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Raymond James Boss Gets 12% Pay Bump Approved

By Alex Padalka March 4, 2019

At his company’s shareholders' meeting this week, Raymond James CEO Paul Reilly had his 12% pay increase approved, bragged that his firm can tout a roughly 2% lower advisor attrition rate than its rivals, and told the crowd that consultants recently helped him and other RJ execs imagine a world in which Amazon competed for wealth-planning business.

The tally at the end of the meeting showed that 96.2% of the votes approved an executive compensation package, which FA-IQ previously described, and included the double-digit pay award increase for Reilly.

According to a proxy statement filed by the company with the SEC, Reilly’s annual direct compensation award rose to $12.45 million for the fiscal year 2018, which ended on September 30, from $11.1 million the previous fiscal year.

At the meeting, Reilly highlighted the growth in the company’s advisor roster, which FA-IQ previously reported grew by 3.6% in 2018. Reilly stressed that growth rate reflects RJ’s retention strengths, as well as its recruiting successes.

“We keep the ones we have,” Reilly told the shareholder meeting audience about FAs. He said RJ’s attrition rate has been for years about 1% compared with 3% or 4% industrywide.

The firm, however, has also attracted new FAs — who in the past year brought $300 million in new AUM to the firm’s private client group.

Reilly conceded that in the most recent quarter (the first of its fiscal year for 2018) RJ's recruiting success had dropped “a little from the previous quarters,” he said. “But that’s just a quarter.” (According to the company’s report on results from its 2019 fiscal year first quarter, which ended on Dec. 31, 2018, its private client group FAs increased to 7,815, a jump of more than 278 over the same time period the previous fiscal year, but an addition of only two FAs more than the most recent prior quarter.)

For FA recruits, RJ’s draw is not all about money, Reilly said. “They came here not because they got big checks but because they thought it was a great place to grow their business and serve their clients,” he said. He noted that rivals are paying “extravagant amounts” for M&A deals, sometimes 50% more than RJ offers.

How did Amazon CEO Jeff Bezos’s disruptive threat fit into Reilly’s address to shareholders? Hypothetically. Reilly asked the audience members to raise their hands if they didn’t have an Amazon account. (Presumably, only few hands rose in the air, but that was not apparent from the audio-only presentation of the meeting, which this story relied upon.) At a recent off-site meeting among RJ executives, McKinsey & Co. consultants had them role-play and act as if half of them had been fired and were then hired by Amazon, leaving those remaining to defend against the newly-constituted digital rivals.

“It was a really interesting discussion,” Reilly recounted.