Platform focus: Raymond James taps the trend towards ‘insourcing’


This week, we take a look at Raymond James. The platform is focused on attracting advisers that hold discretionary investment management permissions and believes its roots in stockbroking give it an edge over the competition. Typically used by stockbrokers and investment focused financial planners with wealthy clients, the average portfolio size is around £500,000 but ranges from £100,000 to £13m.

Raymond James’ ambition is to be seen as the go-to platform for advisers looking to develop their own investment proposition. Many of its peers are seeking to ride the wave of assets flowing into third party discretionary fund management model portfolios but Raymond James is fishing in different waters, tapping into the moves being made by a small but growing number of advisory firms towards “in-sourcing” investment management.

And the platform is having some success in attracting assets from these advisers. It saw healthy asset growth in 2015, achieving 16.4 per cent year-on-year growth in assets under administration. Total AUA stood at £5.28bn in Q4 2015.

One of the challenges faced by platforms seeking to attract discretionary money is that many were built to cater to Oeics and unit trusts, rather than some of the more exotic products that can be favoured by DFMs. Here, Raymond James’ stockbroking heritage works in its favour. It is one of the few platforms that is able to facilitate intra-day trading and is a member of the London Stock Exchange. This is an advantage for ETFs and it also enables portfolio managers to include direct securities. Adviser users rate the platform highly for its investment choice.

Raymond James tells us it wants to support advisers by shouldering some of the burden of regulatory reporting and capital adequacy requirements that taking on discretionary permissions brings with it. Our recent report on DFMs on platforms highlights that those managing money on-platform need more granular reporting. Here, however, the platform comes in for some criticism from users, with a tepid rating for reporting on our user leaderboard. We would urge the platform to invest in this area.


Rebalancing is another feature (or headache) of discretionary management. Raymond James tells us it is launching a portfolio drift tool to help take away some of this pain. The tool allows investment managers to set and test portfolio tolerances. For example, if a portfolio is made up of 50 per cent equities and 50 per cent bonds, the investment manager can set a tolerance of 3 per cent – the range in which he or she is happy to remain. The tool will offer amber and red warnings to investment managers, alerting them of the need to rebalance. The theory is that this tool will help managers to go through re-balancing only when necessary.

It is important that Raymond James keeps investing in its technology and functionality. With some of the big players such as Standard Life developing specific hubs to cater to discretionary management, the competition is growing.

Head of business development at Raymond James David Hazelton is in the unusual position for an investment professional of seeing an opportunity in Mifid II. He believes the increased focus on price transparency and disclosure under Mifid II will drive a renaissance in stock picking. Once Mifid II comes in, he argues, the end-client “will understand that they are paying an awful lot for unit trusts – 2 to 2.5 per cent.” Hazelton points out that a portfolio manager managing direct equities is only levying trading and management fees and this will often come in at around 1 per cent.

Mifid II is some way off so we must wait to see if it will drive growth for Raymond James. For now, we hope the platform can capitalise on the shift by some advice firms to “in-sourcing” discretionary management.

Miranda Seath is senior researcher at Platforum