Jan 17 Raymond James Financial Inc said
Thursday it has overhauled its pay plan for financial advisers,
eliminating incentives for selling certain types of financial
The simplified plan, which takes full effect in October and
applies to the 2,200 advisers who work for the Raymond James &
Associates division, is more in line with the compensation
models of the nation's other large brokerage firms.
But unlike its competitors, St. Petersburg, Florida-based
Raymond James has not modified its pay plan, known in industry
parlance as the payout grid, as a way of "extracting
profitability at the expense of advisers," said Tash Elwyn,
president of Raymond James & Associates, the traditional
employee broker-dealer division of the company.
He said the plan is cost neutral to the company and wasn't
created with the intent of reducing adviser compensation.
The new plan doesn't apply to the over 3,200 advisers in
Raymond James' so-called independent channel, Raymond James
Financial Services. Those advisers receive higher payouts than
the employee-model advisers because they are contractors who run
their own businesses.
Raymond James & Associate's current pay plan is driven by
the amount of revenue advisers bring in and the types of
products they sell.
For instance, a top-revenue producing adviser at the firm -
someone who brings in $1 million or more in a year - currently
takes home half of the commission tied to mutual funds they sell
and 45 percent of the commission tied to stock trades.
And a lower-revenue producing adviser - someone who brings
in between $250,000 to $300,000 in annual commissions -
currently takes home 42 percent of the commission tied to mutual
fund sales and 39 percent of the commission tied to stock
Under the new plan, the type of product sold will no longer
be a factor. Instead, the payout percentage will be determined
solely by the amount of overall commissions the advisers earned
for the company in the previous year. The more fees they
produce, the higher the percentage of that money they get to
For instance, an adviser who brings in $1 million in annual
commissions will take home half that money, while someone who
brings in between $250,000 to $300,000 will take home 32
percent, based on the payout grid.
Advisers can get additional pay through the deferred
compensation plan, which hasn't been changed.
A decade or two ago, many firms were using the product-based
model about to be retired by Raymond James, but have since moved
toward the commission-based compensation grid, said Andy
Tasnady, founder the Port Washington, New York consulting firm
Tasnady & Associates LLC.
Raymond James has been a bit behind the times, perhaps
because it feared upsetting its advisers, Tasnady said, noting
that advisers often assume that a change in their pay model will
result in a pay cut.
But Tasnady, who advises brokerage firms on business and
sales strategies, said he thinks Raymond James' new plan is a
good blend of what the prior payout levels were.
A few other highlights in the new plan:
-The company left unchanged its no-account minimum policy, a
contrast to many of its competitors, which require advisers to
bring in a certain account size in order to earn a fee on it.
-Raymond James tripled the number of tiers in its grid,
making it easier for advisers who increase the amount of
commissions they bring in to edge up to higher payout
-Advisers will no longer get a pay reduction when they give
their clients a discount on asset management services and equity
and options commissions. Advisers often cut deals with clients
as a relationship-building tool.
When asked if it this new policy could lead discounting to
get out of control, Raymond James' Elwyn said the company trusts
its "advisers to price themselves competitively."