July 5, 2017
By Dan Jamieson, Financial Advisor
In response to the DOL fiduciary rule, Raymond James Financial Services will be changing its compensation plan so that all production is paid off of one grid.
The move comes at a time when many broker-dealers are wrestling with the issue of broker payouts in expectation that they will face more scrutiny in a post-DOL world. Some observers speculated that the switch to a single payout grid was designed to eliminate the perception of potential conflicts of interest.
Next year, the independent contractor unit of Raymond James Financial will switch to a single payout grid that starts at 81 percent for trailing 12-month branch production up to $500,000, topping out at 90 percent at the $10 million-plus level.
Depending on product mix and production, the changes could represent a cut in pay for some advisors. Currently, mutual fund commissions are paid out at 90 percent with a ticket charge of $26. Equities earn 85 percent with a ticket charge of $22 plus 1.5 cents per share, and insurance sales get 85 percent with a ticket charge of $49. Rep-managed fee accounts now earn an advisor a payout of 85 percent or higher.
As part of the changes next year, RJFS will switch to a flat $25 ticket charge on all products.
The firm will also be phasing out its Passport fee account, a rep-as-portfolio-manager program with ticket fees and a 100 percent payout. New money will go into the similar Ambassador account that has no ticket fees. Ambassador currently pays out at 85 percent to 90 percent.
Advisors will no longer be able to charge less on certain assets in fee accounts, such as bonds or a low-basis stock, according to RJFS branch managers who have seen the new plan.
While RJFS managers have been briefed on the changes, the firm has not yet made a formal announcement to all advisors.
Smaller branches could see a pay cut from the changes, said recruiter Jon Henschen, but “for the real big producer, this is not such a big deal.”
Nevertheless, it’s rare for independent firms to make such a “radical” change in their pay grids, he added.
A Raymond James spokesman declined to comment on the pay changes.