Q&A with Paul Reilly

Paul Reilly is someone all of us at Raymond James know (or feel like we do), whether we’ve met him at a conference or in the cafeteria at the home office. Diving into his time with the firm – first as a member of the board, then as president and CEO and now as chair and CEO – Paul shares his past with the firm and vision for its future.

Q. Growing up in St. Petersburg, Florida, when did you first hear about Raymond James?

Everyone who grew up here knew Raymond James. The firm was a big community supporter, even in the early days. And my parents knew Tom’s [Chair Emeritus Tom James] parents – we grew up in the same neighborhood. Of course, everyone in St. Pete seemed to know each other in those days.

What I didn’t know growing up was how big Raymond James was getting. I was 8 years old when it started in 1962. It took a while for people in St. Petersburg to see how much it was growing and how nationally it was really known – some may have only realized that fairly recently.

Q. I was going to ask if you and Tom knew each other before you both became active in the local tennis scene; clearly you did.

Oh yeah. Now, Tom is 10 years older than I am. After I graduated from school, I got to know him – because then I was old enough to play tennis with him. Over the years, he kept up with my career. When I sold my business to KPMG, Tom tried to recruit me to run the real estate group. I was intrigued, but when my partner and I sold to KPMG, we kept that group together focusing on real estate and financial services consulting. Maybe we could have done that at Raymond James, but at the time I was eager to branch out and do different things.

Q. But even after turning down his offer, you and Tom kept orbiting each other?

Tennis was the touchstone for years. After I left KPMG and was chair and CEO of Korn Ferry, he asked if I would be interested in one of the mutual fund boards. I said, “No, but I would be interested in the Raymond James board.” It was the only outside board I ever served on because it was Raymond James. It was home. It was important. I knew the values of the company because of Tom. I loved what it did for the community. It was great to be on that board, because you could really see the company and how the board cared about the company, too, which is sometimes unusual in public companies. That was a great experience – with no idea I’d ever be coming inside.

Q. What was it like walking into the headquarters for the first time as a board member?

I came in knowing the CEO – well, I’d call us business friends – and the CFO, and it was great to meet the rest of the management team. That’s when you get to see that the values of the company are really embedded in the firm and its people.

So, it was really kind of a cool feeling walking in that first time. It’s still pretty cool walking through the halls. In fact, there are days I sit and I go “Gosh” – as I get older – “I wonder what it’ll be like when I can’t walk through here anymore.”

Q. How was it experiencing Tom the CEO versus Tom the business friend?

Actually, when I was in the real estate business, my partner and I pitched Tom on building Raymond James’ new office space. The location we’d chosen was off of Ninth Street and allowed enough space to double the size of the firm’s footprint. And he came back and said, “Nah, that’s too small. We’re going to be a lot bigger than that.” And I thought he was crazy, but then we ran out of space here – which is five times as large as where he was. He’s always had that vision of the road ahead and flexibility, which is a key part of our success. Even today, in these more challenging times, the fact that we’ve always taken that long-term view serves us. I learned so much from Tom.

Q. What resonated most?

His commitment to the culture. This is the first place I’ve been where I thought I didn’t have to worry about it, because it’s so embedded. But I learned very quickly from Tom, you can never take culture for granted. You’ll notice in my talks, I always open and close with culture. And it’s for two reasons. One, we hire a lot of people who are new to our culture and don’t understand how the protection of our client-first values – our commitment to clients and also treating advisors like clients – are so embedded. So, you have to remind them of that message over and over again.

And two, you can never allow it to slip. As you get bigger, you have to remind people every day, “This is who we are.” We’re probably the largest public company without an airplane. We don’t have cars, we don’t have a boat, we don’t have private dining halls. I pay for my own parking space. In fact, I don’t have a benefit here that every associate doesn’t have.

I get paid a lot of money for what I do, so why should I have extra benefits? So, that part of the culture, those signals to people, I think, reinforce the fact that everything is “first name” here. Every new person, you almost have to correct, “My name’s Paul, not Mr. Reilly.”

Q. What else did you see from Tom in those early days?

When I first came in, I could see Tom as that leader. I also saw how adamant he was about not taking unnecessary risks. Our outside styles are different, but our inward focus is aligned. I recognized, over time, that we do the same thing – we both say “no” and keep saying “no” until people can prove an idea is good for clients and good for us – in that order. And when there’s a people issue, we’re both always very human and say, “OK, how would we want to be treated?” Over time we’ve become close friends, because we share the same values and we love the same company. It’s his baby. It’s my adopted child. And more recently, with this new banking crisis, the first question I asked was, “What percentage of our clients have insurance on their deposits?” It’s at 94%. We just intuitively say, “Our clients should have the maximum protection possible.” It’s endemic to Raymond James. It’s not what you do in times like these, it’s what you did before.

“Even today, in these more challenging times, the fact that we've always taken that long-term view serves us.”

Q. You talked about Tom approaching you to join the board. How did he broach the subject of asking you to succeed him as CEO?

Our lead director at the time was working on Tom’s succession and shared that Tom would only consider two people to succeed him. One of them was me. After asking the director if he really thought I’d be the right person, I met with Tom – in November of 2008, the midst of the financial crisis. I still remember the last meeting. I said, “Tom, look, I’m honored, but the more important thing is am I the right person? If I’m not the right person to lead the firm, I don’t want to do it. Because I care about the firm more than I care about the job.” And then I asked the other important question: “Are you really ready to transition? You know how hard this is going to be.” And he started yelling, “Transition? Try taking over from your dad! Of course I understand.” And I laughed and said OK, he’s ready. He wanted to make sure that if something happened to him, the company was in hands he trusted, because he cares about the people here. When someone tells you that, it makes you understand the responsibility. It’s not a job, it really is a responsibility.

Q. What was it like breaking that news to the rest of the firm?

We’d been discussing it since June of 2009, but we had the National Conference for Professional Development (now Elevate) coming up in March. We decided to announce earlier because we didn’t want the advisors to get together one month and then make this huge announcement a couple months later and leave them feeling like we’d been hiding something. So, I agreed to do it in March of 2009, right in the depth of the financial crisis. That shows you how much I believed in Raymond James. The morning the conference kicked off, the press release had just come out: “Paul Reilly to succeed Tom James.” I walked up on the stage in Vegas after Chet Helck presented, and gave a very short talk. I said, “I know trust is earned. Just give me a chance.” Then I talked a little about the company. “I know you guys have been battling through the financial crisis. Your clients are worried. You’re coming here in March in, you know, hopefully the low of the cycle. And you got here and said, ‘Gosh, I wonder what could possibly happen next,’ and then you woke up to ‘Paul Reilly to succeed Tom James as CEO.’”

They all laughed. That was my introduction.

Q. How did you prepare for the role beyond your work on the board and the time you’d spent with Tom?

I’d never run a financial services company, but I’d run service firms. So, I had exposure. But I say this was the best job I ever had, because I came in as president to be CEO and had no responsibility. But I had all the authority, because everyone knew I was going to be CEO in a year. It allowed me to do two things. I got to go to meetings with Tom and observe what he did. And then I got to invest the time it takes to really understand our businesses and the people in detail and let them get to know me.

Q. There was still more of a learning curve?

I think there always will be. When you learn a company – especially a financial services company – things are changing all the time. Having that first year as president gave me time to lay out the strategy of “the premier alternative to Wall Street,” and, again, Tom was very, very helpful in that. Then about a couple of years into it, he became just like another board member. He would challenge me as a board member.

People give us a lot of credit for a great succession, but it’s a lot harder to give up the baby than to adopt the baby. Tom should really get the credit. It’s been a blessing to have him here. When you have what I call the personal dilemmas – what’s really fair to a person or something like that – sometimes it’s hard to find someone who’s really objective. But with Tom, it’s easy. I just walk into his office, shut the door, and we talk. There’s an openness to hashing things out. And I like that. I like meetings where everybody’s arguing, because they’re trying to come up with the best answer and they’re arguing the pros and cons.

Tom and I both have the same values, the same endpoints.

Q. What’s been the biggest surprise since taking the reins?

I was shocked when we made the [Fortune magazine] 500 list. I never even thought about it. Much less the 400. I was shocked when we started receiving A ratings from the ratings agencies.

We’ve grown so steadily since the beginning, which has really been the secret. And when you start compounding it, things surprise you that shouldn’t surprise you. It’s funny the things that aren’t goals, but just kind of happen because of who we are and how we operate. The biggest surprise was probably that I kept hearing how good our technology was, from advisor to client to regulatory systems, but only compared to regional firms. And the revelation I had was, “Look, we’re getting to a certain size, and our aspiration is to compete with the Wall Street firms and the custodial firms to really be a leader.” The technology bet gave us a chance to become a leader in a lot of areas, even against the big firms, which is why we’ve done so well in recruiting advisors.

Q. Over the years, Raymond James has become particularly adept at embracing change and pursuing big ideas while staying very grounded, steady and in many ways unremarkable – for example, you’re one of only three CEOs in 60 years. Why do you think that balance is important? How can we preserve it into the future?

I think it’s critical. People say, “You’re conservative, so you can’t be innovative.” But we believe you can be both. Some firms are just rolling out global technology on mobile devices now; we did it six years ago.

For us, “conservative” means you never go faster than your capital, liquidity and flexibility. We’ve avoided a lot of things that have hurt other financial firms, and it’s not necessarily because we’re smarter, we’re just that committed to the long-term protection of clients. And you have to accept the criticisms, knowing that someday the reason for the choices you’ve made will become clear. I didn’t know a banking crisis was going to happen this March [2023], but I knew it would happen sometime. After a long, good economy, there’s going to be an adjustment. That’s the great thing about the firm and our board: Our focus is to make sure that clients are protected first, which means advisors are protected.

Q. What next step on the firm’s horizon are you most excited about?

We’ve been on this path to be the premier alternative to Wall Street and, as we’ve reached that goal, we’re asking how do we continue to be big enough to offer all of the services advisors and clients need but still feel small? One of the ways we do that is by leveraging technology to foster those human connections – the advisor-client relationships.

We’ve had the leading advisor app – I think people in the industry would admit that – but we held off on the client app. It wasn’t that clients were second, it was that we wanted advisors to have the information and get that right first. And now with the rollout of the client app – the first phase will look like other leading banking and brokerage apps, but what’s coming in the next year will make it miles different.

We’re doubling down on the prominence of the advisor while still giving clients something that I think will be ahead of everyone else.

“The business part makes things interesting, but it’s really about the people and the culture. That’s what makes you want to be and do better.”

Q. Of your tenure to this point, what’s been your proudest moment?

Seeing the heart of Raymond James. You see it during our response to hurricanes. When leadership put money into Friends of Raymond James. You see the outpouring of advisors helping associates – taking people into their homes. We’ve been through a few of them and each time I’m just staggered by the generosity. And sometimes our annual United Way campaign would come on the heels of a storm and the giving level would still break our record. I remember after one hurricane, I said let’s open the home office as a shelter. And I looked at the volunteer sign-up sheet, and for most of the times between 2 and 6 a.m., it was executive committee members volunteering. People brought in pizzas and everyone pitched in. During [hurricane] Ian, we sent food down in trucks to the branches and the branches said we have all we need, let’s give it to the community. So we used branch locations as distribution sites and kept sending trucks and people down to help.

Q. What are you most passionate about outside of the firm and your work?

Rose, my wife; six daughters; two sons-in-law – adding a third in August; and two grandkids. So, certainly my family. From a fun standpoint, I played competitive tennis for a long time. Not as well as some other people sometimes [laughs]. I love being out on a boat; I love moving on the water.

Q. Thanks for talking with us, Paul. It’s been great to revisit your journey with the firm as we start on our next 60 years. Any parting thoughts?