In conjunction with the Department of Labor Fiduciary Rule, we want to ensure you understand how Raymond James & Associates, Inc., Raymond James Financial Services, Inc., Raymond James Financial Services Advisors, Inc. and certain other affiliated entities, as applicable (collectively, Raymond James), and its advisors are compensated, and where to find more detailed information about available accounts and investments.
Certain sources of compensation may be familiar to you because they are directly associated with your account type or investments. Other forms of compensation, however, may not be as familiar, because they do not directly affect the amount you pay. To help you learn more about the forms of compensation Raymond James receives, please review the overview below. A “Source Documents” section is included at the bottom to provide more detailed information.
We encourage you to review this information carefully and contact your financial advisor with questions.
Raymond James receives compensation from the companies that sponsor, manage and/or promote the sale of certain mutual funds offered by Raymond James financial advisors. The payments from these mutual fund companies to Raymond James are intended to help offset a variety of expenses, including expenses associated with marketing mutual funds to new investors, educating financial advisors, providing statements and tax reporting, and other expenses associated with servicing clients’ accounts. The following description is intended to provide an overview of the various types of compensation Raymond James may receive in connection with the services provided.
Raymond James provides a variety of marketing and other sales support services to affiliated and unaffiliated mutual fund companies through the Education & Marketing Support Program (E&M Program). Mutual fund companies may participate in one of three tiers: Premier, Preferred or Partner. The participants in the E&M Program’s three tiers are selected based on a number of quantitative and qualitative factors, and Raymond James provides different levels of support and services depending on the tier level. The services Raymond James provides to companies participating in the E&M Program may include, but are not limited to: providing detailed mutual fund information to financial advisors, strategic planning support, inclusion in the No Transaction Fee program, and providing opportunities for assisting with professional development workshops, study groups, and other educational events and conferences. Raymond James also provides distribution support for prospectuses and marketing materials relating to their mutual funds. The Education & Marketing support fees come in a variety of forms, including payments made by mutual fund advisers or distributors which are sometimes referred to as “revenue sharing” fees, and 12b-1 fees, paid by the Funds. This compensation may not be disclosed in detail in either a mutual fund’s prospectus or Statement of Additional Information.
The amounts of payments made to Raymond James for such services, which may consist of asset-based and sales-based components, vary by mutual fund companies pursuant to the agreements in effect between Raymond James and each mutual fund company. The payments received are typically calculated based on the percentage of the average daily net asset value of the mutual fund assets owned by Raymond James clients and may also factor in the dollar value of mutual fund purchases during the period. The asset-based percentage rate varies based on the total value of fund assets owned by Raymond James clients, and the sales-based percentage is generally a fixed percentage established per the contracts with each mutual fund company. The payments are generally made from the resources of each mutual fund company rather than from fund assets.
Certain open-end mutual funds that clients acquire may, in addition to assessing management fees, internally assess a distribution fee pursuant to section 12b-1 of the Investment Company Act of 1940, or an administrative or service fee (“trail”). Trails are included in the calculation of operating expenses of a mutual fund and are disclosed in the fund prospectus. If received by Raymond James on advisory fee-eligible mutual funds, trails are credited bimonthly (as applicable) to the appropriate clients’ accounts.
12b-1 fees are used to cover overall marketing expenses and to compensate securities firms for activities or expenses related to distribution and/or retention of fund shares. For example, Raymond James uses the 12b-1 fees it receives (i) to compensate your financial advisor and participating dealers who have entered into sales agreements with Raymond James; (ii) for advertising, salaries and other expenses related to Raymond James’ sales or servicing efforts; (iii) to organize and conduct educational and sales seminars; (iv) to print prospectuses, statements of additional information and reports for prospective shareholders; (v) for preparation and distribution of advertising material and sales literature; (vi) for other sales promotion expenses; and/or (vii) for providing ongoing services to shareholders.
Raymond James may also receive payments from the Funds and/or their affiliates for the provision of sub-accounting, sub-transfer agency, shareholder servicing and/or administrative services, commonly referred to as Networking or Omnibus Services. In these fee arrangements, Raymond James will maintain an omnibus account on behalf of a particular mutual fund company. Mutual fund companies may pay Raymond James to provide various services related to your account, including but not limited to: (i) processing dividend payments and distributions, (ii) record-keeping, (iii) responding to your inquiries and providing information about your investments, and (iv) processing purchase and redemption orders.
Mutual fund companies that do not pay Raymond James networking and service fees may be assessed a purchase transaction fee, applicable to Passport, IMPAC and Opportunity advisory accounts only.
A number of mutual fund companies participate in this program, under which Raymond James will not charge transaction fees for purchases of these mutual funds in certain advisory accounts. Also, purchases of certain mutual funds that do not pay Raymond James industry standard networking and service fees incur an additional charge imposed by Raymond James for certain fee-based accounts. In return for Raymond James not imposing a sales, transaction or trade charge, mutual fund company affiliates agree to pay Raymond James an additional asset-based fee.
Marketing representatives of mutual fund companies and insurance companies, who are often referred to as “wholesalers,” educate Raymond James financial advisors and branch office managers about their products. Consistent with applicable laws and regulations, these product representatives may pay for or provide training and educational programs for Raymond James’ financial advisors and their existing and prospective clients. These companies may also pay for due diligence meetings, conferences, client relationship building events, occasional recreational activities, and other events or activities that are intended to result in the education of and familiarity with their products.
The management fee payable to investment managers contracted by Raymond James Asset Management Services to participate in certain sponsored managed account programs may vary due to incremental rate negotiation between Raymond James and the Investment Manager. Although the basis of Raymond James’ recommendation of Investment Managers is not contingent upon this negotiated management fee, a conflict may exist due to the potential incentive Raymond James may have to recommend an investment manager(s) with a lower management fee.
Raymond James offers a wide range of investment alternatives and services, including variable, fixed and fixed index annuity products. Raymond James and its financial advisors receive compensation from the insurance companies that issue annuity contracts, in the form of commissions for the purchase of such contracts and for additional deposits into the contract. Raymond James may also receive payments from insurance companies for contract servicing expenses (“trails”), which it may pass on in part to financial advisors. Commissions and trails are paid out of the insurance company’s assets, but may be derived from product fees and expenses. Raymond James also receives payments from insurance companies or their affiliates for expenses associated with marketing products to new and existing investors, educating Raymond James financial advisors, and expenses associated with servicing existing client accounts. Raymond James also receives additional compensation from the insurance companies whose annuities it distributes in the form of sales and asset-based education and marketing support payments. It is not paid directly from the assets of your annuity. The amounts received will vary based on the type and structure of the annuity.
Insurance companies and other plan service providers participate in educational conferences organized or sponsored by Raymond James to provide generalized educational information not specific to any plan and may pay Raymond James a fee to offset the cost of these educational conferences.
Raymond James has an affiliate that acts as a wholesaler for several insurance companies that issue annuity products. When serving in this capacity, the insurance companies compensate Raymond James for providing this service on their behalf. The amount of compensation will differ based on the type and structure of the annuity, but is always calculated as a percentage of the total annuity premiums sold through this wholesaling arrangement.
Annual fees for variable annuity contracts are often higher than those associated with mutual funds investment options that exclude insurance benefits. This is because the company must pay for the insurance benefits associated with annuities that are not found in mutual funds. Therefore, you should compare the cost structures of both variable annuities and mutual funds in conjunction with your individual tax considerations and/or your need for the additional insurance benefits before investing.
Raymond James makes available through its financial advisors a wide range of alternative investments such as hedge funds, private equity funds, private real estate funds and structured products. The manager for any particular investment will often charge a management fee that is based on the total value of your investment. Alternative investments may charge a variety of fees. These fees are similarly structured but are often higher than management fees associated with other, more traditional, investments such as mutual funds and exchange traded funds. Raymond James and/or your financial advisor may share in a portion of management fees to which an investment manager is entitled. Many alternative investment managers receive incentive-based compensation in addition to management fees. Incentive-based fees typically involve the manager retaining a percentage of profits generated for clients. It is important to note that these fees are in addition to management fees that are charged by the manager and that the exact calculation of incentive fees or carried interest differs by product and manager. Raymond James and/or your financial advisor may share in any incentive-based compensation to which an investment manager is entitled.
Many alternative investments have upfront costs directly related to compensating your financial advisor and/or Raymond James. These fees are generally based on the total amount of your investment. Additionally, there may be ongoing fees, based on the value of your investment, that are directly related to compensating your financial advisor and/or Raymond James. Also, some investments charge a redemption fee for the liquidation of an investor’s position. Finally, there may be fees assessed to investors relating to the legal structure of the investment itself, as well as to the investment activity of the fund (such as fees related to the acquisition of property, in a real estate fund), and certain ongoing expenses related to the administration of the fund.
If your investment is eligible for asset-based advisory fees, your financial advisor will not receive upfront and/or ongoing servicing compensation. To the extent that Raymond James receives compensation, the portion of the compensation intended to compensate your financial advisor will be credited back to your account. While your financial advisor does not receive compensation, Raymond James may receive compensation even if your investment is eligible for asset-based advisory fees.
Conversely, alternative investment products not eligible for the asset-based advisory fee typically price less frequently than quarterly and/or have an upfront commission or sales load assessed upon the initial purchase. Subsequently, a client may choose to hold one of these products in their advisory account, but the financial advisor will not receive an asset-based advisory fee as long as it is held in the advisory account. In the case of alternative investment security holdings that are not eligible for asset-based advisory fees, Raymond James and/or your financial advisor are eligible to receive compensation as previously stated.
For additional information regarding your advisory account, please refer to your client agreement and the ADV disclosure document which was provided to you upon account opening. Additional copies are available from your financial advisor without charge.
Raymond James offers a variety of unit investment trusts (UITs). A UIT is a professionally selected pooled investment vehicle in which a portfolio of securities is selected by the UIT sponsor and deposited into the trust for a specified period of time. It is registered with the Securities and Exchange Commission as a registered investment company or grantor trust. Raymond James receives payments from UIT sponsors to cover a variety of expenses, including expenses associated with marketing UITs to new investors, educating Raymond James financial advisors and expenses associated with servicing existing client accounts.
Trust sponsors and/or their affiliates may compensate Raymond James for training and education seminars for Raymond James associates, financial advisors, clients and potential clients. This may include due diligence meetings regarding their UITs, recreational activities or other non-cash items. Also, marketing representatives of UIT sponsors, often referred to as “wholesalers,” work with Raymond James financial advisors and their branch office managers to promote their UITs. Raymond James provides a variety of marketing and other sales support services to UIT sponsors related to their trusts pursuant to the E&M Program (see Education & Marketing Support Fees). These services include, but are not limited to, the provision of detailed UIT information to financial advisors, strategic planning support to assist trust sponsors by making financial advisors available for educational information regarding their trusts, and branch office support, including phones, computers, conference rooms, as well as facilities and distribution support for prospectuses and promotional materials relating to their trusts. In addition, Raymond James is paid marketing service and support fees by sponsors which come in a variety of forms, including revenue sharing and concessions. This compensation may not be disclosed in detail in a UIT’s prospectus. Raymond James receives additional volume compensation based on total assets purchased from the sponsor over a given period of time. These fees are used to cover the services provided by Raymond James and are not shared with Raymond James financial advisors as compensation. Raymond James does not receive an additional volume-based concession on UIT units purchased through fee-based advisory accounts.
Raymond James provides a variety of marketing and other sales support services to UIT sponsors related to their trusts pursuant to the E&M Program (see Education & Marketing Support Fees). These services include, but are not limited to, the provision of detailed UIT information to financial advisors, strategic planning support to assist trust sponsors by making financial advisors available for educational information regarding their trusts, and branch office support, including phones, computers, conference rooms, as well as facilities and distribution support for prospectuses and promotional materials relating to their trusts. In addition, Raymond James is paid marketing service and support fees by sponsors which come in a variety of forms, including revenue sharing and concessions. This compensation may not be disclosed in detail in a UIT’s prospectus. Raymond James receives additional volume compensation based on total assets purchased from the sponsor over a given period of time. These fees are used to cover the services provided by Raymond James and are not shared with Raymond James financial advisors as compensation. Raymond James does not receive an additional volume-based concession on UIT units purchased through fee-based advisory accounts.
Raymond James receives additional volume compensation based on total assets purchased from the sponsor over a given period of time. These fees are used to cover the services provided by Raymond James and are not shared with Raymond James financial advisors as compensation. Raymond James does not receive an additional volume-based concession on UIT units purchased through fee-based advisory accounts.
Consistent with FINRA rules, product sponsors and/or their affiliates may compensate Raymond James for training and education seminars for Raymond James associates, financial advisors, clients and potential clients. These seminars and training may include due diligence meetings regarding their products, recreational activities and other noncash items. Representatives of product sponsors attend these meetings, provide speakers for education presentations and attend events where they can interact with Raymond James financial advisors. Raymond James representatives may receive promotional items, meals, entertainment or other non-cash compensation from product sponsors.
Raymond James or your financial advisor may receive referral fees or finder’s fees for referring business to affiliates or assisting others in developing new business.
Also, Raymond James and its affiliated broker-dealers have established the Professional Partners Program to encourage professionals (such as accountants and attorneys) to refer clients to Raymond James. Each professional partner is either an independent registered investment adviser or an investment adviser representative of Raymond James and has agreed to act as a solicitor in accordance with a written agreement with Raymond James. This individual receives a percentage of the asset-based advisory fee as compensation for introducing the client. The client is provided a separate written disclosure by the solicitor detailing the compensation arrangement, and the client must consent to the payment of the solicitation fee prior to any payments being made.
Eagle Funds has established a program under which referral fees are paid to Raymond James financial advisors who refer institutional clients to Eagle. The fee is paid as a percentage of the management fee earned by Eagle.
Raymond James or its affiliates receive compensation from the Eagle affiliate for providing services unrelated to sales of Eagle mutual funds, including (but not limited to) consulting services, marketing services, sponsorship fees, support services and transfer credits for trade execution services.
Raymond James clients, typically institutional money managers, may have arrangements under which they obtain research services from Raymond James. These “soft dollar” arrangements are common in the financial services industry. Raymond James has no requirement that clients send us order flow in exchange for research services. Certain clients who execute trades with Raymond James may also direct a portion of the related trading commissions to third party providers of research services pursuant to a commission sharing agreement. Raymond James Asset Management Services does not utilize “soft dollars” to pay for research or other related services.
Compensation known as “payment for order flow” is provided as an incentive for routing orders to particular broker-dealers or market centers for execution. We do not receive payment for equities or exchange-traded funds, but may for options, and all contracts of a particular trade may not generate payment. The routing decision is in no way influenced by the prospect of receiving such payment.
Raymond James Financial Inc. is a diversified holding company whose subsidiary companies provide financial services to individuals, corporations and municipalities. Those subsidiary companies provide a wide variety of financial services to each other and third parties to facilitate servicing client accounts. Raymond James receives compensation for these services, and it may pursue additional business opportunities with companies whose products and services Raymond James makes available to clients. As a general matter, clients should be aware that the receipt of economic benefits by Raymond James and its affiliates and financial advisors in and of itself creates a potential conflict of interest.
These services may include, but are not limited to, banking and lending services, sponsorship of deferred compensation and retirement plans, investment banking, securities research, institutional trading services, investment advisory services, and executing portfolio securities transaction for funds and other clients. Raymond James professionals, who offer mutual funds and other products to individual investor clients, may introduce mutual fund company representatives and others to other services that Raymond James provides. Raymond James may receive compensation for these services. Such compensation may be shared among Raymond James’ subsidiary companies.
Raymond James may act as the clearing firm for those accounts and securities transactions introduced by its affiliates. To the extent recommendations are implemented through any affiliates, compensation will contribute to the overall profitability of the firm. Should any securities transactions be placed through a Raymond James brokerage affiliate, that affiliate may receive commissions on such transactions.
Raymond James is engaged in investment banking activities. Because Raymond James may trade its advisory clients’ assets in the securities of companies which Raymond James’ Investment Banking division is advising, there may be the appearance of a conflict of interest. To mitigate the potential conflict of interest, Raymond James Investment Banking has implemented policies and procedures restricting the dissemination of non-public information in connection with these companies to parties outside the Investment Banking division. In addition Raymond James Asset Management Services has insider trading policies and procedures which are designed to prevent and detect misuse of non-public information by its associates.
Raymond James has established a system whereby clients’ cash reserves “sweep” daily to and from the client’s investment account to cover purchases or to allow excess cash balances to immediately begin earning interest, subject to certain minimum balances. The account in which these cash reserves are held is considered the client’s sweep account. The sweeps options available will vary depending on account type. Please refer to your account opening documentation, “Sweeps (Transfers) To and From Income-Producing Accounts” in the “Your Rights and Responsibilities as a Raymond James Client” brochure, a current copy of which is available from your financial advisor, or visit raymondjames.com/cash_sweep.htm.
Raymond James as custodian of the account assets determines where cash reserves are held, and may offer one or multiple selections to different account types in consideration of various factors including terms and conditions, risks and features, conflicts of interest, current interest rates, the manner by which future interest rates will be determined, and the nature and extent of insurance coverage such as, deposit protection from the Federal Deposit Insurance Corporation (“FDIC”) and SIPC. The custodian may change an investment selection at any time with advance notice to you. The interest rate offered through Raymond James Bank and the Raymond James Bank Deposit Program (“RJBDP”) may differ in yields earn by Clients and Raymond James from the various money market funds.
With respect to cash reserves of advisory client accounts, the income earned by Raymond James through its cash sweep service is in addition to the asset-based advisory fees that Raymond James receives from advisory accounts. Where an unaffiliated third party acts as custodian of account assets, the client and/or the custodian will determine where cash reserves are held.
Raymond James assesses advisory fees on cash sweep balances and money market funds (“cash”) held in advisory accounts. With respect to cash reserves of advisory client accounts, the income earned by Raymond James through cash sweep service is in addition to the asset-based advisory fees that Raymond James receives. With regard to cash sweeps in IRAs and ERISA plans that are advisory accounts, Raymond James uses its bank affiliate exclusively as a depository. The interest rate offered through Raymond James Bank and the Raymond James Bank Deposit Program (“RJBDP”) may differ in yields earned by clients and Raymond James from the various money market funds. This structure may result in additional fees charged by Raymond James from its bank activities.
Raymond James is publishing this Disclosure in order to comply in “good faith” with elements of the Department of Labor Fiduciary Rule (Fiduciary Rule). Please note that the information contained in this Disclosure is not intended to be a “Transitional Disclosure” or “Best Interest Contract” as defined in the Fiduciary Rule. Disclosures in this document were previously provided to you in other documents (Source Documents), many of which are listed at the end of this Disclosure. If there is a conflict between this Disclosure and the Source Documents, the information published in those documents will control, as they are updated more frequently and may contain more up-to-date information.