Raymond James is offering to become a minority equity partner to some of its financial advisors to help fuel growth.
The St. Petersburg, Fla.-based firm is offering equity financing to advisors as part of its Practice Capital Solutions program, which leverages its investment banking arm.
The firm’s move comes as the competitive landscape for retaining and drawing top advisor talent remains a key focus area. During an April earnings call, the firm reported its net new assets from clients declined 8% year-over-year, though CEO Paul Shoukry expressed optimism about its recruiting pipeline for advisors.
The new program is designed for advisors to exchange a minority equity stake in their practice and revenue for capital to fund areas such as hiring, succession planning or a merger or acquisition. According to the announcement, the practices will retain full operating control and have the option to buy back the stake on “clearly defined, favorable terms.”
“With equity financing through Practice Capital Solutions, advisors can fund the unique vision they have for their practice without having to sacrifice the long-term interests of their clients and team at the discretion of an outside investor,” Tash Elwyn, president, private client group, said in a statement.
The equity stake is initially available to advisors in Raymond James’ independent contractor affiliate practice division, but will likely expand to other affiliations. Requirements include meeting certain production levels and tenure with the firm.
The new program will look to promote “book ownership and advisor independence,” Emma Boston, vice president, strategic operations for Raymond James, said in a statement.
The firm is competing in a market where many advisors are moving to independent RIA setups. According to data released in April by AdvizorPro, the RIA channel netted the most advisors in the past six months when considering inflows and outflows as compared to hybrid platforms, independent broker/dealers and wirehouses.