00:00So let's start there. You, of course, have a very unique view on the lay of the land when it comes to sentiment.
00:06And when you take a look at advisors, what their clients are doing and saying, how does sentiment look right now?
00:13Yeah, the advisor and client sentiment is very high right now.
00:16I was just at a dinner last night in downtown New York with 250 advisors and the morale from the advisor community is through the roof.
00:25They're managing, on average, record levels of client assets and production.
00:30And most importantly, the client sentiment is very high.
00:33The equity markets are near all-time highs.
00:36And so I know there's a lot of headlines around tariffs, government shutdown and those type of things.
00:41But I'm not hearing a lot of those concerns when I'm out on the road.
00:44And I spend 80 percent of my time out on the road meeting with advisors and clients.
00:47I don't hear too many concerns around those type of headlines.
00:51Yeah, it's pretty wild to look at the S&P 500 higher by about 16.5 percent year to date.
00:57I want to talk specifically about Raymond James, because one of the big reasons why you've seen such a resilient market is this belief in AI,
01:05really powering some of those huge technology companies.
01:08I know when it comes to Raymond James, you recently filled your chief AI officer role.
01:13You also hired a head of AI strategy.
01:16What does AI look like for Raymond James and basically the business of wealth management?
01:23I mean, the leadership team at Raymond James, we have a conviction that AI is going to be an absolute game changer,
01:27not only in our industry, but in all industries.
01:30And so we made these key hires to really build out our AI strategy across the organization.
01:36I'd say it's a three-pronged strategy.
01:38It's first starting on efficiencies in the back and middle office to do more with the same number of people.
01:45It's also to protect the firm, the foundation, the cybersecurity, where so many of the false positives were historically monitored and evaluated by humans.
01:55Now those can be done in seconds through AI and automation.
01:59And then, of course, helping advisors and financial professionals with client-driven insights to help them develop more personal relationships with the help of technology.
02:09And so we're looking at AI not from a lens of circumventing or going around our financial professionals to go directly to clients,
02:16but really from a lens of how can we enable our financial professionals, our financial advisors,
02:21to develop even more personalized relationships and tailored relationships with their clients.
02:26As you sort of build out those AI and technology capabilities, is that going to be done sort of organically, internally,
02:32or are you looking maybe to potentially make acquisitions to help?
02:35Well, it's really all of the above in terms of building AI technologies organically and internally,
02:41but also partnering with third-party vendors.
02:43Because every third-party vendor that we use, including Bloomberg, they're integrating AI into their solutions.
02:49And so the team is really looking at where does it make the most sense for us to leverage the AI that's available to us.
02:56Do we want to build it in-house?
02:57Does it make sense to build it in-house?
02:59Can we do something differentiated with it, or should we partner with a third-party firm that's doing that on their specific area of expertise?
03:07I am curious, though, about just the general impact right now of economic conditions and, I guess, more importantly, interest rates as well.
03:14And I know on your earnings a few weeks ago, you talked on the conference call about this idea of actually how a drop in interest rates,
03:19to a certain extent, might actually help your business, at least on the lending business side of that business.
03:24But I am curious if you could kind of articulate what a lower interest rate environment is going to mean for Raymond James and your clients.
03:31Yeah, I mean, we're a diversified financial services firm, so there's always puts and takes with anything that happens in the markets or with interest rates.
03:38Lower rates, we believe, will be helpful to the M&A business.
03:42We have a large investment banking and M&A business.
03:44Lower rates, especially if financing is still available to the extent that it is today, makes valuations and makes financing transactions more attractive.
03:54So we think that that could be a nice tailwind for the M&A business.
03:58You talked about loans to our high net worth clients, mortgages and securities-based loans.
04:03Those are floating rate loans.
04:04So lower rates should increase borrowings there, as it did, when rates were near zero during the pandemic.
04:11But then in terms of some of the offsets, certainly the spread, the earnings we have and the spreads that we make on cash balances will go down.
04:20So that would be a potential offset to some of the tailwinds.
04:24I also do want to bring private markets into the conversation, specifically in the context of wealth management, because we know that private assets, all the rage right now.
04:33And I wonder, you know, what it means for Raymond James.
04:36You think about the competitive landscape here.
04:38You had Morgan Stanley buy equities and Schwab just bought Forge Global, I believe.
04:44So what is your offering currently look like and how do you see it evolving over the next couple of years?
04:50Yeah, we've been investing in that platform for a long time.
04:52I mean, the underlying premise is that more companies are staying private longer.
04:56And these are high-growth companies in a lot of cases.
04:58And so we want to be able to enable our advisors to provide access to their clients to invest in those type of companies.
05:06At the same time, what private markets means has expanded dramatically just in the last three to five years.
05:12And so we want to make sure, first and foremost, that any investment that advisors sell to their clients makes sense for their clients and their positions.
05:20These are relatively illiquid to public securities.
05:24And so we need to make sure that clients are comfortable holding that amount of liquidity in their portfolio because it tends to become less liquid when you need the cash the most.
05:33And so we're having a balanced approach, just like we do with everything.
05:36It's really, it has to make sure, we have to make sure that's consistent and aligned with the long-term financial plan of the clients.
05:43You said you travel a lot, as you would expect a CEO like you to do.
05:47I am curious, though, how much time are you spending in Washington right now?
05:51I'm actually going to Washington next week.
05:53So I didn't get invited to the dinner tonight that I guess a bunch of Wall Street CEOs, yeah, I still can make it if I get the invite here in the next 30 minutes.
06:01But, you know, and Paul Reilly, who was my predecessor's executive chair, he's spending a lot of time on Washington, too.
06:09He's on the board of an industry association.
06:12So, yeah, we are engaged in Washington.
06:15But I really try to spend most of my time with advisors, financial professionals, and clients.
06:20And so that's where I'm spending the bulk of my time when I travel.
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