Commentary May 19, 2022 at 07:44 AM Share & Print
What You Need to Know
- Three firms have been testing the program since 2021, Private Client Group President Scott Curtis tells.
- The corporate RIA structure could appeal to advisors who want to ditch their FINRA registration but don’t want to set up an RIA of their own.
- Raymond James handles cybersecurity and compliance chores for advisors who join the corporate RIA.
The new affiliation option for independent financial advisors that Raymond James announced last week was under consideration for a while before its launch, especially after the firm saw a similar option work for rivals including Commonwealth, Scott Curtis, president of the Private Client Group at Raymond James, told on Tuesday at its Elevate national conference in Nashville, Tennessee.
The company’s new corporate registered investment advisor model for investment advisor representatives, or IARs, who run fee-only practices was launched with three offices in 2021, but “we wanted to make sure, if there were any bugs, that we got the bugs worked out before we announced it more broadly,” he said during a media briefing.
Competitors had already started offering an option like this; Curtis pointed to Commonwealth as an example of a firm that’s had “great success with it.”
This was “something we talked about for a while” before launching it. There were a small number of advisors who had already expressed interest in it and they “raised their hand” and basically said, “if you need a pilot or you need a test case, we’re happy to do it,” he recalled.
“They’ve been great partners,” he said. “They’ve been appropriately patient and letting us know the tweaks that we need to make before we announced it more broadly.”
No additional offices have been added since last week’s announcement, Curtis said, as it was not communicated to the firm’s advisors before the launch.
Raymond James recruiters hadn’t talked to prospective advisors about the new option yet either, he said, adding: “That’s something we’re looking forward to as well, as now the recruiters have another potential affiliation option to talk about” to attract new advisors to the firm.
The new program also presents another option for “advisors who are interested in becoming fee only, but perhaps not taking on the responsibility of managing their own RIA” and dealing with compliance policies and procedures, hiring a chief compliance officer and managing cybersecurity, Curtis explained, noting that “we do all of those things on their behalf.”
So if you want to market yourself as a fee-only advisor but continue to “have access to all the capabilities and resources that we have but roll up under the corporate RIA, that’s what the option is,” he said.
The three initial offices that opted to go this route have provided “great, great feedback” so far that it’s “working for them … so our expectation is that for others who are out there who may want to drop their FINRA registration, but not go through that process of establishing an RIA, this is a great option for them,” Curtis said.
Raymond James has “many more offices that are independent RIAs that manage an independent RIA” who may be interested in this new option so there’s “not a real incremental expense at this point” to offering it, he added.