Remote Work, Technology Innovations, and Teaching Tennis with Paul Reilly of Raymond James Financial
As part of our Voyagers and Visionaries interview series, Stonehill recently spoke with Paul Reilly about his professional and personal insights on the Future of Work, innovation in the financial services industry and adjustments in his style of management due to the COVID-19 pandemic. Paul Reilly is Chairman and Chief Executive Officer of Raymond James Financial.
Q: How has the financial services industry fared during the pandemic as compared to other industries?
A: I’m surprised at how well and immediate the financial industry shifted to remote working. Some firms dealt with a few service issues, but because of the investment Raymond James made in mobile technology, and our increase in bandwidth, our transition went almost without a glitch. If you asked any other financial services firm if they thought 99% of their people could be working from home in a week, they would have said no, yet we all were. We thought the weakest link would be the ISPs, especially with our kids and families on the Internet at the same time. But the entire switch was truly amazing from an operational standpoint.
The larger challenge for banks and broker/dealers in particular, was within days the Federal Reserve took interest rates to zero. Half of profits were erased from the industry. During the first month, certain primary dealers and self-clearing firms without a lot of capital struggled tremendously. However, it wasn’t as significant of an issue for Raymond James due to our extremely large capital position and liquidity. Profits are down and they're going to be down for a while, if you believe the Fed. We’ve had fee compression in the brokerage business from mutual funds, and third-party fees, happening for a while. However, interest rate margin expansion more than made up for this. Now that interest rates have come back in and firms don't have the same level of third-party fees supporting the platform, the challenge will be lowering costs. We have to be more efficient and focus in on a plan if rates don’t go up over the next couple of years.
Q: You mentioned that in about a week everyone was working from home. How do you envision the Future of Work for both your client facing teams, as well as your back office associates?
A: Over the last several months I’ve been asked, “What are you going to do in January or in a month?” My answer is always, “I simply don’t know.” It will be a different answer if cases begin to decrease in Tampa Bay, or if winter approaches they may peak. However, I think the pandemic has taught us a few things … like the capacity and ability to work from home exists. There was the initial phase of what I’ve called ‘the transactional days,’ where everyone went home working on adrenaline. The markets were kind of crazy, and I think we were shocked at how well – even at peak volumes – we could serve advisors with all of our support associates at home.
There have been advantages and challenges working with clients in this virtual environment. Many clients who historically didn’t like electronic documents have now become users of eSignature and Zoom. However, if there’s a complex issue, it can be difficult to collaborate with your co-workers who are usually right down the hall. I find Zoom meetings very effective for delivering information, but it may be more difficult to have a back and forth strategic discussion when you don't have the ability to ask your associate a quick question during a meeting break. Things that can be solved simply in an office environment may be tough virtually, especially as the industry becomes more complex.
Our internal surveys show that people really want to get back in the office and see each other, but only if they feel safe. We have also learned they want more flexibility, and want the option to work from home. Fortunately, we've shown that people can work from home successfully, but it has to be done in a strategic manner. We can’t have everyone working in the office Tuesday through Thursday, it wouldn’t work for productivity, and we still have peak office space costs along with the ancillary costs. However, we may be open to a flexible schedule, rotating work from home days. The counterpart of this is social distancing, and keeping associates who have a small office space spread out. Earlier in the year, before the pandemic hit, we were on a path to prepare for remote working. We had plans to sign an office lease in New York for our commuters who want the option of working at home, or at offices in the suburbs on occasion. We had hired the head of PWC ‘s real estate mobile mobility group with a goal to be 30% mobile in five years. When he on boarded with us during the shutdown in March, I kiddingly said, “You know, I meant five weeks not five years.” Overall, office space may go down 30% to 50% in general, depending on the industry. We will have to continue to learn and adapt over time.
Q: What has been the most significant challenge Raymond James has faced since the shutdowns began?
A: In the beginning, our number one goal was getting people home safe. At the time, no one knew how risky or deadly the virus was, and we were concerned it could run rampant. Even though we did really well at getting everyone home, no matter how many associates we have, if we lost an associate it would be personal.
Our second immediate goal was to service everyone, because we have a business to run for advisors and their clients, and for other business and associates who depend on the firm. My transition thought was, “Just get home, and we’ll figure it out.” This progressed to making sure all our systems were running properly. The next step was to develop plans for people to safely return to the office when that made sense. We established safety protocols, making it safe for those who chose to go back in.
As we continued to work remote, we found ways to keep people engaged with Zoom cocktail parties and Zoom board games. After three months, Zoom fatigue started to set in, and we looked for additional ways to virtually engage our associates and celebrate our firm’s culture. Without pride of authorship, we began to look at what other firms were doing to stay engaged. We looked at other industries, turned to outside consultants, and internal committees, to help us identify best practices and learn what others were doing to try to build the bond.
Ultimately, we just need to get people through this and continue to give them hope and protection. We want to help them make responsible choices with protocols and space, and make sure we're maintaining an environment that keeps them safe. But, we can't guarantee their safety if they’re too close to each other. Currently, returning to the office remains entirely voluntary with the option of a maximum capacity of 50% at our branches, following necessary procedures and safety measures, including advisor and associate attestation requirements and social distancing protocols.
Q: What has been Raymond James’s most impactful innovation?
A: A lot of the systems that helped us through the shutdown had already been implemented. We previously increased our bandwidth, put in a new data center, and provided our advisors with remote technology like Advisor Mobile. This app enables our advisors to quickly answer clients' questions and improve the client experience with information including account balances, holdings, transaction information, records and CRM.
Pre-COVID, adoption of some technology had been relatively slow, then all of a sudden advisors and their clients and our associates were asking about it and using it. Naturally, we widened the pipeline even further when we saw how many people were on board, and during the first month, we had a number of a record account opening days. It came down to quick adoption of the available technology by both associates and clients.
The most impactful innovation was probably on the institutional side. We never previously looked into work from home solutions for traders. Traders are normally supervised, and need to be together to communicate quickly. However, technology solutions, like call boxes and open speakers on Zoom, provided them with enough resources and bandwidth to work from home. We always assumed the Private Client Group would become a mobile business, but hadn’t considered it for institutional. I think the whole industry was surprised we could do that, but necessity made us learn.
Q: How have you changed your management style or any practices in the current environment?
A: My management style has been evolving. Because I’ve been meeting by Zoom so often, I think it made me rationalize which meetings we really needed, and which people truly needed to be involved. I’m also working on reaching out to people more frequently. I’m making lists, and making it a point to talk to a certain amount of advisors a day. Group face-to-face meetings aren’t occurring, and the opportunity to see advisors in a branch is minimal.
Additionally, I probably gained back several months of time not traveling, but some of the savings has been counterproductive. Our annual conferences and recognition trips are extremely important, because they allow me the opportunity to deliver personal messages to our teams. During these trips I saw people and businesses from different parts of the country where I generally would not be able to visit. More importantly in those settings, I’m really able to connect and listen to advisors and our associates. Since those opportunities aren’t available, I’ve been making the effort to reach out more.
Q: What activity have you missed most during this time of social distancing?
A: From a work standpoint, I’ve missed the crowds of financial advisors at our Private Client Group conferences – I’m energized by them. When you see so many good people together, they remind you why you’re working, and that what you're doing is important to them. I also miss gatherings in my personal life. I have seven siblings, and most Sundays were spent with family get-togethers of 30 to 40 people. Those have now been replaced with just couples, sometimes with their kids. Similarly, I’ve been seeing just one or two friends at a time. I remember the last dinner party we had back in March, and it was fun introducing 14 people to each other and mingling – I miss those types of interactions.
Q: What’s a fun fact that people don’t know about you?
A: I’ll give you two. I’m a CPA, but I don’t have an accounting degree, and my favorite summer job was being an ice cream man. During the summer between graduating from Notre Dame and heading back for an MBA, I taught tennis. The lessons were in the morning, and I had nothing to do in the afternoons, so I took a job driving an ice cream truck. One time I was near the St. Pete Pier wearing a Notre Dame shirt and a man asked, “Do you know someone at that school?” I proceeded to tell him that I had just graduated from Notre Dame and he followed by saying, “And this was the best job you could get?”
This interview was conducted by the team at Stonehill. Stonehill is a strategy and innovation firm that helps businesses to identify opportunity, implement change, and accelerate growth. Our team consists of an innovative blend of creative, strategy, technology, and change management experts that allows us to unite the functional silos of business in the common objective of creating differentiated customer experiences.