When the RIA division of Raymond James Financial Services raised the minimum amount of assets new firms must manage from $30 million to $50 million last November, it may as well have drawn a line in the sand. The firm, which has long touted a family-style feel attached to a widely recognized brand name, was sending a clear message to the industry, one that beckoned large, successful practices to come hither-and pressured smaller ones to find somewhere else to put clients' assets.

It's an interesting time for the custodial division of RJFS to set a minimum that dwarfs its competitors' (TD Ameritrade and Schwab don't have AUM minimums, while Fidelity keeps its at $15 million). After all, this is coming off a year when production and asset levels hit record lows for both clients and the advisors serving them.

But while the new minimum could help cover the cost of Raymond James' notably expensive platform, it may also deter smaller, fast-growing firms from considering RJFS. Is this all part of a long-term plan to target more successful, larger practices? "It certainly is," affirms Dick Averitt, chairman and chief executive officer of RJFS.

UPPING THE GAME

Last year's financial crisis shined a harsh light on the wirehouse model, causing brokers who had never given independence a thought to take another, quite serious look at their myriad options. Over the past 18 months, both broker-dealers and custodians serving the independent space have ramped up their efforts to recruit these breakaways, peddling everything from fee waivers and price reductions to new marketing tools and creative compensation packages. The recruitment of breakaways has truly become an all-in game, with many firms posting increases topping 300% over the past two years.

But to Mike DiGirolamo, senior vice president and managing director at RJFS, as well as the head of the firm's RIA division, not all breakaway brokers are a good fit for the Raymond James name. "A lot of wirehouse advisors have been cut because they're not necessarily making the grade. Raising the minimum helped us distinguish between them and the successful ones who really want to find independence and become entrepreneurial," DiGirolamo explains.

Another reason DiGirolamo gives for bumping up AUM is to cover the cost of the Raymond James platform, known for its high price and integration-a tool Bill Van Law, who heads up the independent contractor division at RJFS, calls "the single best fit for higher producers." To many in the custodial industry today, however, any major differences between platforms are more a matter of ad budgets than substance.

"While there are industry leaders out there, typically those advantages are much smaller than they used to be due to the race to invest in platforms," says Timothy Welsh, president of Nexus Strategy, a wealth management consulting firm in Larkspur, Calif. "I don't believe Raymond James' platform provides as big an advantage as some would believe."

SETTING THEMSELVES APART

Cost cutting and differentiating aside, Raymond James' overriding reason for raising AUM minimums is simple: Successful advisors want to work with other successful advisors. "When we're speaking with advisors and they're trying to determine what road to take for their business, one question I get consistently is, What's the profile of your average advisor?" DiGirolamo notes.

"Everyone wants to improve their game and they think the best way to do that is by associating with other successful, highly motivated advisors versus maybe newer or less successful ones," he continues. "While keeping minimums at $30 million is fine, it doesn't make a statement that you're setting yourself apart from other firms and orienting yourself toward a more successful advisor."

That's exactly what Averitt is trying to do. The AUM hike is only the first step toward higher floors in the future, he admits. And while he acknowledges that he will need to see how business develops in 2010, Averitt insists that further change is coming within the next 12 months.

WHAT ABOUT QUOTAS?

That raises the question, then, why the independent contractor division of RJFS hasn't raised its production quotas-the equivalent measurement independent broker-dealers use to gauge the success level of their advisors. Van Law, who also serves as a senior vice president and national director of business development at the firm, has kept production quotas for his division at $250,000 since it raised them from $225,000 in 2006.

The independent contractor division of RJFS is the strong shoulders of the firm, serving between 3,400 and 3,500 advisors and bringing in the bulk of revenues. By comparison, the investment advisors division, which serves as a custodian to RIA firms in the same way Fidelity, Schwab and TD Ameritrade do, is the smaller, often overlooked child of the RJFS family.