Transcript

Let's talk more about what we're hearing when it comes to investor sentiment with Paul Shoukri. He is Raymond James, CEO, joining us on set. Great to see you, Paul. Oh, great to be here. So let's start there. You, of course, have a very unique view on the lay of the land when it comes to sentiment. And when you take a look at advisors, what their clients are doing and saying, how does sentiment look right now? Yeah, the advisor and client sentiment is very high right now. I 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. They're managing, on average, record levels of client assets and production. And most importantly, the client sentiment is very high. The equity markets are near all-time highs, and so I know there's a lot of headlines around tariffs, government shutdown, and those type of things. But I'm not hearing a lot of those concerns when I'm out on the road. And I spend 80% of my time out on the road meeting with advisors and clients. I don't hear too many concerns around those type of headlines. Yeah, it's pretty wild to look at the S&P 500 higher by about 16.5% year to date. I 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 really powering some of those huge technology companies. I know when it comes to Raymond James, you recently filled your chief AI officer role. You also hired a head of AI strategy. What does AI look like for Raymond James and basically the business of wealth management? I mean, the leadership team at Raymond James, we have a conviction that AI is going to be an absolute game changer, not only in our industry, but in all industries. And so we made these key hires to really build out our AI strategy across the organization. I'd say it's a three -pronged strategy. It's first starting on efficiencies in the back and middle office to do more with the same number of people. It's also to protect the firm, the foundation, the cybersecurity, where so many of the false positives were historically monitored and evaluated by humans. Now those can be done in seconds through AI and automation. And then, of course, helping advisors and financial professionals with client-driven insights to help them develop more personal relationships with the help of technology. And so we're looking at AI not from a lens of circumventing or going around our financial professionals to go directly to clients, but really from a lens of how can we enable our financial professionals, our financial advisors, to develop even more personalized relationships and tailored relationships with their clients. As you sort of build out those AI and technology capabilities, is that going to be done sort of organically, internally, or are you looking maybe to potentially make acquisitions to help? Well, it's really all of the above in terms of building AI technologies organically and internally, but also partnering with third -party vendors. Because every third-party vendor that we use, including Bloomberg, they're integrating AI into their solutions. And 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. Do we want to build it in-house? Does it make sense to build it in-house? Can 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? I am curious, though, about just the general impact right now of economic conditions and, I guess, more importantly, interest rates as well. And 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, to a certain extent, might actually help your business, at least on the lending business side of that business. But 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. Yeah, 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. Lower rates, we believe, will be helpful to the M&A business. We have a large investment banking and M&A business. Lower rates, especially if financing is still available to the extent that it is today, makes valuations and makes financing transactions more attractive. So we think that that could be a nice tailwind for the M &A business. You talked about loans to our high net worth clients, mortgages and securities based loans. Those are floating rate loans. So lower rates should increase borrowings there as it did when rates were near zero during the pandemic. But then in terms of some of the some of the offsets, certainly the spread, the earnings we have and the spreads that we make on cash balances will go down. So that would be a potential offset to some of the tailwinds. I 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. And I wonder what it means for Raymond James. You think about the competitive landscape here. You had Morgan Stanley buy Equities and Schwab just bought Forge Global, I believe. So what is your offering currently look like and how do you see it evolving over the next couple of years? We've been investing in that platform for a long time. I mean, the underlying premise is that more companies are staying private longer, and these are high -growth companies in a lot of cases. And so we want to be able to enable our advisors to provide access to their clients to invest in those type of companies. At the same time, what private markets means has expanded dramatically just in the last three to five years. And 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. These are relatively liquid to public securities, and 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. And so we're having a balanced approach, just like we do with everything. It'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. You said you travel a lot, as you would expect a CEO like you to do. I am curious, so how much time are you spending in Washington right now? I'm actually going to Washington next week. So 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. But, you know, and Paul Riley, who was my predecessor's executive chair, he's spending a lot of time on Washington, too. He's on the board of an industry association. So, yeah, we are engaged in Washington. But I really try to spend most of my time with advisors, financial professionals, and clients. So that's where I'm spending the bulk of my time when I travel. Yeah, it's a much nicer bunch than the folks in Congress. Paul, great to have you here.