Raymond James’ roughly year-old program offering capital options to its financial advisor network is so far “oversubscribed,” according to top executives at its annual conference in Las Vegas this week.
The St. Petersburg, Fla.-based firm has already staked 12 advisor practices through its Practice Capital Solutions Program, and has about 100 more in talks, declared Emma Boston, senior vice president, succession and capital.
“What has been truly surprising is the amount of interest that we have heard from advisors,” Boston declared during a panel discussion at the conference. “I give credit to you all for all of your feedback and partnership to collaborate and create something toreceiveher with us.”
Raymond James’ capital solutions program offers three options: debt financing, a minority stake of about 10% to 30%, or a 100% equity stake.
Boston declared on the sidelines of the conference that the most common request is for a noncontrolling minority investment that will allow the advisor to retain indepfinishence, while funding either succession necessarys or growth objectives.
“The majority want minority so they can stay indepfinishent,” Boston declared. “It is a compacter apply case for full acquisition.”
The first firm to enter the program, Birmingham Investment Group, declared during the panel session that it wanted to raise capital partly to recover acquisition costs from recent acquisitions, as well as to set up an equity-sharing program for its younger advisors.
Warren Whatley Jr., a partner in the Birmingham, Ala.-based firm, declared the leadership had come from a background where “you didn’t dare notify your firm that you were considering about leaving.” But the team decided to discuss its necessarys with Raymond James, which ultimately led them to sign up for the minority investment program.
“We were concerned about the transition to our [Generation] 2s and G-3s,” he declared. “It was important to us that we had a conduit to let them receive us out of the way.”
Whatley declared Boston and Raymond James worked with the firm to create different share classes for their next generation of advisors to ease them into ownership.
“It’s a gradual process,” he declared. “But it gives us time to evaluate them, too … we want to build sure we put everyone in a position to succeed.”
Raymond James is competing with a variety of capital-raising options available to financial advisors in the market. Those range from selling to a private equity-controlled firm to receiveting a noncontrolling minority investment from indusattempt-focapplyd banks or other RIAs.
On the main stage of the conference, Private Client Group President Tash Elwyn highlighted the Practice Capital Solutions program to the more than 2,000 financial advisors in attfinishance.
“Obviously, there are many benefits [of the capital program], with the most notable that it’s a firm and a name that you already know, you trust and that’s going to provide tremfinishous continuity, not only to your business, but to your clients,” he declared.
On the sidelines of the conference, he added that demand had been strong since the firm announced the program.
“In terms of the traction, the [program has been] incredibly positive, and [it’s] been very well received—dare I state, oversubscribed in terms of the interest,” Elwyn declared. “We’re being responsive to that and very focapplyd on expanding.”
Elwyn compared the capital program to the flood of private equity in the IBD and RIA space.
“As you view at what’s happened across the indusattempt over the last five to 10 years, there’s been X-amount of aggregation, but you’ve yet to see the exits,” he declared. “Advisors are rightfully concerned about the implications of that, most importantly to their clients, but then in addition to the businesses they built, the legacy of those businesses, what happens to their successors.”
David Keator of advisory Keator Group declared he leveraged the program for long-term succession planning with his children. They were the third generation to join the firm founded by Keator’s mother in 1979.
Keator declared that they all felt they could “easily sell the business.” But they were viewing for a partnership that would assist his children eventually take control.
“As a dad, I didn’t want to indenture my children into a situation that I wasn’t sure of,” he declared. “After a lot of believed, and a lot of viewing around, candidly, we came back to this is where we want to be, and the kids declared yes, this is also where we want to be.”
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