Industry Cash Sweep Changes
Q: How might industry cash sweep changes impact RJF's approach?
A: Paul Reilly emphasized that Raymond James' sweep programs are different from peers, offering rates from 25 to 300 basis points, compared to others' 1 to 50 basis points. " They provide up to $6 million in FDIC insurance per individual. " Reilly stated they don't see anything forcing them to change rates currently but will adjust if the competitive landscape changes. "

Regulatory Scrutiny and Conflicts
Q: Are there concerns about conflicts in adviser compensation from sweeps amid regulatory scrutiny?
A: Reilly explained that in advisory accounts, advisers receive no different payment on cash than any other asset class, with no indirect incentives. " The disclosure refers to limited cases in brokerage where advisers are compensated for placing clients in higher-rate accounts, not on sweeps. " He believes there's no conflict, and practices are compliant. "

Operating Leverage Trajectory
Q: How do you view operating leverage as you reach record levels?
A: Reilly stated they believe they can achieve operating leverage as they grow assets. " Strong equity markets and cash spreads have supported businesses. " With investment in technology, they can make services better and achieve leverage while maintaining high levels of adviser support. "

Loan Growth Prospects
Q: Will securities-based loan growth continue to fuel overall loan growth?
A: Paul Shoukry noted that the securities-based loan growth was due to a deceleration of payoffs and clients getting used to new rate levels. " He is cautiously optimistic that this trend could continue, supporting overall loan growth. "

Net Interest Income Outlook
Q: Can NII hold up despite potential rate cuts?
A: Shoukry expressed confidence in their ability to perform well in any interest rate environment. " Lower rates have previously supported M&A and fixed income business, and loan growth could improve. " Reilly added they have room to adjust rates and remain competitive. "

Capital Allocation and Repurchases
Q: Will you increase share repurchases given capital levels?
A: Reilly stated they haven't found suitable M&A opportunities and will return capital to shareholders more aggressively. " They intend to increase the pace of repurchases beyond the $243 million executed in the prior quarter. " "

Recruiting Activity and Net New Assets
Q: Can you provide more color on recruiting and net new assets?
A: Reilly mentioned that recruiting activity remains strong, with a backlog of large teams picking up. " They continue to get new advisers, contributing to net new assets. "

Cash Sorting Stabilization
Q: How close are we to the bottom of cash sorting?
A: Shoukry believes they are closer to the end of the sorting cycle. " Stabilization of runoff and continued growth will drive cash balance growth, but they won't declare an end until they have several quarters of data. "

Evolution in Capturing Value
Q: How might customer payments for services evolve over time?
A: Reilly suggested payments could become more asset-based, and changes might occur depending on regulatory developments. " He noted possibilities like performance fees but emphasized it's hard to predict. "

Deposit Betas and Rate Cuts
Q: How will deposit betas behave with rate cuts?
A: Shoukry said it depends on the competitive environment, but they have been generous in passing rates to clients and should have sensitivity to the downside. " Reilly added they have ample room to adjust and stay competitive. "