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Raymond James CEO speaks out on regulations, robo advising and leadership

Margie Manning



Moez Limayem, dean, USF Muma College of Business, talks with Paul Reilly, chairman and CEO, Raymond James Financial

Regulatory pressures on financial service firms have not eased much under the Trump administration, said Paul Reilly, chairman and CEO of Raymond James Financial Inc.

“Under the new administration, no matter what you’ve read, we haven’t had a lot of relief from rules. We just haven’t had a lot of new ones,” Reilly said at the USF Muma College of Business Conversation with a CEO gathering Tuesday morning in Tampa.

In a wide-ranging talk with Moez Limayem, dean of the business school, Reilly talked about his own career path, his approach to leadership, disruption in the industry and challenges and opportunities at Raymond James (NYSE: RJF), one of the largest companies in St. Petersburg, providing asset management, brokerage, banking and other services.

The company has five separate regulators, Reilly said.

“During the last administration, we were getting new regulations and we couldn’t implement them fast enough,” he said. “The problem isn’t always the rules. It’s the time to implement them. There are major changes to people, to clients, to systems, and we’re getting it over and over again.”

Another challenge is an industry phenomena called decompression.

“Everything is getting cheaper, from computers to what people pay for financial advice to the cost of funds, whether that’s an index fund or ETFs [exchange-traded funds] or things that have lower cost to them. But that’s always happened, that’s been going on forever,” Reilly said. “It’s interesting the one fee that hasn’t been going down is what people are willing to pay their financial advisor because they believe there’s value in it.”

He’s not concerned about “robo advisors,” which provide digital financial advice based on algorithms. Some pundits have suggested robo advisors will cause the financial services industry to shrink, but Reilly doesn’t see it as a threat.

“When I didn’t have children and I didn’t have money, I didn’t need advice … But I believe the millennial generation will want advice when they earn and inherit money,” Reilly said. “The way they get advice may be different. I believe the technology of robos will be table stakes. People want to go on line, they may want to self-initiate. They may want to electronically talk to their advisor, Facetime versus meeting. But they will still want advice. So I believe the fundamental part of advice is not going away.”

Reilly has been CEO of Raymond James since 2010, succeeding long-time leader Tom James, who is now chairman emeritus.

Reilly joined the Raymond James board of directors in 2006. Three years later, James recruited Reilly to become his successor, and Reilly brought a different leadership style.

“Everyone reported to Tom and Tom was a great entrepreneur for years. The guy worked 12 hours days, including Saturdays and Sundays, and it just got to be too big for his style of management,” Reilly said. “The only thing I did was bring, because of the size of the company, a management structure to it.”

Reilly’s No. 1 job is keeping the Raymond James culture James established alive, he said. Strategy is second.

He also shared some career anecdotes and leadership lessons learned along the way, including stints as CEO of KPMG International and chairman and CEO of Korn/Ferry International.

Careers aren’t linear. He became CEO of KPMG by a series of accidents. After selling a St. Pete consulting firm to KPMG, he ran the Tampa Bay consulting practice and then got a series of promotions, including running regional and national real estate consulting practices and later financial services practices. He had planned to leave KPMG after a merger with Ernst & Young, but instead was nominated for CEO when that merger fell through. “I thought I was leaving the firm and I ended up running it.”

Be yourself. “People trusted me. I always felt my job was to help other people and not compete with other people … If you help other people at some point they are going to help you.”

Have conviction. As CEO at his next firm, Korn/Ferry, he worked to transform the troubled company from a recruiting firm to a human capital firm. It was a struggle, Reilly said, and he called the founder, Richard Ferry, to express doubts about whether he was the right person to lead the company. Ferry backed Reilly’s leadership, and Reilly woke up the next day “on fire.” He had to let go of one-third of the firm’s workers and find private equity backing. Five years later, the company was No. 1 in its industry, with twice the market cap of the next largest competitor. “It was all that moment of having the belief and the courage to stand in there. Sometimes your career is shaped by little phone calls … A lot of leadership is just about conviction, having the courage to do things and fight through it.”

Career advice. “Take jobs where you learn the most. Do things that are interesting. If you love what you do and are learning you are more valuable to yourself and to your company. And I wasn’t afraid to take on things … when you do that, you meet people and learn to work together.”







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