Financial Post interview with Chairman and CEO
This article appeared on the Financial Post.com site on October 26, 2011.
He is not there yet, but Paul Allison, chief executive of Raymond James Ltd., can see the day when the Canadian firm offers the same group of services as its Florida-based parent.
For that to happen, the local operation - which emerged a decade back when Raymond James Financial outlayed $48 million in cash and issued one million shares to purchase Goepel McDermid Inc. - will have to add a bank and a wealth management operation to complement its existing retail brokerage network and wholesale investment banking operation.
While no decision has been made about the former, some steps have been taken. For instance, in June Raymond James Bank, the parent's bank subsidiary agreed to buy nearly all the assets of Allied Irish Bank's Canadian operations, a purchase that gave it about US$650 million in loan commitments. That deal is working its way through the regulatory process (it's been cleared in Canada but not yet in the U.S.) At the time, the plan called for Raymond James Bank to establish a new finance company in Canada which will allow it to expand its corporate and real estate banking.
As for the latter, a way will have to be found to expand the current role of Eagle Asset Management, the RJ entity that offers institutional and individual investors equity and fixed income investment strategies, from being a sub-advisor on some wrap programs.
"It's exciting," said Allison who was named co-head of the Canadian operation more than three years back and who became sole head at the start of 2009. Whatever is decided it also has to work within the firm's culture, which Allison defined as "conservative growth, client focused and long term. It's all about the client," said Allison, noting that one week back, the parent reported its 95th consecutive quarter of profits, with 60% of its revenue coming from the private client group.
So what has Allison achieved in his almost three years at the helm?
the firm's retail brokerage network has grown by more than 50%. The firm is now home to 460 brokers including a few in its recently opened Montreal office. It picked up a handful this week from HSBC's Victoria office. While it was miffed and made its views known at the way the sale of HSBC's retail brokerage network proceeded, Allison said the firm would rather bring in teams. "It's about identifying people, it's a relationship process but first and foremost it's about the culture of the organization," said Allison. RJ is different from other firms because it has the traditional investment advisor and the independent contractor advisor. The main difference between the two is that the brokers keeps more of their gross revenue and pay more of their costs with the latter model. More than half its brokers are independent contractors.
the firm's institutional operation has made steady progress. In the recent Brendan Wood International study, for example, RJ was the only independent firm that ranked in the top 10 for sales, trading and research. It has 15 analysts.
In investment banking the firm caters to mid-market companies that operate in eight industry sectors. According to FP Informart, in the first nine months of the year, it ran the books on 23 deals that raised $508 million - or 2% of the amount of equity raised in Canada over the period.
"We are always trying to lever the expertise [of our parent] into our market place," said Allison.