October 23, 2014
Wirehouse advisors looking to break away don’t always get to chat face-to-face with both the chairman and the COO of the new firm they’re thinking of joining. Yet such a conversation was what swayed Thomas Dedrick to sign on with Raymond James & Associates from Merrill Lynch last February.
“When I walked out of that meeting, I knew this was the place I wanted to be,” says the Tuscaloosa, Ala., advisor, whose two-person team made the move with him. “It reminded me a lot of how Merrill was when I started with them back in 1982.”
Dedrick’s path exemplifies how Raymond James woos wirehouse breakaways and makes them comfy once they set up shop. Executives at the company’s employee channel say the firm’s massive resources and personal feel — two attributes that don’t always go together elsewhere — have long been selling points.
The firm would not say exactly how many wirehouse FAs have signed on lately. And external recruiters say RayJay still isn’t seen as an obvious choice for advisors with ultra-wealthy clients accustomed to robust concierge services.
Still, from a technology and product standpoint, Dedrick finds Raymond James more client-centric than Merrill Lynch was and more accommodating of his financial decisions. As for compliance, Raymond James can be more stringent, he says. He needs airtight documentation before opening new accounts, whereas Merrill would let him open temporary accounts despite gaps on forms. When he needs to speak with a live human for client-service support, Raymond James shines. The wirehouse was cutting support staffers when Dedrick was looking to leave.
In the eight months he’s been with Raymond James, Dedrick has attended at least three training sessions where he could network with other breakaway advisors. And he’ll soon be taking advantage of the firm’s “By Invitation Only” program, which lets new advisors bring high-net-worth clients or prospects to company headquarters in St. Petersburg, Fla., to meet key personnel and gain confidence in their advisor’s decision to switch firms. Dedrick expects to transition 80% of his book from Merrill, where his team managed $161 million.
“Recruiting generally at RJ&A has been robust, and particularly from wirehouse firms,” says Tash Elwyn, president of the Raymond James & Associates employee channel. “In fact, the top four sources for advisors joining RJ&A [over the past year] were all wirehouse firms.” Overall, RJ&A’s recruiting results this year are up over 50% from 2013 — in terms of total annual production for new advisors, he says — with wirehouses accounting for about 60% of all affiliated advisors who joined. Raymond James’s independent broker-dealer channel recruits in similar proportions.
Headhunters agree Raymond James excels at recruiting middle-tier breakaways — heavyweights, not so much. The firm might not be targeting the biggest producers, suggests Jon Henschen of Henschen & Associates. The Marine on St. Croix, Minn., recruiter argues that if the company sought clients with over $50 million, it would enhance services like managing collectibles portfolios or leasing private jets. For other ultra-wealthy clients, it may come down to brand perception, says Michael Terrana of Chicago recruiting firm Terrana Group. The über-rich think of Morgan Stanley and UBS as elite institutions, but Terrana suspects that some might not feel that way about Raymond James.
Wirehouse advisors who want to straddle the fence between captivity and freedom might be happy at Raymond James, according to LPL Financial branch manager Richard Dragotta, but breakaways longing to shed all product affiliations could find that tricky. Dragotta, based in Paramus, N.J., says that was a big factor in his choice when he left UBS nearly 13 years ago. He had been at Merrill earlier. Now his INC Advisors network of roughly 85 FAs oversees almost $2 billion.
“If you’re an ethical advisor and this is truly your own business, you will do what’s in the best interest of the client regardless of product,” he says.