Raymond James CEO says advisor payouts could offset sweep losses

Raymond James Financial chief executive Paul Shoukry said the firm can adjust account pricing and advisor payouts if AI-driven cash-sorting tools erode the revenue it earns on client cash. He spoke Wednesday at the Wolfe Research Wealth Symposium, according to AdvisorHub's account of the presentation, and no changes to fees or compensation were announced.

Shoukry told the conference that wealth management firms can adjust account pricing and advisor payouts if revenue from clients' cash sweep balances declines. "We have account pricing. We have cash pricing. We have payouts to advisors," he said. "We have a whole host of levers across the industry."

For an advisor, the lever that matters is the payout, which sets their share of the revenue a sweep produces. Absorbing a thinner spread through payouts would reduce what an advisor earns; the same pressure through account pricing would raise what a client pays. Either route makes the grid a live term in a recruiting conversation rather than a settled one.

Moves Wire logged 18 recorded moves involving Raymond James in the past 12 months, the most recent being the Krawec team's arrival from Wells Fargo with $460 million in client assets. Ted Krawec and Jordan Krawec moved to Raymond James & Associates with their four-person team on Oct. 28, according to Moves Wire.

Raymond James earns sweep revenue by moving client cash to its own bank or by collecting fees on cash held at a third-party bank. Shoukry addressed the analyst worry directly. "There's so much concern around cash-sweep [revenue] and what if that goes away," he said. "And just like any other industry, if an entire revenue line item goes away, then the industry will rebalance." He said he was not predicting that sweep revenue would ultimately suffer.

"Rates have been high enough for long enough where most of the cash has been sorted and invested in the alternatives," Shoukry said. He added that he felt advisors had mostly already placed client cash in higher-yielding products during earlier rate increases.

Wolfe Research analyst Steven Chubak asked separately whether the industry could move to a platform fee in place of monetizing cash sweep balances. Shoukry said the firm "would be open to it" if the industry moved that way and clients and advisors "would prefer" that model, and that it was "hard to tell" whether that could happen.

Jed Finn, head of wealth management at Morgan Stanley, made a similar argument earlier in the week, saying customers would be reluctant to spread cash across multiple firms because doing so would hurt their ability to obtain fee discounts.

Any eventual decision on account pricing or payouts, Shoukry said, would balance the interests of clients, advisors and the firm.