RayJay to Implement “Product Neutral” Grid for Indie Brokers
Raymond James Financial Services is introducing a new payout formula for its roughly 4,200 independent brokers next year that will no longer base payout on specific products sold, according to advisors and consultants who had seen a copy of the plan.
The streamlined, ‘product-neutral’ grid pays Raymond James affiliates based on a portion of their overall revenue, similar to conventional payout grids, the advisors said. Brokers who generate up to $500,000 in fees and commissions in the previous 12 months will receive an 81% payout while those at $10 million and higher will peak at 90%, according to an earlier report on the new plan in “Financial Advisor” magazine.
The model is similar to the pay structure at Raymond James’ smaller 3,000-broker employee channel, although the payout is higher as is typical of independent broker-dealers. Raymond James eliminated the product-focused grid in its employee channel in October 2013. Independent brokers are typically responsible for paying most of their overhead in exchange for their higher payouts.
“It sounds like the independent space comp plans may start to finally follow what most of the employee based B/D designs have been doing over the past 5 to 10 years, which is to go product neutral,” Andy Tasnady, a compensation consultant with Tasnady Associates wrote in an email.
Under the new plan, Raymond James also will assess a flat $25 ticket charge on all transactions rather than the $22-$26 range keyed to specific products, according to “Financial Advisor.”
The effect on a broker’s wallet will depend on the mix of products he or she has sold, but is not expected to be dramatic. Raymond James Financial Services currently offers payouts of 85% to 90% on most products and the new payout will be “very close” to what most practices have already been getting, said John Morey, an independent broker at Morey-Voorhees Financial Services in Omaha.
“Considering the mix of our business and the size of it, we think it’s a fair deal, and we’re happy with it,” said Morey, who has been affiliated with Raymond James for 19 years.
A spokesperson at Raymond James did not return a request for comment on the changes.
Michael Terrana, an industry recruiter with the Terrana Group in Chicago said that many more independent broker-dealers are likely to follow Raymond James because of the Department of Labor’s new fiduciary rule that requires reasonable costs and level pricing within asset classes.
“Raymond James is pioneering this methodology right now,” Terrana said. “They’re trying to show they’re not favoring any one product.”