Raymond James Financial Inc Profile
Raymond James Financial, Inc. (RJF) operates as a diversified financial services company.
The company provides private client group, capital markets, asset management, banking, and other services to individuals, corporations, and municipalities. The company, together with its subsidiaries, is engaged in various financial services activities, including providing investment management services to retail and institutional clients, merger and acquisition and advisory services; the underwriting, distribution, trading and brokerage of equity and debt securities; and the sale of mutual funds and other investment products. The company also provides corporate and retail banking services, and trust services. It operates predominantly in the United States (U.S.), and to a lesser extent, in Canada, the United Kingdom (U.K.), and other parts of Europe.
Segments
The company operates through five segments: Private Client Group (PCG), Capital Markets, Asset Management, Bank, and Other.
Private Client Group segment
Private Client Group segment provides financial planning, investment advisory, and securities transaction services to clients through financial advisors. The company had 8,712 employee and independent contractor financial advisors affiliated with the company as of September 30, 2023.
Affiliation
The company offers multiple affiliation options, which it refers to as AdvisorChoice. Financial advisors primarily affiliate with the company directly as either employees or independent contractors, or as employees of third-party Registered Investment Advisors (RIAs) and broker-dealers to which it provides services through its RIA and Custody Services (RCS) division.
Employee Financial Advisors
Employee financial advisors work in a traditional branch supported by local management and administrative staff. They provide services predominantly to retail clients. Compensation for these financial advisors primarily includes a payout on revenues they generate, and such advisors also participate in the company's employee benefit plans.
Independent Contractor Financial Advisors
The company's financial advisors who are independent contractors are responsible for all of their direct costs and, accordingly, receive a higher payout percentage on the revenues they generate than employee financial advisors. The company's independent contractor financial advisor options are designed to help its advisors build their businesses with as much or as little of its support as they determine they need. Independent contractor financial advisors may affiliate with the company directly or through an affiliated bank or credit union in its Financial Institutions Division. With specific approval, and on a limited basis, they are permitted to conduct certain other approved business activities, such as offering insurance products, independent registered investment advisory services, and accounting, and tax services.
RIA and Custody Services
Through the company's domestic RCS division, it offers third-party RIAs and broker-dealers a range of products and services, including custodial services, trade execution, research, and other support and services (including access to clients' account information and the services of the Asset Management segment) for which it receives fees, which may be either transactional or based on assets under administration (AUA). Firms affiliated with the company through RCS retain the fees they charge to their clients and are responsible for all of their direct costs.
Products and Services
The company offers a broad range of third-party and proprietary investment products and services to meet its clients' various investment and financial needs. The company provides the following products and services through this segment:
Investment services for which the company charges sales commissions or asset-based fees based on established schedules.
Portfolio management services for which it charges either a fee computed as a percentage of the assets in the client's account or a flat periodic fee.
Insurance and annuity products.
Mutual funds.
Support to third-party mutual fund and annuity companies, including sales and marketing support, distribution, and accounting, and administrative services.
Administrative services to banks to which the company sweeps a portion of its clients' cash deposits as part of the Raymond James Bank Deposit Program (RJBDP), its multi-bank sweep program. Fees received from third-party banks for these services are variable in nature and fluctuate based on client cash balances in the program, as well as the level of short-term interest rates relative to interest paid to clients by the third-party banks on balances in the RJBDP. PCG also earns fees from the company's Bank segment, which are based on the greater of a base servicing fee or net yield equivalent to the average yield that the firm would otherwise receive from third-party banks in the RJBDP.
Margin loans to clients that are collateralized by the securities purchased or by other securities owned by the client. Interest is charged to clients on the amount borrowed based on current interest rates.
Securities borrowing and lending activities primarily with other broker-dealers, financial institutions, and other counterparties. The net revenues of this business generally consist of the interest spreads generated on these activities.
Diversification strategies and alternative investment products to qualified clients of the company's affiliated financial advisors.
Custodial services, trade execution, research, and other support and services to third-party RIAs and broker-dealers.
Capital Markets segment
The company's Capital Markets segment conducts investment banking, institutional sales, securities trading, equity research, and the syndication and management of investments in low-income housing funds and funds of a similar nature, the majority of which qualify for tax credits (referred to as its 'affordable housing investments' business).
The company provides the following products and services through this segment.
Investment Banking
Merger and Acquisition and Advisory: The company provides a comprehensive range of strategic and financial advisory assignments, including with respect to mergers and acquisitions, divestitures, and restructurings, across a number of industries throughout the United States (U.S.), Canada, and Europe.
Equity Underwriting: The company provides public and private equity financing services, including the underwriting and placement of common and preferred stock, and other equity securities, to corporate clients across a number of industries throughout the U.S., Canada, and Europe.
Debt Underwriting: The company's services include public finance and debt underwriting activities, where it serves as a placement agent or underwriter to various issuers, including private and public corporate entities, state and local government agencies (and their political subdivisions), and non-profit entities, including healthcare and higher education institutions.
Brokerage
Fixed Income: The company earns revenues from institutional clients who purchase and sell both taxable and tax-exempt fixed income products, municipal, corporate, government agency and mortgage-backed bonds, and whole loans, as well as from its market-making activities in fixed income debt securities. It carries inventories of debt securities to facilitate such transactions.
The company also enters into interest rate derivatives to facilitate client transactions or to actively manage risk exposures that arise from its client activity, including a portion of its trading inventory.
Equity: The company earns brokerage revenues on the sale of equity products to institutional clients. Client activity is influenced by a combination of general market activity and the company's ability to identify attractive investment opportunities for its institutional clients.
The company's global research department supports its institutional and retail sales efforts and publishes research on a wide variety of companies. This research primarily focuses on the U.S. and Canadian companies across a multitude of industries. Research reports are made available to both institutional and retail clients.
Affordable Housing Investments Business
The company acts as the general partner or managing member in partnerships and limited liability companies that invest in real estate entities, the majority of which qualify for tax credits under Section 42 of the Internal Revenue Code and/or provide a mechanism for banks and other institutions to meet their Community Reinvestment Act (CRA) obligations throughout the U.S. The company earns fees for the origination and sale of these investment products, as well as for the oversight and management of the investments, including over the statutory tax credit compliance period when applicable.
Asset Management segment
The company's Asset Management segment earns asset management and related administrative fees for providing asset management, portfolio management, and related administrative services to retail and institutional clients. This segment oversees a portion of its fee-based AUA for its PCG clients through its Asset Management Services division (AMS). This segment also provides asset management services through the company's Raymond James Investment Management division (Raymond James Investment Management) for certain retail accounts managed on behalf of third-party institutions, institutional accounts, and proprietary mutual funds that it manages, generally using active portfolio management strategies.
The company's Asset Management segment also earns administrative fees on certain fee-based assets within PCG that are not overseen by its Asset Management segment, but for which the segment provides administrative support (e.g., record-keeping).
The company's Asset Management segment also earns asset management and related administrative fees through services provided by Raymond James Trust, N.A. (RJ Trust) and Raymond James Trust Company of New Hampshire (RJTCNH).
Bank segment
The company's Bank segment reflects the results of its banking operations, including the results of Raymond James Bank, a Florida-chartered state member bank; and TriState Capital Bank, a Pennsylvania-chartered state member bank. It provides various types of loans, including securities-based loans (SBL), corporate loans (commercial and industrial (C&I), commercial real estate (CRE), and real estate investment trust (REIT) loans), residential mortgage loans, and tax-exempt loans. The company's Bank segment is active in corporate loan syndications and participations and lending directly to clients. It also provides Federal Deposit Insurance Corporation (FDIC)-insured deposit accounts, including to clients of its broker-dealer subsidiaries, and other retail and corporate deposit and liquidity management products and services. The Bank segment generates net interest income principally through the interest income earned on loans and an investment portfolio of available-for-sale securities, which is offset by the interest expense it pays on client deposits and on its borrowings.
The Bank segment's investment portfolio is primarily includes agency mortgage-backed securities (MBS), agency collateralized mortgage obligations (CMOs), and U.S. Treasury securities (U.S. Treasuries) and is classified as available-for-sale. Raymond James Bank's liabilities primarily consist of cash deposits, including cash swept from the investment accounts of PCG clients through the RJBDP and deposits in the company's newly launched Enhanced Savings Program (ESP), in which PCG clients may deposit cash in a FDIC-insured high-yield Raymond James bank account. Deposits at TriState Capital Bank are primarily retail and corporate money market deposits, including RJBDP sweep deposits, and interest-bearing demand deposits. Raymond James Bank's and TriState Capital Bank's liabilities also include borrowings from the Federal Home Loan Bank (FHLB).
Other segment
The company's Other segment includes private equity investments, which predominantly consist of investments in third-party funds.
Regulations
RJF is a BHC under the Bank Holding Company Act of 1956, as amended (the BHC Act) and is subject to regulation, oversight, and consolidated supervision, including periodic examination, by the Board of Governors of the Federal Reserve System (Fed).
The company has two FDIC-insured depository institutions, Raymond James Bank and TriState Capital Bank. Raymond James Bank is a Florida-chartered state member bank that is primarily supervised by both the Fed and the Florida Office of Financial Regulation (OFR). TriState Capital Bank is a Pennsylvania-chartered state member bank that is primarily supervised by both the Fed and the Pennsylvania Department of Banking and Securities (PDBS). Both Raymond James Bank and TriState Capital Bank are also subject to supervision by the Consumer Financial Protection Bureau (CFPB) and the FDIC.
The company also has non-depository trust company subsidiaries, including RJ Trust, which is regulated, supervised, and examined by the Office of the Comptroller of the Currency (OCC), and RJTCNH, which is regulated, supervised, and examined by the New Hampshire Banking Department (NHBD). RJTCNH provides individual retirement account (IRA) custodial services and trust services for its PCG clients.
Collectively, the rules and regulations of the Fed, the FDIC, the OFR, the PDBS, the CFPB, the OCC, and the NHBD result in extensive regulation and supervision covering all aspects of the company's banking and trust businesses, including, for example, lending practices, the receipt of deposits, capital structure, transactions with affiliates, conduct and qualifications of personnel and, as discussed further in the following sections, capital requirements. This regulatory, supervisory and oversight framework is subject to significant changes that can affect the operating costs and permissible businesses of RJF and its subsidiaries. As a part of their supervisory functions, these regulatory bodies conduct extensive examinations of the company's operations and also have the power to bring enforcement actions for violations of law and, in the case of certain of these regulatory bodies, for unsafe or unsound practices.
Transactions between Raymond James Bank, TriState Capital Bank, RJ Trust, or their subsidiaries on the one hand; and RJF or its other subsidiaries or affiliates on the other hand are subject to compliance with Sections 23A and 23B of the Federal Reserve Act and Regulation W issued by the Fed, which generally limit the types and amounts of such transactions that may take place and generally require those transactions to be on market terms. These laws generally do not apply to transactions between Raymond James Bank, TriState Capital Bank, RJ Trust, and any subsidiaries they may have.
RJF is subject to the Volcker Rule. The Volcker Rule, a provision of the Dodd-Frank Act, generally prohibits certain transactions and imposes a market terms requirement on certain other transactions between RJF or its affiliates on the one hand; and covered funds for which RJF or its affiliates serve as the investment manager, investment adviser, commodity trading advisor or sponsor, or other covered funds organized and offered by RJF or its affiliates on the other hand.
Raymond James Bank and TriState Capital Bank are subject to the Federal Deposit Insurance Act.
The U.S. Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) requires the U.S. federal bank regulatory agencies to take prompt corrective action with respect to depository institutions that do not meet specified capital requirements. FDICIA establishes five capital categories for FDIC-insured banks, such as Raymond James Bank and TriState Capital Bank: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.
The company's compensation practices are subject to oversight by the Fed. The company is required to obtain Fed approval before engaging in certain banking and other financial activities both within and outside the U.S.
Raymond James Bank and TriState Capital Bank are subject to the Community Reinvestment Act, which is intended to encourage banks to help meet the credit needs of their communities, with a focus on low- and moderate-income communities, consistent with safe and sound bank operations.
The company's U.S. broker-dealer subsidiaries are subject to SEC regulations relating to their business operations, including sales and trading practices, securities offerings and other investment banking activity, publication of research reports, use and safekeeping of client funds and securities, capital structure, record-keeping, privacy requirements, and the conduct of directors, officers and employees. Financial services firms are also subject to regulation by state securities commissions in those states in which they conduct business. The company's most significant U.S. broker-dealers, RJ&A, RJFS, and SumRidge Partners, LLC (SumRidge Partners), are registered as broker-dealers in all 50 states.
The single primary regulator with respect to the company's conduct of financial services in the U.K. is the Financial Conduct Authority (FCA), which operates on a statutory basis.
The company's U.S. broker-dealer subsidiaries are subject to the Securities Investor Protection Act (SIPA) and are required by federal law to be members of the Securities Investors Protection Corporation (SIPC).
Certain of the company's subsidiaries are registered in, and operate from, the U.K. which has a highly developed and comprehensive regulatory regime. These subsidiaries are authorized and regulated by the FCA and have limited permissions to carry out business in certain European Union (E.U.) countries, to the extent permitted under domestic law and regulation in those countries.
Retail clients of the company's U.K. subsidiaries benefit from the Financial Ombudsman Service, which settles complaints between consumers and businesses that provide financial services, as well as the Financial Services Compensation Scheme, which is the U.K.'s statutory deposit insurance and investors compensation scheme for customers of authorized financial services firms.
In Germany, the company's subsidiary Raymond James Corporate Finance GmbH is licensed by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, or BaFin) to conduct the regulated activities of investment advice and investment brokerage. Among other requirements, BaFin requires Raymond James Corporate Finance GmbH, as a regulated entity, to comply with certain capital, liquidity, governance, and business conduct requirements, and has a range of supervisory and disciplinary powers which it is able to use in overseeing the activities of this subsidiary.
The company's investment advisory operations, including the mutual funds that it sponsors, are also subject to extensive regulation in the U.S. The majority of its asset managers are registered as investment advisers with the SEC under the Investment Advisers Act of 1940 as amended and are also required to make notice filings in certain states. Virtually all aspects of the company's asset management business are subject to various federal and state laws and regulations. These laws and regulations are primarily intended for the benefit of its clients.
History
Raymond James Financial, Inc. was founded in 1962.
