Raymond James has introduced a new Corporate Registered Investment Advisor model, aimed at fee-only advisors who don’t want to run their own RIA yet don't need the association with a broker/dealer. Under the new model, advisors would affiliate with Raymond James’ existing corporate RIA, Raymond James Financial Services Advisors, and drop their Series 7 license with the Financial Industry Regulatory Authority, if they still have it. This would allow advisors to operate as a fee-only fiduciary, with no commission business.
“There’s an attraction now to be able to say, ‘I’m a fiduciary,’ and one way that they can do that is just to be a full-on fiduciary and only do fee-based business,” said Jodi Perry, president of Raymond James’ independent contractors division.
Perry said the firm has had three internal advisor practices move to this model so far—dually registered teams that decided to drop their FINRA licenses.
Raymond James already has an offering for fee-only advisors with its RIA & Custody Services Division, led by Greg Bruce. But that custodial offering targets folks with their own RIAs.
With this new affiliation model, fee-only advisors can offload the burdens involved in running the business and come under Raymond James' Form ADV. Raymond James will custody the assets, Perry said.
“It’s a solution for fee-based advisors who don’t want to manage their own registered entity. It’s a way for them to accomplish the same thing, without taking on that extra responsibility and liability it takes to actually start and manage that entity,” she said.
“It lessens their burdens greatly by just tucking under theirs,” said Jonathan Henschen, founder of the recruiting firm Henschen & Associates in Marine on St Croix, Minn. “It’s not only a lot more work, but a lot more liability on them to have their own RIA.”
Making room for the fee-only advisor under the corporate RIA of a traditional broker/dealer is a path many IBDs have taken. Commonwealth, the largest privately held IBD, unveiled in 2018 a fee-only platform for advisors free of their Series 7 but who want to still operate with the support of the firm. LPL also supports fee-only advisors within the walls of the largest independent broker/dealer. Partially, it's a move to keep assets on the platform as advisors themselves continue toward fee-based businesses and away from commissions.
“The other thing we’re seeing is that there are investment advisor representatives under RIAs out there, who are interested in moving and they have interest in Raymond James, say, but they don’t want to go back and again get re-licensed," Perry said.
Perry said there’s another set of fee-only advisors—those coming up on retirement—who are interested in this model because of Raymond James’ succession planning support. She points to the firm’s Practice Exchange, a cloud-based tool powered by FindBob, that facilitates introductions between prospective buyers and sellers.
“We’re providing all the tools and services and the wealth management succession planning—everything that Raymond James has to offer—to these advisors. It gives them a very robust platform in which to do their business.”