Unlike at other firms, cross-selling bank offerings like loans to wealth management clients isn’t mandatory at Raymond James, says CEO Paul Shoukry.
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Speaking Monday at Raymond James’ annual institutional investor conference, held this year in Orlando, Florida, Shoukry said Raymond James advisors often collaborate with the firm’s asset management, investment bank and other business divisions. But they are not pressured to sell products or services from those other units to meet performance quotas or boost their compensation.
“We have zero cross-selling requirements,” Shoukry said. “There’s not one financial advisor that will tell you — out of our 9,000 or so advisors — that they have a cross-selling requirement to hit a deferred comp program goal.”
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“That sounds like common sense,” he added. “But that’s actually pretty unique in the wealth management space.”
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Widespread pressure to cross-sell
Particularly for wealth management businesses attached to large banks, cross-selling is seen as a way to bring in additional revenue streams while also giving clients fewer reasons to go to other institutions for financial services. Executives at firms like Merrill and Wells Fargo frequently note in quarterly earnings calls their advisors’ successes in arranging loans, checking accounts and similar offerings for customers.
Shoukry said advisors at firms that emphasize cross-selling often can’t hit a desired pay level unless they “sell a certain number of products or refer a certain number of products.”
“And we’ve seen that certainly cause a lot of explicit tangible issues in the industry and a lot of intangible issues in the industry,” he said.
Louis Diamond, the CEO of the recruiting firm Diamond Consultants, told Financial Planning that most advisors are happy to have banking affiliation that allows them to offer clients security-backed loans and checking accounts.
Still, one of the most common complaints he hears from advisors he helps move from one firm to another is about the constant nudges they were receiving at their previous employer to sell non-wealth management products. A lack of such pressure adds greatly to the appeal of firms like Raymond James, Stifel and RBC Wealth Management, which are all without strong cross-selling demands, Diamond said.
“A critical part of that is: ‘We have all the capabilities. But it’s your business. And we are not going to demand you do anything you don’t want to do,'” Diamond said.
Phil Waxelbaum, the founder of the recruiting firm Masada Consulting, questioned Shoukry’s distinction between “cross-selling” and “collaboration.” Advisors and firms, he said in an interview, too often get hit with accusations of “cross-selling” when they’re doing little more than making clients aware of the wide variety of offerings that can be found under the same roof. The referrals that advisors are sometimes rewarded for making are in no way a guarantee a customer will take on an additional service or product.
“That’s not cross-selling,” he said. “That’s exposing the client to the resource capabilities that Raymond James has, or Wells Fargo has, or Morgan Stanley has — and that may be in the best interest of the client.”
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Raymond James’ ‘financial advisor bill of rights’
Shoukry also drew attention to what Raymond James calls its “financial advisor bill of rights.” This is an agreement allowing departing advisors to take their client list with them to another firm with no risk of legal action — provided they abide by various industry laws and standards.
“If you leave in good standing, we’ll help you move to your new firm,” Shoukry said. “No other firm says that across all of their affiliation options.”
Diamond said Raymond James — which has nearly 9,000 advisors — does distinguish itself by putting up relatively few barriers to advisors who seek to leave for industry rivals. That’s particularly true for its direct-employee division, Raymond James & Associates.
Especially with employee advisors, firms are likely to view client information as proprietary rather than as fair game for competitors. Diamond said the Raymond James advisor bill of rights is one of the biggest reasons why the firm has “been such a successful recruiting force over the past 10 to 15 years.”
Waxelbaum said Raymond James may be less litigious than other firms toward departed advisors. But it will go to court when it feels a need to protect its rights.
“And there’s a lack of clarity on that,” he said. “Maybe I’m nitpicking, but there certainly are circumstances where Raymond James has been adversarial to a departed advisor.”
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How letting advisors go without a fight gives them reason to stay
At many firms, it’s advisors who are working as independent contractors, rather than as direct employees, who encounter relatively few barriers to moving a book of business. But Shoukry noted that even many so-called independent firms have taken to filing lawsuits against departed advisory teams.
Speaking last month at another industry conference, Shoukry had said that Raymond James is seeking to recruit only advisors who want to join it for the long term. That goal, he said, presents a strong contrast to wealth managers who bring in advisory teams by offering them large transition checks, only to see them depart for another big payout in five to 10 years.
On Monday, he said that — perhaps paradoxically — advisors’ knowledge that they could depart Raymond James easily if they chose to is one of the reasons many decide to remain.
“They know they’re treated like free agents,” he said. “They want to stay at Raymond James because we have a unique value, unique culture and a robust platform that we’re investing in. So why would they want to go anywhere else?”
