Richard Averitt, the new president and CEO of Raymond James, says he wants the firm’s financial advisors to concentrate on "doubling their gross production to $500,000."
Averitt, speaking to Registered Rep. at the Raymond James Financial Services Conference in Anaheim, Calif., this week, was introduced to the firm’s financial advisors as Tony Greene’s successor. Greene announced his retirement on May 14, after 27 years at the helm of Raymond James, which has approximately 3,600 registered reps nationwide.
When Averitt was asked how he plans to get his brokers to double their production, he said, "By providing more products and services, better products and services, mentoring, improved communication and with conferences like this."
Averitt, a former Merrill Lynch and Raymond James broker, says that he will not use the method of upfront bonuses to recruiting high-net-worth producing brokers from the wirehouses.
"I think that’s a slippery slope," he says. "I think it’s a mistake. Firms that do it are simply buying production and treating people cheaply. When you move from an employee situation at a wirehouse to an independent contract firm like us, you’re taking on additional business risk. You now have to do two jobs: being a good advisor and sales manager. You have to do the job of managing a business well. It doesn’t serve us well to induce people to take more risk."
In light of the industry’s current chaotic state that has left investors questioning the honesty and integrity of Merrill Lynch and other large brokerages, Averitt was asked if he anticipates a slew of wirehouse brokers defecting and going independent, joining such firms as Raymond James and LPL.
"That’s hard to say, but I do feel we found the model for our industry and perfected it. More and more, that will be recognized as times goes on. We’re a nice alternative [from wirehouses]. Our financial advisors don’t sit in their offices holding the sales list of the day. We don’t require them to sell our research-based equities. We don’t believe in telling our advisors ‘We know what’s best for your clients.’"
Yet, Averitt did admit that the wirehouses have advantages, particularly the training ground that independent firms do not offer. "We’ll not be going down that road," he says.
Like most CEOs of financial firms, Averitt wants RJFS to continue to be aggressive in its move toward becoming more fee-based.
"I want to see our fee business grow," he says. "I believe it’s a suitable and appropriate place for both advisors and clients to be. Commission salesmen are not bad people. You can certainly be on commission with integrity. But many clients are dealing with Enron-type situations, and they’re very concern about conflict. The fee side takes that away. Reps only get paid more if you make more. That’s the way it should be."
RJFS advisors are currently 40 percent fee based. Averitt wants that figure to be at 50 percent. In five years, he expects it to be at 60 percent.
There’s one other thing Averitt wants to see in the industry: more women advisors. "This industry is ideally suited for women, who are outstanding consultants and counselors," he says.