Raymond James Financial Inc. isn't everything to everyone -- but it's pretty darn close. The firm has a stable of about 1,500 financial advisors, a traditional bank and units for investment banking and asset management. It also supports almost 3,850 independent advisors.
In short, it has a lot to offer both clients and would-be employees.
For this interview, Raymond James gathered its hiring braintrust -- Scott Curtis, senior vice president of the private client group, Pamela Ward, human resources director and Melissa Keiser, manager of talent management -- to discuss the recent exodus of FAs from the wirehouses, how the company is improving retention rates and why its shareholders are on board every step of the way.
Kyle Stock: Can you take me through any hiring or downsizing since the crisis?
Scott Curtis: What was perhaps somewhat unusual was for the past few years with the mergers and acquisitions that created an opportunity for us and for a number of our competitors. We were able to pick up a significant number of high-quality financial advisors in Raymond James offices throughout the country.
At the same time, the business was in a more difficult position, so we actually cut back a little. Whereas in a normal year we would hire about 60 relatively inexperienced financial advisors. In the last two years we've cut that down to roughly half of that. Our intention now is to push that number back up.
On the more experienced side, we brought in roughly 800 financial advisors from other firms; roughly 300 of those were on the employee side.
The recruiting that we did last year was a complete aberration. Our numbers this year will be less than half what we did last year.
Pamela Ward: Our general hiring has been pretty consistent over time. We feel that we are performing well this year and we feel that is partially the result of all that hiring.
KS: Has the labor market tightened up?
SC: Somewhat. The markets are better; the firms themselves are more stable. There are big retention packages now for advisors with trailing production.
KS: Has the company changed its signing or retention incentives?
SC: Not really -- nothing outside of what we would call the norm. There's a lot more that we do culturally that helps keep people here.
KS: What kinds of things?
SC: Some of it's pretty simple, when an FA calls or sends an e-mail, they hear back from a person right away.
KS: How do you find your experienced FAs?
SC: It really starts with the branch managers in the local marketplace. Part of their job is not only to be responsible for the day-to-day, but they're also responsible for growing their branch. That's frankly where a lot of the leads come from.
KS: Do you pay referral bonuses?
SC: Yes. We also receive leads from third-party recruiters who we've contracted with, but that's a small percentage [of the hires].
PW: JD Powers recently did a survey in which advisors on a whole were asked to respond. Raymond James fell into the top group of firms that they would join at any point in time. The things we have done to put our advisors first really has translated into brand awareness that we've been able to capitalize on.
SC: We've recorded 90 straight quarters of profit, so there is also a very compelling record of success.
KS: Are you finding good advisors in any odd places?
SC: We've had some who were running their own broker-dealer and elected not to continue for a number of reasons -- some of them tech-related, some of them compliance-related. There's an understanding if you join Raymond James, if you wanted to move from an independent role to an employee role or vice versa, you could do that and not have to change brands.
KS: You consider that a recruiting strength?
PW: We do. Not a large number of folks will afford themselves of that opportunity, but just having that option holds some value.
KS: Do you have any particular approach on that? For instance, do you try to funnel some FAs to the employee side?
SC: I would tell you that it's primarily up to the advisor, but we don't have employee-staffed branches everywhere. Consistent with our fiscally conservative approach, opening new branches is an expensive proposition, so we're careful each year about where we open (employee-run) branches. We believe it makes more sense to open branches in our existing footprint or adjacent to it.
KS: Is the big, crisis-related hiring opportunity over?
SC: Not at all. We had a $2.5 million team here yesterday and we'll have a $2 million team here today.
KS: A lot of insurance companies and traditional banks are building FA teams, is there any concern that you might not have the pipeline you once had?
SC: Not really. Unless there's another event, like an acquisition of another firm that triggers FAs to really rethink their affiliation, we don't foresee or expect wholesale migration out of any firm.
KS: But it stands to reason that the labor market might get a little tighter.
SC: I don't want to sound dismissive, because we're always sensitive to competition, but the proposition that is Raymond James now -- we think that it would be pretty hard for a newcomer to replicate in short order. We like how we're positioned today, but believe me we're not complacent.
KS: Let's zoom out to some of your other lines of business. Has there been any major growth in capital markets or investment banking?
Melissa Keiser: To kind of carry the theme with opportunistic hiring, that is something that (the investment bank unit) did a lot of last year. We hired a class of 18 research analysts last year for the training programs.
KS: Where are they coming from?
MK: The major university programs in Texas, New York, Chicago, etc. They actually go through a three-year training program, complete with bringing in professors, and they partner them with senior investment bankers, so they make sure they get real experience and exposure.
They have a staff of 100 investment bankers and they're looking to continue growing where it makes sense. We manage for bear markets with our staffing approach. When we do have a down market that we've had, we're not having to make the drastic cuts that you've seen other places make.
PW: We figured that you would ask about layoffs as well. We've had a very small and targeted strategy resulting in a very small number of reduction in force. We slowed our hiring rates, last year. But in 2010 to date we've hired well over 600 people.
KS: Has the company changed its search strategies since the crisis?
SC: I would tell you strategically, what's changed most is [the] build-out of the recruiting platform. We have 20 or so recruiters spread out around the country focused on specific geographies for our individual-contractor model. If you turned the clock back four years ago, we didn't have that.
PW: That's allowed us to have less reliance on third-party channels. We do, strategically, continue to use them, mostly with a boutique background as we go for a specific skill-set.
KS: Are there any parts of the country where you've been particularly aggressive lately?
SC: Nothing that I would pinpoint as unique. We're having success in all different parts of the country. You name it, I can think of activity in all of those places.
KS: You mentioned retention earlier, how has turnover been?
PW: We've been north of 95% in annual retention for our experienced advisors; that includes the unfortunate situations of when people die.
KS: How about your greenhorns?
SC: It's a higher percentage than any of us would like. Those who join us, by the time they get to their fifth year, it's somewhere around 25% to 30% who are still with us, which I think is in line with the rest of the industry.
KS: Anything working particularly well in terms of improving that number?
SC: The key to the newer people is getting them up to speed as quickly as possible and getting them competent as soon as possible. Even before that, it's a question of how do we identify the right people? Selection is the hardest thing of all.
PW: We have had some success with pre-selection testing to really identify those people who have not just the background, but also the aptitude for that type of job. We're continuing to evolve that though.
SC: Two years ago we started what we call the residency program where we hire prospective FAs into a program where they sign up for two years of pretty intensive training. We actually have these people here on staff in our financial planning department, but they rotate around to other departments. As they get closer to the end of that two years, they spend more time in our branches interviewing and being interviewed by particular teams. We've expanded that program and now we have roughly a dozen people in it. The challenge we now face, is how do we take that program and scale it up? How do we develop a little bit of a hybrid model between that and other recruiting of relatively inexperienced hires.
KS: Can you speak to culture. What makes you different from Edward Jones or the wirehouses?
SC: There is a real balance here. I'm not going to put the focus on the other organizations, but in this organization the focus is truly on the long-term -- putting clients and financial advisors first. The belief is that if we do right by them and stay fiscally conservative, the financial results will take care of themselves. We don't cut corners because in the near term it will benefit the income statement. That's easier to do when your chairman is the largest shareholder. When a person like that is making the calls, no one can make the argument that what we're doing isn't in the best interest of shareholders.
When you add up the current employees and former employees, the stock ownership is around 40%.
Write to Kyle Stock