This report delivers recent statistics that tell how clients of Raymond James (a.k.a. “RayJay”) think and feel about how well they are being served by RayJay advisors.  Credo’s annual statistics are presented in the two tables below.  With 2018 only part-way complete, the statistics provided for 2018 are current projections for the year based on data collected between January 2018 and August 2018 inclusive.  While these should be reliable for projection purposes, there is still time before the year’s end for changes in scoring.

The first two exhibits below shows RayJay investors’ Likelihood to Recommend (L2R) their personal financial advisor in each of the last four years. Exhibit 1 shows a raw L2R score for RayJay advisors as a group against our bellwether measurement statement, “”How likely would you be to recommend your financial advisor to friends, family or others?” Exhibit 2 shows an indexed version of the same score. What do we mean by indexed? We compare RayJay’s score to the industry average score. The product is a score that is relative to 1.00 where 1.00 is the industry average score. When RayJay’s indexed score is above 1.00, their advisors have scored above the industry average on the item in question. If their indexed score is below 1.00, RayJay advisors scored below the industry average on the item. The magnitude of the difference from 1.00 immediately shows how much above or below the industry average our target company (Raymond James, in this case) scores.

In both exhibits 1 and 2, the “target” dealership for the analysis is Raymond James in Canada. Let’s be clear, the target is the company; it’s not a target score. Credo does not set a target score for RayJay or for any other company. Rather, Credo makes various dealerships the “target” of our analysis. Again, in the case of this report the target is Raymond James. A perfect raw score would be 10.0; it is the highest score on our rating scale. With respect to L2R, RayJay is currently operating at the 6.73 level. Other dealerships’ analyses and scoring are available for comparison purposes. In this report, the presentation of indexed scores provides that comparison.

Exhibit 1: Investor Likelihood to Recommend (L2R) Raymond James Advisors — raw scores, shown annually. (NB: 2018 is a current, part-year score based on tracking results)

Exhibit 2: Raymond James Advisors’ indexed Investor L2R Score. (NB: 2018 is a current, part-year score based on current tracking results)

How does Credo derive the L2R score?

Credo ask thousands of investors: “How likely would you be to recommend your financial advisor to friends, family or others?” We call this bellwether measurement the Likelihood to Recommend measurement, or L2R for short. It is a key measurement. Investors that reply with resounding affirmation in the L2R measurement are classified as RayJay promoters. Those who indicate they wouldn’t by offering low scores, we call detractors. When we deduct the proportion of respondent investors that are classed as detractors from the proportion who are promoters, we end up with the net promoter score. It is a simple but valid statistical measure of a company’s brand health when taken in comparison with competitors’ NPS scores.

Currently, investors who work with RayJay advisors (i.e., during the currently incomplete year 2018) rate their advisors at 6.73 overall. This is on a scale where zero represents the lowest possible level of recommendation likelihood and ten represents the highest possible likelihood. This current score is about 12% lower than the company’s score of 7.63 last year. Coincidentally, at an index of 0.88, it’s also about 12% lower than the current industry average; an average score for all of the dealerships Credo measures. Though our measures are not yet complete for calendar 2018, the current trend is unfavorable for the company; it is possible, but improbable that this situation will be reversed by the end of the year.

BENEATH AND BEYOND L2R

After establishing the benchmark L2R score (and an NPS score) for the company, it is interesting to look at how the same investors rate their advisors against other items that are important drivers of the relationships advisors maintain with their clients. Below we look at additional items that Credo has been tracking for years. Many of these are factors correlated to driving investors’ willingness to recommend their advisors to others, i.e. their L2R. In many respects these constitute RayJay advisors’ strengths and weaknesses. These may be viewed as justification for investors to be using RayJay as an advice supplier or to be seeking guidance elsewhere. Credo’s Financial Advisor (FA) rating statements are presented in Exhibit 3 below.

Exhibit 3: Raymond James Financial Advisors — Credo FA Statement Ratings at September 2018

The numbers in Exhibit 3 are all indexed; they tell whether RayJay advisors score above (or below) industry average scores, i.e., relative to other dealerships’ advisors. To appreciate what this means and how to interpret these measurement items, consider the first item listed in our battery of test statements. It relates to investors’ comfort levels in discussing concerns and questions with their advisor.

RayJay Clients’ comfort communicating with their advisor

The first item listed in our measurement battery is, “I am comfortable discussing concerns and questions with my financial advisor.” Raymond James advisors, through the most recent quarter of 2018, produced and indexed score of 0.91. From this we know that Raymond James advisors are currently scoring 9% lower than the average score achieved by other dealers’ advisors; recall that the average score is always represented by a score of 1.00 in our indexed scoring. This represents a projected 18 percentage point decline between 2017 and 2018. In each of the last three years, RayJay’s comparative statistic have been consistently above the industry average score. So, Credo is concerned for RayJay because of this measured decline in score.

While the current year’s projected decline in scoring will likely not be appealing to Raymond James’ advisors or corporate management, it is the company’s current reality. Without understanding what changes are going on at RayJay, Credo is currently concerned that the company’s communication efforts and service initiatives have changed substantially in some respect. The firm may be consciously adjusting its position in the advice marketplace. This is a matter that Raymond James will want to monitor and address if the firm will stay near the leading edge of advice delivery in Canada, a position the company has tried to maintain for years.

Trust in Raymond James advisors is concerning, too

The second item in our measurement battery is critical: “I trust my advisor completely.” Currently in 2018, RayJay’s score on this item is tracking 6% below the industry standard. This, too, is a deterioration from last year when the company met the industry average with an indexed score of 1.00. In both 2015 and 2016, RayJay was 7% above the industry average on Trust but last year RayJay only met the industry standard. This year the company is tracking to fall short on the delivery of a trust-based experience. The trust that RayJay advised investors have in their advisors has clearly been drifting in an undesirable direction.

RayJay communications quality is slipping, too

RayJay as a firm currently scores 0.87 (or 13% below the advice-industry average scoring) with respect to Credo’s marker statement, “I am very satisfied with the level of communication I have with my financial advisor.” This is an item Credo has found is highly correlated with loyalty. RayJay advisors can feel sure that they will slowly see clients defecting if this deterioration trend continues. Credo suspects, based on our measurements, that the company has been adjusting its communication practices since 2015. Then it stood 15% above the industry average on this tracking dimension. Credo believes that RayJay’s communications practices with clients need to be audited carefully. This deterioration is either the measured representation of a transformation in advisor communication practices or the result of RayJay not keeping pace with customer expectations.

RayJay Clients know what their advice costs

It appears that either RayJay has made a conscious effort to have their investors appreciate the costs that they incur from garnering advice from a RayJay advisor or that these investors have gained a real interest in those costs. At this point this dealership scores 11% above the industry average on this measured dimension. Credo infers, from considering this in conjunction with concerning loyalty statistics that are discussed below, that the RayJay value proposition is being scrutinized substantially by the company’s investor clients.

LOYALTY: Clients Seeking Another Advisor

In the past, RayJay investors have tracked well below the industry average with respect to the desire to seek a new advisor. At this point in 2018, however, Credo’s indexed measurement for RayJay stands at 1.29. This company’s investors are almost 30% more likely than the rest of the investor population to indicate that they are looking for another advisor. While this is consistent with many of the other data points we’re seeing about RayJay, it does not bode well for the company. Only last year (in 2017) this statistic was 36% better than industry average and two years ago it was more than 10% better than industry average.

Loyalty is an outcome, we should point out. You get nowhere by simply asking people to be loyal and to stick with you. You have to deliver value and enable loyalty to result. So, loyalty isn’t an item that RayJay advisors affect directly. Rather, they affect loyalty by managing such matters as their communication processes.

RayJay Clients are doing their own homework

Credo asks investors to indicate whether or not they make efforts to validate their advisors’ recommendations. RayJay’s investor clients have had a dramatic change of heart in the last year. Where the company’s scoring was tracking at the industry average or below, Credo’s measurements in 2018 have risen to 37% above industry average. Credo infers that this is consistent with investors seeking alternatives to RayJay advisors, a matter discussed above.

How Clear is the Value of your Advisor’s Guidance

RayJay’s investors have indicated that there has been a dramatic deterioration in the degree to which they see value in their advisor’s guidance. cIn 2017, RayJay’s indexed score was 1.17, well above the industry average. In 2018, however, the company is tracking at 0.93; below the industry average scoring by 7%. This 24-point deterioration is consistent with the overall deterioration in RayJay’s L2R and loyalty direction.

Congruence of Guidance and Goals

RayJay’s advisors offer guidance that is essentially at industry standard with respect to our marker statement, “The guidance my advisor offers fits with my goals.” The company’s score stands at 0.99, only one point off the industry average. That said, our measurement for RayJay in 2017 stood at 1.12 which is more than ten points higher than the industry standard. The apparent decline is consistent with other Credo measurements and indicates an organization that is in some state of transition with respect to what it is delivering to clients.

Highly controllable Advisor Accessibility falls, too

Credo’s measurement of RayJay advisors’ accessibility shows deterioration, too. This may be a result of RayJay’s changing communication processes or evolving investor expectations with respect to advisor accessibility at an industry level. In either case, the decline in Credo’s measurement for the company from an indexed score of 1.10 in 2017 to 0.94 midway through 2018 should be a wake up call to RayJay and the company’s advisors.

Consistency of Experience

RayJay investors’ assessment of the consistency of experience with their advisors is of concern for Credo. This statistic indicates that there is considerable consistency, year over year, in how the company’s advisors deal with their clients. There is a decline of 6 percentage points (from an index of 1.08 to 1.02) between 2017 and Credo’s mid-year measurement in 2018. From this we infer that there really is little change in the overall experience that RayJay advisors are delivering. Yet, with many of the other parameters Credo is measuring, the company’s scores are in decline. Accordingly, Credo is questioning whether or not the RayJay model is remaining both relevant and adequate for investors.

QUALITY, COMFORT & CREDIBILITY

Three factors that predict a company’s ongoing success are its clients’ assessments of the quality of what it delivers, the comfort they take in working with the company and the overarching credibility that the company has in their minds. Credo measures these items for Raymond James and for the company’s many competitors. We report on these items regularly.

The Quality of RayJay Advisors

The measured quality of RayJay advisors — based on their clients’ assessments — has fallen relative to the rest of the industry. In 2017 the company’s quality score was 11% above industry average. As we track this metric in 2018, it has fallen to 0.94. Though our 2018 is still only a mid-year statistic, the prospect of a 17 point drop year-over-year would be grossly undesirable prospect coming from clients. Quality is a critical driver of L2R and NPS. This has to be of concern to RayJay, its advisors and its investors alike.

Investors’ Comfort with RayJay Advisors

In 2017, RayJay indexed at 1.10 against Credo’s key measurement item, “My advisor provides me with a sense of comfort.” This score was fully 10% above the industry average. As we continue our measurement tracking in 2018, the company’s scoring is currently projected at 0.90, 10% below the industry average and a 20 point deterioration year over year. RayJay should consider auditing its service delivery models with customer experience mapping techniques in order to identify causes of deteriorating investor comfort.

The Credibility of RayJay Advisors with its clients

By Credo’s measures, Raymond James advisors stood 7% above the industry standard with respect to credibility in 2017. Its index score was 1.07. This offered assurance that the company’s advisors were viewed as dependable and trustworthy by its investors. (Note that dependability and trustworthiness are the underpinnings of credibility.) Our measurement for 2018 has the company tracking to score 0.93 for the year; a 14 point deterioration in its scoring of credibility. Credo has concerns about changes the company may be making in its service delivery model.

INVESTORS’ BEST INTERESTS

Do investors feel their advisors have their best interests at heart? This matters. When investors lose the confidence that their advisors are properly looking after them; when investors feel that their advisor is taking advantage of them, there is trouble brewing from a loyalty perspective. Credo regularly asks investors to rate their advisor against two key statements related to this matter:

Agree or Disagree

  1. My advisor has my best interests at heart.
  2. My advisor puts my best interests before their own.

The results of investors rating RayJay are concerning on these items. Both show considerable deterioration.

My Best Interests at Heart

In 2017, Raymond James scored 10% above the industry average with respect to this item. The average score for a Raymond James advisor was 8.50. This represents an index of 1.10 or 10% above the industry average. The current tracking for the company has its score projection for 2018 at no higher than 7.00 which will index at 0.90 or 10% below the industry average. Credo thus projects a deterioration of 20 percentage points on this item.

My Interests Before Theirs

With respect to investors feeling that their advisors put investor interests before their own, Raymond James scored 10% above the industry average in 2017, just as they did with having the investor’s best interest at heart. The company’s score is currently tracking toward a 0.93 for 2018; fully a 17 point decrease and a score that would be 7% below the industry average.

CONCLUSION

Credo’s tracking of investors’ perceptions of their advisors produces objective benchmarks that enable managers to assess whether their firm is progressing in a constructive manner within a tremendously competitive Canadian financial advice environment. The statistics described in this report portray Raymond James as a provider of financial guidance to Canadian investors. The trends and measurements for the company are not desirable and Credo would recommend that the company further evaluate both strategic and tactical initiatives that have been introduced on the last year, in particular.

RECOMMENDATIONS

Credo’s Current Recommendation for Advisors: Cultural fit is essential and the changes Credo is observing in investor-driven measurements suggest a current state of transition for RayJay; wait and thoroughly investigate from a cultural perspective before joining this platform.

Credo’s Current Recommendation for Investors: Without very careful consideration, do not jump into a relationship with Raymond James as an advice firm until the current direction of the firm’s commitment to investors is better understood and demonstrated in a measured way; it appears to be changing.

QUESTIONS, COMMENTS AND CONCERNS

If you have questions, comments or concerns about this research, you may contact Hugh Murphy, President, Credo Consulting at 905.919.1926 or by eMail at hugh.murphy@credo.ca

METHODOLOGY

Credo surveys investors on a monthly basis. Each month we invite randomly selected investors from specific dealerships to complete a set of questions about their financial advisor. Investors are recruited by telephone to participate in a simple online survey. Credo provides these investors with the assurance of their anonymity and of the confidentiality of the feedback they provide. Many of the questions that are posed are described above, in this report. The questions comprise a robust brand measurement framework that Credo has been using for more than a decade to track customers perceptions of their suppliers; in the case of this research exercise, customers are investors while suppliers are financial advisors. Credo aggregates data collected from investors and we produce comparative analysis of specific companies relative to the rest of the industry.