Raymond James invests in training, even as other firms cut back

At a time when some larger Wall Street firms are trimming training programs to cut costs, Raymond James Financial Inc is bulking up its plan to develop the next generation of advisers.

Raymond James plans to build on a highly successful program developed by Memphis-based brokerage Morgan Keegan, which it acquired last year for $1.2 billion. It will spend more to integrate its plan with Morgan Keegan's model, Paul Reilly, the chief executive of Raymond James, said.

Raymond James does not break out the amount it spends on training alone, but Reilly says it will be a "top priority" for the company for 2013.

"We're focused on long-term conservative growth, even as the Street wants us to cut costs," Reilly said in an interview at the company's annual conference in Dallas last week for independent Raymond James advisers. "We're looking to grow the business five years out, not this quarter."

Training is a costly undertaking. Investing in younger trainees can be a gamble for firms, as it can take decades to build a book the size of veteran advisers - those who manage large pools of clients assets of around $100 million or more - and generate significant revenue for firms, said industry managers and recruiters interviewed by Reuters.

In fact, the success rate of trainee programs historically has been very low, with the industry average for program completion at about only one or two for every 10 trainees.

Just last week, UBS Wealth Management Americas said it was trimming its trainee program. The company said it plans to cut 50 positions from its traditional training class, and, in turn, create financial planning associate roles focused on duties such as planning questionnaires, booking client appointments and discussing client goals related to retirement and estate planning.

Raymond James hopes to have its program fully up and running in the second half of the year, with a goal to reap the results from Morgan Keegan's model - which has had roughly 65 percent of its trainee class move on to full-time advising positions.


Under the new program, trainees will spend the first six months in a "pre-production" period, during which they will study and test for their Series 7 and 66 broker licenses, as well as obtain life and health insurance licenses, before they can begin to generate revenue for the firm. All trainees, for the first time, will be required to eventually obtain their Certified Financial Planner designation.

Trainees will be partnered with a mentor and required to do market research to identify their own future target client base. There will also be a stronger emphasis on relationship-building and financial planning through the program.

Raymond James has not determined how big the program will be at this point, Brian Fowler, who is leading the program team, said. At Morgan Keegan, the goal was to have the number of trainees be roughly 10 percent of its overall adviser force of 1,000.


Raymond James's increased attention on training comes at a time when some larger Wall Street firms have slashed funding or downsized training programs.

Goldman Sachs late last year ended its two-year training program for its banking and investment management divisions after running it for a quarter century because it found the program was not meeting its aim of retaining new talent.

And Morgan Stanley in late 2011 decided to reduce its wealth management adviser trainee hires by nearly a third to 1,250 as a part of efforts to cut $400 million in costs.

"Back in the days of E.F. Hutton, they had big training centers, and they would bring guys into New York and New Jersey," said New York-based financial services recruiter Rich Schwarzkopf, a former branch manager, who said adviser training programs have since fallen by the wayside.

"They're now in a situation where they don't have a lot of replacements for brokers," Schwarzkopf said.

(Reporting by Ashley Lau; Additional reporting by Jed Horowitz in New York; Editing by Linda Stern and Leslie Adler)