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Independent Minded

Raymond James' CEO on Spitzer, hiring and the Mayo Clinic.

When he took over as CEO of Raymond James Financial Services in May 2002, Richard Averitt famously announced that he wanted the firm's reps to “double their production.” A year later, they haven't quite done that, but the independent arm of the Tampa-based brokerage firm remains focused on revenue growth, adding 300 advisors in a year when most firms were downsizing.

Averitt spoke to Registered Rep. reporter Will Leitch about his year at the helm and about his expectations for the coming year.

RR: Since you took over, you have added a considerable number of reps. Is there a certain type of broker you're looking for?

Averitt: We believe that when an advisor wants to move firms, we want to be there so that he or she recognizes we're an option. An advisor, let's say a Merrill Lynch or A.G. Edwards, goes through four steps to get with us.

He first has to decide he wants to move. Second, that he wants to be independent. Third, that he wants to be independent with us, and fourth that he wants to do it now. We have no business trying to make people unhappy where they are, and we have no business rushing people. But No. 2 and No. 3 are where we're involved in trying to help an advisor decide whether he or she ought to be independent and whether they meet our criteria.

RR: Raymond James wasn't one of the firms named in the Spitzer settlement, but do you think it will affect the way you do business, or the way you're perceived?

Averitt: It affects our business in that it affects people's attitudes about our business, but it doesn't affect us, because we weren't guilty of anything. Mostly the way this news affects us is how it affects investors' attitudes about people in our business.

We don't trade much on research. It's unlikely that investors would find themselves in a situation where they had to question where our research opinion came from, because more often than not, we turn to third-party private asset management or mutual funds, products that have professional managers who would be completely away from our research. So the investing research scandal doesn't have a significant impact on what we do.

RR: With everything that's going on, the numbers show that more and more brokers desire to go independent. In a way, do these scandals work to your advantage?

Averitt: The independent side is definitely growing much faster than the wirehouse side. The numbers I've seen say about 30 percent growth in independents over the last few years as opposed to single digits for the wirehouses. So we have the wind at our back a little bit. Still, though, the category “independent” is too broad for my liking, because it includes people who draw a lot of negative attention.

We're independent, but we have proprietary research, and alternative investment products for wealthy clients under our own screening and due diligence process, as well as a fully staffed options department. We have a full-service firm in direct support of the independent marketplace, which makes us unique in a way that I think is important.

RR: What's on tap in the near term?

Averitt: We've put together a sales management team, which is something we've never done on the independent contractor side, to deliberately and aggressively create the capability to go to our advisors with advice and consultation.

It's time now for us to take that to the next step. We have to carry that message to the investing public. The Mayo Clinic doesn't have the most beds. But that's where you go when you have a life-threatening, critical condition, and you want the best diagnosis and the best treatment. That's us. That's the firm this is going to be. I can't make it there in the time that I have at the helm, but I'll make sure that's in the vision of everybody who works here.

We are setting ourselves up for some remarkably good years, but, let's be honest, it could be a number of years away. I don't know what your view of the world is, but mine is that we're a long ways from being out of this. We have some grueling years ahead.

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