Over the past 12 months, much has happened in the finance subcategory of custody and clearing.
Charles Schwab agreed to acquire TD Ameritrade, regulators gave their stamp of approval and, although the deal hasn’t closed, Schwab is already dissecting the seller. Interactive Brokers and Pershing have rethought their pricing models. Altruist — a new digital, commission-free custodian that says it can save RIAs up to 90% on technology and other costs — also launched.
But missing from those stories and others was mention of a growing custodian. It might have been slighted, but it’s not hurt. It recently streamlined its custody business and believes it’s as good a place as any for RIAs.
Raymond James Financial (ticker: RJF) announced Tuesday it is combining two divisions in its Private Client Group: the Investment Advisors and Custody & Clearing divisions. They will form the new RIA & Custody Services, or RCS, division and bring together what were separate custody and supporting services segmented for broker-dealers and RIAs.
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The company considered combining the two divisions for years and benefits of doing so could no longer be avoided. As a single entity it will save money, improve efficiency and better manage expected growth.
“Traditionally, we have looked at advisors or groups of advisors that were leaving the wirehouses or regional broker-dealers as our ideal prospects. But the disruption in the RIA custody business has allowed us to have a lot of conversations with existing RIAs that are at our competitors. So, there is an opportunity for our pipeline to look a little more balanced,” Greg Bruce, senior vice president and national director of the Investment Advisors division, told RIA Intel.
Bruce will be a senior vice president and the head of the new RIA & Custody Services division.
The Private Client Group includes advisors employed by Raymond James & Associates (led by a philanthropic, pizza-tossing executive) and Alex. Brown, another private wealth manager; advisors contracted through Raymond James Financial; and independent broker-dealers and RIAs through what will be RCS. In July, the Private Client Group reported a total of $833.1 billion under administration, $443 billion in fee-based accounts, and a record 8,155 financial advisors in its third quarter.
The company does not publicly disclose the brokerage assets or those under management within the RCS division. But total assets for one of its halves, the Investment Advisors division that catered to RIAs, are up 37% in the past 18 months, Bruce told RIA Intel.
The RCS division is set on bringing “white-glove service” to custody clients and being an “extension of their back office,” Bruce said. It is also continuing to invest in its practice management resources for advisors.
For those reasons and others, Bruce expects more RIAs will choose it in the future. Unlike at other financial services firms, Raymond James isn’t competing for the clients of its advisors. “There’s no retail brokerage offering that allows for a do-it-yourself type of model,” Bruce said.
Raymond James also has an insurance platform, in-house marketing support for advisors, and an investment bank advisors can turn to.
“I think that we have very interesting story to tell, for the reasons that I just alluded to.”
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.
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