RayJay Details Recruiting Offer Hikes, Drops Some Clawback Provisions
Raymond James Financial on Wednesday outlined the contours of the enhanced recruiting bonuses it will pay in its employee channel to better compete with firms that have been offering more attractive deals to lure experienced advisors.
Elwyn did not give specifics of the new deal, but the “all-in” recruiting package for a multi-million dollar broker can now hit 2.2 to 2.4 times the fees and commissions the broker produced in the previous 12 months, up from less than double earlier, according to three headhunters and an internal source.
The Florida-based firm also has eliminated two economic “pain points” that Elwyn said had made its advisor-centric allure a little harder to sell for recruiters—a production quota affecting forgiveness of upfront loans and a requirement that estates of deceased advisors pay off balances that may remain on the loans, according to people who heard the call.
Raymond James had required newly hired brokers to achieve 50% of their annualized production to have their loan repayment eliminated each quarter.
The recruiting symposium followed Raymond James Chief Executive Paul Reilly’s concession last month that the employee channel needed to improve its recruiting deal because some larger firms and regional competitors had upped their deals.
“We’re a hard choice for advisors when someone is willing to pay them 50% more,” Reilly had said on an earnings call.
The employee channel, which has about 3,400 advisors, is still far from offering the highest-paying deal to recruits but believes its relatively benign attitude to the way brokers run their practices is a competitive advantage, according to firm executives and recruiters. “We’re conservative but competitive in terms of transition assistance,” Elwyn reportedly said on the call.
One recruiter and the internal source said the firm has raised its upfront bonus to top producing advisors to as much as 150% to 160% of trailing-12 production from a previous high of around 135%. Its back-end bonuses have jumped from a maximum of 40% to as much as 60%, the recruiter said, with supplements for hitting certain growth and stay-in-place goals over the approximate nine-year term of the forgivable loan.
Particulars of individual bonuses depend on client mix, business mix, length of service and other selected criteria, the sources said. Prospects who began negotiating prior to the new changes and accepted lower offers will generally be eligible for the enhanced deals, according to the Raymond James manager.
The new deals still trail offers of 300%-of-T12 signing bonuses that aggressive firms have been making on an “all-in” basis. Wells Fargo Advisors is giving upfront forgivable loans as high as 180% of T-12 to top producers as it seeks to replenish its scandal-depleted ranks, as have Ameriprise Financial, boutiques such as First Republic and, occasionally, Morgan Stanley, according to headhunters.
A Raymond James spokesperson did not return a request for comment on terms of the new offers or on Elwyn’s remarks.
Raymond James’ Alex. Brown division that generally works with sophisticated high-net-worth clients also has increased its recruiting, recruiters said, though Alex. Brown President Haig Ariyan did not discuss recruiting deals during the symposium.
Raymond James companywide ended 2020 with 8,233 financial advisors—59% of whom are on contracts in its independent channel and the remaining 3,387 who are employees. Total advisor headcount grew by a net 173 in calendar year 2020, but the employee channel lost a net 17 advisors since September 30 while the independent channel gained 11.
“We dug down and [realized] we had a lot of room to move up,” Reilly said on January’s earnings call.
—Jed Horowitz contributed to this story.