following suit.  Sounds like more greed on RJ's part than any desire to do what is right for the client (advisors) and the clients' customers.

May 5, 2006 4:22 pm

Indy - I know for a fact that RJ contacted LPL as they were developing this plan to alter their annuity comp. to ask us to go along and our folks flat out said NO and went on their merry way.  It will be a sad day if they reverse themselves some day.


Farmboy, with some of the changes RJ seems to have made, I wouldn't be to surprised if they found themselves under somebody else's control (i.e. Wachovia) in the near future.  I remember that thread and one particular person countering you pretty heavily...I always suspected he was a insider at RJ the way he came to their defense on all things.  


May 5, 2006 4:39 pm

[quote=csmelnix]

Indy - I know for a fact that RJ contacted LPL as they were developing this plan to alter their annuity comp.


That's a sad statement on price collusion isn't it? Of course I think that's a hard thing to prove from an anti-trust point of view. I hope LPL cleans their clock on the subject.


My worry about LPL was the sales price (private equity deal last year)and the sort of implications that might hold for producers there (wicked over valuation that must be rationalized later from brokers hides). I really don't think RJ is for sale quickly, I don't know, I think there is a longer term uniformity process going on between divisions. That's were you take the worst qualities of all the divisions and make them standard policy for everyone. 


After a down period they seem to be blowing kisses on the wirehouse side, the whole "you own your book" pitch. Meanwhile they are sticking pins in the RJFS guys eyes. It's always good cop bad cop isn't it in this business?







May 5, 2006 4:46 pm

[quote=Indyone]

"...there really isn't a whole lot of savings difference for the client and...there is payout leaving the vendor and not being received by the advisor."


If that's true, it sucks. 


There is always an MGA overide at the very least. This is in front of "revenue sharing" incentives that are not long for this world. It's always been true. The pressure of late has been to disclose it. By eliminating the payment they save the embarrassment of the practice being well known going forward but it helped trigger this direction. Dealers are very scaled and these hidden perks are why the business gets concentrated overtime. Notice how the pain always gets distributed down the line in this process.


Naturally annuities have been a whipping boy also aside from this subplot.

May 5, 2006 4:53 pm

"My worry about LPL was the sales price (private equity deal last year)and the sort of implications that might hold for producers there ..."


That thought has crossed my mind from time to time.  The only defense I've some up with is that although majority ownership was sold, majority voting rights were retained...at least for the time being.  The LPL indies I've spoken with are taking a wait and see attitude and that's pretty much where I'm at.

May 5, 2006 4:56 pm

"There is always an MGA overide at the very least."


I'm aware of standard practice, but I'm starting to wonder if that "override" is growing substantially at RJ with this practice...


I don't do a large percentage of my business in VA's, but I'm not ready for an involuntary pay cut on the biz that I do...

May 5, 2006 5:40 pm
Indyone:

"There is always an MGA overide at the very least."


I'm aware of standard practice, but I'm starting to wonder if that "override" is growing substantially at RJ with this practice...


I don't do a large percentage of my business in VA's, but I'm not ready for an involuntary pay cut on the biz that I do...



We're just talking about the obvious items in a straight forward way. I think the bigger picture is kissing uniform pricing away (the prospectus system which is a subside to the industry) while keeping all the regulated garbage (the dealer system itself) at the same time. If we really wanted to save consumers money we should end broker captivity to dealers. Similar to the RIA model. If all prices float I should be allowed to disclose them to my customers and shop my clearing where I want. It shouldn't require the extortion system of being an employee of firms that clearly don't give a hoot about clients or brokers.


It's kind of amazing how muted these threads are on this topic. For people who claim knowledge about finance and economics the board seem pretty ignorant about the system they are players in. Uniform product pricing is what built those building in St. Pete by the way. If ML had tried this crap 15 years ago RJ would have nothing to pirate off to get where they are. As I asked, why just annuities? Why not everything? You might be talking about 35% of revenue vanishing with that standard, again for the "public good of lower costs"?


I've gotten some PMs that fairly uninformed as well (informed as well). It really does have to do with Walmart thinking. So unless you have a book to sell like Suze you better start saying something and hope RJ gets nailed on this move by market reactions. If the # 2 independent group lies down it's bad for everyone anywhere. Sure, it's complicated compared to the twaddle of a press release but if you're a highly compensated worker you should be able to absorb the facts and make a trade argument. This is really bad for brokers and consumers.


Thousands of services points are doomed if this becomes standard dealer MO, next they'll tell you how good that is for customers.











May 5, 2006 6:04 pm

I'm starting to wonder if you are ever free even if you ARE independent...