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.