When Chet Helck was named chief operating officer of Raymond James Financial and head of the company's retail operations in early 2002, he was given a straightforward task: Grow the company. Raymond James & Associates, the company's employee broker-dealer unit, had been languishing--not even growing half as fast as the independent contractor side of the business.

Helck recalls that Chief Executive Tom James said to him: " 'Figure out how to get this business growing.' I looked at him and said, 'Why don't we borrow some of the best practices from that part of our business that has had this extraordinary success? Why don't we take those same factors and apply them over here and see if they don't work?' Guess what? They did."

Much of the firm's recent success stems from a simple formula: Provide advisers with an unusual degree of latitude--then get out of their way. Helck, 53, and RJA President Dennis Zank, 51, are the architects of the growing employee unit, and they credit this strategy for much of its progress. Indeed, recruiting has picked up as advisers come from the wirehouses to work here. And they tend to stay. Regretted attrition is less than 1%. They come to own their book of business and enjoy more freedom than they're allowed under the more traditional brokerage structure.

Each financial adviser, Helck says, "has their own interests, ideas about the way they want to do business. As long as they are high quality, with high standards of conduct, we want them to run their business the way they want to. If you have total control over your environment, you're happy, motivated. Happy people do better than unhappy people. That's a law of the universe."

The statistics confirm his assertion. The number of advisers has climbed 16% in the last five years to 1,005 as of March 31, up from 874 in 2002. Revenues for RJA's Private Client Group, the employee broker-dealer, have increased by nearly one-third during that time, jumping to $302 million in fiscal 2005 from approximately $228 million in fiscal 2002. The firm is on track to reach projected revenues of $360 million for the current fiscal year ending Sept. 30. (RJA also includes the company's equity and fixed income capital markets business--the entire unit has revenues of just over $1.1 billion.)

Whether it's at the home office in St. Petersburg, Fla., or at the firm's February convention in Las Vegas, the message from all levels of management is consistent: The adviser is our client.

Solving the Ownership Issue

The firm's attitude towards employee-advisers wasn't this enlightened before Helck and Zank's ascendancy in 2002. But it was in line with the rest of Wall Street. Helck's conviction that employees should have the same freedoms as independent contractors was born from his own days as an adviser. He believed that he--and not the firm--owned the relationship with his client.

So Helck and Zank concluded it was futile to try to hold advisers in line with the biggest threat in a company's arsenal: keeping clients should an adviser leave the firm. This stood in contrast to the industry norm of putting a temporary restraining order on advisers who try to contact their customers after leaving--and then unleashing a new team of brokers to contact those clients in the hopes of persuading them to stay with the firm. Even with such measures, Helck and Zank observe that clients generally leave anyway.

"The client decides who they're going to do business with," Helck says. "And to think that we can arbitrarily assign clients to people--it doesn't happen."

Therefore, if an adviser wants to leave RJA, he leaves with his clients as long as he meets three criteria: 1) he did not owe the firm any of the front money paid out when he arrived; 2) he was making a minimum of $225,000 in gross revenues per year; and 3) there were no compliance reasons for his departure. If the last condition exists, RJA has a fiduciary responsibility for the clients.

But not all observers consider ceding books to the brokers a position based purely on principle. Andy Tasnady, a consultant with Tasnady & Associates in Port Washington, N.Y., who works with brokerage sales force management, sees it simply as savvy marketing. "This is a good plank in the broader marketing message that 'we're pro-broker.' You want your company to be a good place for brokers. Regionals grow primarily by adding more FAs--it's not that the original 20 brokers are doing $20 billion [in revenues]."

In addition, Tasnady says, targeting advisers who are disgruntled with wirehouse policies is a sharp competitive position. "A lot of firms, especially regionals, grow mostly from hiring people from wirehouses," he says. (Indeed, Zank says that half of the 142 experienced brokers he hired in fiscal 2005 came from wirehouses.)