Raymond James Financial, Inc. (RJF) is a diversified financial services company providing 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 & acquisition and advisory services, the underwriting, distribution, trading and br...
Raymond James Financial, Inc. (RJF) is a diversified financial services company providing 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 & 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. The company 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.
As a bank holding company (‘BHC’) and financial holding company (‘FHC’), RJF is subject to supervision, examination and regulation by the Board of Governors of the Federal Reserve System (‘the Fed’).
A large portion of the company’s revenues are derived from fees generated from the distribution of financial products, such as mutual funds and variable annuities, and the various services the company performs related to such products. Certain of the company’s principal operations are located in St. Petersburg, Florida.
Reportable Segments
The company operates through five segments: Private Client Group (‘PCG’); Capital Markets; Asset Management; Bank; and Other.
Private Client Group segment
This segment provides financial planning, investment advisory, and securities transaction services to clients through financial advisors.
Affiliation
The company offers multiple affiliation options, which the company 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 the company 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 firm’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 the company’s advisors build their businesses with as much or as little of the company’s 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 the company’s 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, the company 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 the company receives fees, which may be either transactional or based on AUA. Firms affiliated with the company through RCS retain the fees they charge to their clients. Financial advisors associated with firms in RCS are not included in the company’s financial advisor counts, although their client assets are included in the company’s AUA.
Products and Services
The company offers a broad range of third-party and proprietary investment products and services to meet the company’s clients’ various investment and financial needs. Revenues from this segment are typically driven by AUA and are generally either asset-based or transactional in nature.
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 the company 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’), the company’s 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. These fees are eliminated in consolidation.
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 the company’s ‘affordable housing investments’ business).
The company provides the following products and services through this segment.
Investment Banking
Merger & Acquisition and Advisory - The company provides a comprehensive range of strategic and financial advisory services, including with respect to mergers and acquisitions, divestitures and restructurings, across a number of industries throughout the 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 the company 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 the company’s market-making activities in fixed income debt instruments. The company carries inventories of debt instruments 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 the company’s 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 the company’s institutional clients. Revenues on equity transactions are generally based on trade size and the amount of business conducted annually with each institution.
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 the company’s fee-based AUA for the company’s 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 the company manages, generally using active portfolio management strategies.
Management fees in this segment are generally calculated as a percentage of the value of the company’s fee-billable financial assets under management (‘AUM’) in both AMS, which includes the portion of fee-based AUA in PCG that is invested in programs overseen by AMS, and Raymond James Investment Management, where investment decisions are made by in-house or third-party portfolio managers or investment committees. The fee rates applied are dependent upon various factors, including the distinct services provided and the level of assets within each client relationship. The fee rates applied in Raymond James Investment Management may also vary based on the account objective (i.e., equity, fixed income, or balanced). The company’s AUM are impacted by market fluctuations and net inflows or outflows of assets, including transfers between fee-based accounts and transaction-based accounts within the company’s PCG segment. Fees are generally collected quarterly and are based on balances as of the beginning of the quarter (particularly in AMS) or the end of the quarter or based on average daily balances throughout the quarter.
The company’s Asset Management segment also earns administrative fees on certain fee-based assets within PCG that are not overseen by the company’s 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. The company 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. The company also provides Federal Deposit Insurance Corporation (‘FDIC’)-insured deposit accounts, including to clients of the company’s 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.
As of September 30, 2024, SBL and residential mortgage loans held for investment represented approximately 41% of the Bank segment’s total assets. SBL are primarily collateralized by the borrower’s marketable securities at advance rates consistent with industry standards, and to a lesser extent, the cash surrender value of life insurance policies issued by investment-grade insurance companies. Residential mortgage loans are originated or purchased and held for investment or sold in the secondary market. Corporate and tax exempt loans held for investment represented 33% of the Bank segment’s total assets as of September 30, 2024, and 67% of such loans were U.S. or Canadian syndicated loans. The Bank segment’s investment portfolio is primarily comprised 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 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 interest income on certain corporate cash balances, the company’s private equity investments, which predominantly consist of investments in third-party funds, certain other corporate investing activity, and certain corporate overhead costs of RJF that are not allocated to other segments, including the interest costs on the company’s public debt, certain provisions for legal and regulatory matters, and certain acquisition-related expenses.
Regulation
RJF is a BHC under the Bank Holding Company Act of 1956, as amended (the ‘BHC Act’), that has made an election to be a FHC and is subject to regulation, oversight and consolidated supervision, including periodic examination, by the Fed. Under the system of ‘functional regulation’ established under the BHC Act, the primary regulators of the company’s U.S. non-bank subsidiaries directly regulate the activities of those subsidiaries, with the Fed exercising a supervisory role. Such ‘functionally regulated’ subsidiaries include the company’s broker-dealers registered with the Securities and Exchange Commission (‘SEC’), such as Raymond James & Associates, Inc. (‘RJ&A’) and Raymond James Financial Services, Inc. (‘RJFS’), and investment advisers registered with the SEC with respect to their investment advisory activities, among other subsidiaries.
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 the company’s 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.
Transactions between (i) Raymond James Bank, TriState Capital Bank, RJ Trust, or their subsidiaries on the one hand and (ii) 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.
Raymond James Bank and TriState Capital Bank are subject to the Federal Deposit Insurance Act because they provide deposits covered by FDIC insurance, generally up to $250,000 per account ownership type.
The U.S. Federal Deposit Insurance Corporation Improvement Act of 1991, as amended (‘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.
Raymond James Bank and TriState Capital Bank are subject to the CRA, 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 is required to obtain Fed approval before engaging in certain banking and other financial activities both within and outside the U.S.
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.
Financial services firms are also subject to regulation by various foreign governments, securities exchanges, central banks and regulatory bodies, particularly in those countries where they have established offices. Outside of the U.S., the company has additional offices primarily in Canada, the U.K., and Germany; and are subject to regulations in those areas. Much of the regulation of broker-dealers in the U.S. and Canada, however, has been delegated to self-regulatory organizations (‘SROs’), such as the Financial Industry Regulatory Authority (‘FINRA’) in the U.S., the Canadian Investment Regulatory Organization (‘CIRO’) in Canada, and securities exchanges. These SROs adopt and amend rules for regulating the industry, subject to the approval of government agencies. These SROs also conduct periodic examinations of member broker-dealers. 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, as amended (‘SIPA’), and are required by federal law to be members of the Securities Investors Protection Corporation (‘SIPC’).
The company’s U.S. broker-dealer subsidiaries are subject to certain of the SEC’s financial stability rules, including the: (i) net capital rule; (ii) customer protection rule; (iii) record-keeping rules; and (iv) notification rules.
Pursuant to the Dodd-Frank Act, the SEC adopted a package of rule-makings and interpretations related to the provision of advice by broker-dealers and investment advisers, including Regulation Best Interest and Form CRS. Among other things, Regulation Best Interest requires a broker-dealer to act in the best interest of a retail client when making a recommendation to that client of any securities transaction or investment strategy involving securities. Form CRS requires that broker-dealers and investment advisers provide retail investors with a brief summary document containing simple, easy-to-understand information about the nature of the relationship between the parties. The company’s implementation of these regulations resulted in the review and modification of certain of the company’s policies and procedures and associated supervisory and compliance controls, as well as the implementation of additional client disclosures, which included the company providing related education and training to financial advisors.
Raymond James Ltd. (‘RJ Ltd.’), a wholly-owned subsidiary, is registered as an investment dealer in all provinces and territories in Canada. CIRO is responsible for the enforcement of, and conformity with, securities legislation for their members and has been granted the powers to prescribe their own rules of conduct and financial requirements of members, including RJ Ltd. CIRO also requires that RJ Ltd. be a member of the Canadian Investors Protection Fund, whose primary role is investor protection.
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. The FCA operates on a statutory basis and creates rules which are largely principles-based. These regulated U.K. subsidiaries and their senior managers are registered with the FCA, and wealth managers and certain other staff are subject to certification requirements. Certain of these subsidiaries operate in the retail sector, providing investment and financial planning services to predominantly high-net-worth individuals, while others provide brokerage and investment banking services to institutional clients. 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 its oversight.
The company’s investment advisory operations, including the mutual funds that the company sponsors, are also subject to extensive regulation in the U.S. The majority of the company’s 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 the company’s clients.
The U.S. state laws and regulations adopted under the U.S. federal law impose obligations on RJF and its subsidiaries for protecting the confidentiality, integrity and availability of client information, and require notice of data breaches to certain U.S. regulators and to clients.
History
Raymond James Financial, Inc. was founded in 1962.
