Right. We might be a minute or so early, but we'll just go ahead and get started. First of all, thank you all for coming. Good afternoon. I'm Kristie Waugh, Senior Vice President of Investor Relations, and welcome to Raymond James Financial's 2025 Analysts and Investor Day. We're happy that so many of you were able to join in person here in our corporate headquarters in St. Petersburg, Florida. We do really value that you're taking the time out of your day to travel down here and spend the afternoon and part of the evening as well. Thank you for that. Additionally, we know we have many more listening via the webcast, and thank you again as well for your interest in following Raymond James.
Over the next few hours, you will hear directly from leaders across the firm who will provide insights into our long-term strategy as well as key strategic initiatives across the firm. We have a lot planned, so let's go ahead and just get started. You would not see me if I do not have to go through the forward-looking statements. First, I will call your attention to the safe harbor statement shown on the screen. Certain statements made during this presentation may constitute forward-looking statements. Forward-looking statements include, but are not limited to, information concerning future strategic objectives, business prospects, financial results, anticipated timing and benefits of our acquisitions, anticipated results of litigation and regulatory developments, or general economic conditions.
In addition, words such as believes, expects, plans, will, could, and would, as well as any other statement that necessarily depends on forward future events, are intended to identify these forward-looking statements. Please note that there can be no assurance that actual results will not differ materially from those expressed in these statements. We urge you to consider the risks described in our most recent Form 10-K and subsequent 10-Q, which are available on our Investor Relations website. We will also use certain non-GAAP financial measures to provide information pertinent to our management's view of ongoing business performance. A reconciliation of these non-GAAP measures to the most comparable GAAP measures may be found in the appendix of this presentation. Now, turning to the agenda. In a minute, CEO Paul Shoukry will join us and kick things off with the strategic review.
Following Paul, we'll have Tash Elwyn join us to review our largest business, Private Client Group, and Steve Raney will discuss our bank segment. At that point, we will take a short 15-minute break, and when we resume, Jim Bunn will join us to review the businesses within our Capital Markets segment, and Butch Oorlog will provide a financial review. Finally, we'll be joined by Ben Campagnoli and Andy Zilber to review our technology. The presentation today has been made available on our Investor Relations website. Biographies, as well as those non-GAAP reconciliations, can be found in the appendix. We will have Q&A after each presenter. For those of you in the room, I just ask that you please just wait to be recognized and then please name yourself, your firm, or state your question. All right. With that, I do want to introduce Paul Shoukry.
Paul became CEO earlier this year, and he's currently, in addition to CEO, he's also a director on the board. He previously did serve as Raymond James' president from 2024- 2025 in anticipation of taking over as CEO, and he served as the firm's CFO from 2020- 2024. Please welcome Paul Shoukry.
Thanks, Kristie.
Good afternoon. Thanks for making the trip down to Florida, spend a half day with us, and have dinner tonight. We're looking forward to spending more time with you and providing a strategic update. Our goal, as you see on this slide, is quite simple. It's to be the absolute best firm for financial professionals and their clients. Their clients is really important and really applies across all of our businesses. It's not just true for our independent business and PCG. It's true for the employee advisors as well, and that we respect that they own the relationships with their clients. We treat all of our financial professionals like free agents. The way we measure our success, the way we make decisions, is do financial professionals feel like Raymond James is a special place? Do they want to be here?
That has really been driving our leading growth in the industry, both from a recruiting perspective and a retention perspective, not just in the wealth business, the Private Client Group business, but in the Capital Markets business, asset management business, and the bank as well. I take over as CEO with very big shoes to fill. Paul Reilly's in the room, our Executive Chair, and this is a look at what we did as a firm over the 15 years that he was CEO, which happens coincidentally to be the month that I joined the firm back 15 years ago as well. Really remarkable growth, and Paul's the first to remind us this is not because of us. We're just corporate overhead. This is really due to the success of all of our financial professionals and their clients.
Started 15 years ago with a little less than $250 billion of client assets. Now it's over $1.6 trillion, representing about 14% a year, steady growth over that period. Net revenues was less than $3 billion. We're just around $13 billion last year, representing 11% growth. In the market cap, we were about $3 billion market cap 15 years ago. As of today, we're about $28 or $29 billion, representing during this period a 16% per year growth rate. Really successful 15-year period, and that is really driven by the values of the organization. We always put clients, and we include financial professionals, financial advisors as clients. We put them first. A lot of firms say this, but I say the proof's in the pudding. It really permeates through every decision we make: strategic decisions, tactical decisions, big decisions, small decisions.
Every single meeting, we always start off with, "How is this going to impact the client? Is this the best thing to do for clients?" If we do well by clients, if we do well for clients, then the success for shareholders will follow. That is a very different approach than some firms in our industry take. We always put clients first, and we always make decisions for the long term. That is another key value of the firm. We know there are a lot of short-term levers that can increase results next quarter or the following quarter, but we always look at, "Will pulling those levers give us the best opportunity to serve financial professionals and their clients and our shareholders over the long term?" We always pick the long term over the short term.
We're focused on what's going to happen over the next 5, 10 years and beyond. Frankly, we could care less about what's going to happen in the next quarter or two. That's meaningful, but not important to the long-term success of the company. We value independence across the entire firm. We want all of our financial professionals and associates to feel a sense of ownership at the firm, that they want to drive growth for the firm. They feel like they have accountability and ability to influence decisions and make the firm a better place for the financial professionals and clients. Importantly, we act with integrity. There's a lot of noise out there. We're 15 years into a bull market. There have been things that people have been asking us to do in that period of time when rates were near zero.
Certainly, we were criticized a lot for not taking more leverage on the balance sheet and taking more duration on the balance sheet, as an example. We always say, "You know what? We're acting with integrity no matter where we are in a market cycle, no matter what kind of pressure we're getting from the outside, no matter what our competitors are doing." We keep these values front and center, and we always act with putting the clients first, making decisions for the long term, and valuing independence. That has led to 149 consecutive quarters of profitability. We can't find any other firm in the financial services space that we compete in that can say this, even through the financial crisis. We didn't take TARP money. We were able to stand on our own two feet.
In fact, since 1983, the only time we had a losing quarter was 1987, Black Monday, when all of our competitors shut down their trading desk because they were losing money, and Tom James said, "No, we have to keep our trading desk open because we have to serve clients when they need us the most." I think we lost $100,000 that quarter. Beyond that, we've been profitable every single quarter in the financial services industry, the volatile industry. We've been profitable every single quarter since going public in 1983. We have a very diversified business profile anchored with the Private Client Group business, which represents about 70% of our revenues, but complemented with the Capital Markets, Asset Management, and Bank segment.
We'll get into this more later, but all of these businesses have both critical mass to be competitive in their spaces, but also plenty of headroom to grow, continuing to do what they do. Within each one of these businesses, we have a lot of diversification. For the private client group business, for example, we have an independent channel. We have an employee channel. We have an RIA channel and multiple affiliation options. A lot of other firms are talking about entering those spaces and having multiple affiliation options, but we're one of the few that actually have scale in all of those affiliation options with continued plenty of headroom to continue growing in each one of those affiliation options. We believe at Raymond James, we have the largest addressable market in the wealth space. That diversification holds true to capital markets as well.
Jim Bunn will get into both the equity side, fixed income, and the affordable housing business that we have there, as well as the bank and the asset management segment. I want to take a second to really focus on financial strength. I know we show this slide a lot, but I think it's particularly important as we're 15 years into a bull market. It's really been 15 years since a financial crisis and since the last time we saw a prolonged downturn. COVID was somewhat of a downturn, but fortunately, a lot of aid came to support the economy, and the markets came back pretty quickly during COVID, as you may recall. I think it's important to focus on, as we're starting to get questions, even from financial advisors and financial professionals, they're starting to look at balance sheets again.
They want to make sure that the firm that they entrust their clients' assets with, as a custodian, as a broker-dealer, as a partner, has a strong balance sheet. Fortunately, we do have a strong balance sheet. We have a total capital ratio of 25%. The regulatory requirement is 10% to be well capitalized, which we'll talk about how we plan on using that capital going forward because even over our 10% tier one leverage target, we're at over 13% now. We have about $2.5 billion of excess capital above our conservative target. We know that, and we have plans to address that. We have corporate cash of $2.5 billion. We have a target of just over $1 billion.
We do not have as much excess cash as we have excess capital, but we have plenty of debt capacity to raise cash to match that up over time if we find the good growth opportunities. Our credit ratings are A with all the major rating agencies, A-level ratings with all the major rating agencies, which is really unique for a firm of our size and, again, a testament to our conservative balance sheet and business practices and long-term relatively consistent performance. With private equity entering our space and even a lot of the strategics, particularly on the independent side, they are coming in with extremely aggressive balance sheets. Financial advisors are starting to ask us about it.
They're looking at firms, both private equity-backed and/or even some of the public firms, particularly on the independent side, and they're saying, "These firms don't even have positive tangible equity." Some of these firms, if you take their assets minus their liabilities, their equity, and you subtract out the intangible assets that really don't have a liquid value or a liquid net worth, their goodwill and intangibles, they're running on negative tangible equity. Financial advisors are concerned about that. Some of them are asking, "We want to join a firm that has positive—we have $10 billion of positive tangible equity." They want a firm that they can trust could withstand a downturn and be opportunistic and still front-footed in a prolonged downturn. Not that they're calling a cycle in the market, but 15 years into a bull market, it's something that they're increasingly focused on.
We have over $12 billion of total equity, both tangible and intangible, and we have $2 billion of senior notes, just over $2 billion of senior notes. Again, some of these other firms, whether they're private equity-backed or even some of the public firms, it's just they have a fraction of the equity that we have and multiples of the debt. Those financial advisors, a lot of them coming from the independent side, are saying, "We want to be associated and affiliated with a firm that has a lot more equity than debt and not the other way around." That is something that is becoming increasingly a competitive advantage in this 15-year bull market, is a financial strength and profile. For the firms that don't have that, it's increasingly becoming a headwind strategically for those firms.
In addition to the robust technology, products, and platform, balance sheets really becoming a true competitive advantage, more so than it has probably in the last five to seven years. Our value proposition is we want to be the best of both, the best of both worlds. What does that mean? It means to have the scale, the capabilities, the technology, alternative investments, AI, which Andy Zilber and Ben will talk about here shortly, all the things that the vast majority of our advisors that we recruit come from the largest firms in the industry. They're used to having in-house bank to the extent that they want to make jumbo mortgages to their clients, an in-house trust company if their clients have trust needs, all of the alternative investment products, in-house insurance capability to provide open architecture to provide outside insurance.
We have to have the capabilities, the technologies, the products, the expertise in-house to be competitive with the largest firms in the industry. We also want to provide a culture that's family-friendly, that people are excited to be affiliated with, they enjoy the people that they're interacting with. That is really the best of both worlds value proposition, which really resonates in each one of our businesses. It's not unique to just the wealth management business. It's true in capital markets, asset management, and the bank as well. I've been spending about 80% of my time over the last year traveling across the country, meeting with many financial advisors, clients, bankers that I can possibly meet with. The thing that I hear consistently, and I've shared this before in the public domain, is oftentimes emotionally, with tears in their eyes.
In this particular case, you see Tammy sitting there. When I was at her branch in Nashville, they were saying, "The best decision I ever made was affiliating with Raymond James five years ago. The biggest regret I have is we did not do it two or three years earlier." I hear that consistently. We were at our independent conference in Orlando about a month ago with 3,000 advisors, and we had some prospects there from other firms. The number of times I heard our existing advisors telling the prospects, "What are you waiting for? You cannot affiliate with Raymond James quick enough." I was where you were at, and I thought it was okay. I thought it was decent. The products, the services, and most importantly, the culture and the people here are unrivaled at your current firm. That is music to our ears.
When the board asked us at our offsite in February, "How are we going to measure success 10 years from now? What financial metrics are we going to track? What initiatives are we going to track?" I said, "We'll have all of that." The one thing we know about financial projections, as you all know, is they're wrong almost the second you're done with them. What we know we can track and what will be the biggest success factor for the firm is when we travel around the country 10 years from now, are people still saying with tears in their eyes, "The best decision they ever made was affiliating with Raymond James," and the biggest regret they have is they didn't do it three years earlier?
Because if that's still happening 10 years from now, that means we preserve the special culture at Raymond James that differentiates us in this highly competitive industry. That is how we're measuring ourselves. We actually created videos. This is from a video that we're creating to capture that sentiment and to hold ourselves accountable to that sentiment going forward. This is our strategy going forward through 2030, and you'll hear more specific elements of the strategy from each one of the speakers today. First, it's to increase our market share in each one of our businesses. Again, we have critical mass in each one of the businesses and continued headroom to grow. We'll talk about that a lot more throughout the day. To increase collaboration in each one of our businesses to help our financial professionals differentiate themselves with their clients by providing deeper and broader financial advice.
You will hear specific examples of that today as well. Invest in tools and resources, that platform that I talked about that is so critical to be competitive. We are investing almost $1 billion in technology. Most of that is in wealth management. It is very hard for smaller firms to compete with that. A lot of them lose their independence because they cannot compete with that. They do not have the skill that is necessary to provide competitive technology offerings. Then enhancing the infrastructure. If there is one thing that keeps me awake at night, it is cybersecurity and it is fraud. That is the thing that I hate seeing the most, when a client gets defrauded. Those are the kind of things Andy and Ben will talk about later. I think there will be a tour at the end of the day of our cyber control center, which is just phenomenal.
Again, we can never rest on our success there because the criminals are moving so quickly. We are always paranoid about where and how the next threat will come. We do that all with a very strong leadership team. People always ask me, "Coming into the CEO role, I must be overwhelmed." Oftentimes I am, but what gives me comfort is knowing that leading a firm is a team sport. It is not just about one person. I am so fortunate to have a fantastic leadership team, many of which you will hear from today, that are leading their respective businesses and functions. They have a very strong leadership team. This is our senior leadership team. Everyone on these two pages, with the exception of our Chief Risk Officer, David, who is here today, were internal promotions.
That is so critical for us, and I thank Paul for that every day in terms of being able to—he built a bench of very talented leaders, not just at the top levels, but throughout the organization. He focused on succession planning, and having that continuity is so critical because, as I said, our culture and values is what makes us different. The only way we can reinforce that and continue that over time is if we have leaders across the entire organization who have been here for a long time, who really buy into the culture and the values and the way we treat people and do things at Raymond James. We have a fantastic leadership team.
In terms of expanding our market share across all businesses, this is one example that's particularly relevant in wealth, and Tash will get more into this, is growing in the Northeast and out West, where our market share is much lower than our national average. We have significant opportunity in the two wealthiest markets in the country. That will help us continue to grow for years to come. This map would look different, for example, that Jim will talk about in investment banking. We have a significant opportunity to continue expanding in Europe and France, for example. We have plenty of opportunity geographically to continue gaining market share in each one of our businesses.
Really important, I want to take a second to talk about the importance, again, 15 years into a bull market, I think this is really critical, the importance of sustainable growth versus growth at all costs. Our strategy is to pursue sustainable growth. We have a quality-over-quantity strategy. When it comes to the number of financial advisors, you saw the asset growth and the revenue growth over the last 15 years. The advisor count during that period was low single digit because we're bringing on and recruiting advisors with much higher productivity than the advisors that are retiring or that are leaving the business.
That quality-over-quantity approach, which is true for both our employee side of the business, but also the independent side of the business, which, again, is extremely unique in the independent side of the business, where many of those firms have a quantity-over-quality strategy, where their average production is a fraction of the average production that we have in the independent side of the business because, to them, they just want to get more throughput through the system. We do not look at our advisors as throughput. We look at them as full-time professional advisors providing exceptional advice to their clients, and we want to be able to have a high-touch model that supports those advisors, enabled and supported with technology as well. It is easy in our business to buy growth. In fact, in absence of a value proposition, what do you do?
You pay more upfront, and you have higher payouts to bring on growth. Again, 15 years into a bull market, you can do a lot of adjustments to show the street adjusted earnings and Adjusted EBITDA and all these other things that the street buys 15 years into the bull market more so than they would maybe 15 years ago after a downturn. Our focus is on sustainable, long-term, profitable growth and having quality-over-quantity. That is very unique, particularly on the independent side of the business. Collaboration, the focus on collaboration is so critical to providing financial advisors. The number one thing I hear from financial advisors is that our clients are expecting more from us. They want more holistic advice. It is not just about investments anymore. It is about all aspects of assets, liability management, insurance management, estate planning.
We have to be able to bring the entire firm to the financial professionals so they can provide that differentiated and deep advice to their clients. You will hear throughout today the leaders talk about how they are doing that, how they are working together. I would say they are working together exceptionally well in figuring out how can we help financial professionals provide broader and deeper advice to their clients. The bank segment is just one example. Steve will talk about it. Jumbo mortgages, securities-based loans. We have a trust company internally. All those things. A lot of our financial advisors say, "I do not want to be a full-time lender. I do not want to sell mortgages to each one of my clients.
If I have a high-net-worth client that comes in and wants a competitive jumbo mortgage in 30 days, I want to be able to offer it here at Raymond James. I do not want to have to go send them to another bank because that other bank is going to put a financial advisor on that client if we do that. Having a full-service platform, again, both on the employee side of the business and the independent contractors' side of the business, is so critical to the higher-net-worth focused advisors. Invest in tools and resources. I have talked about almost $1 billion in technology. One area we are very focused on that you will hear more about later is artificial intelligence. About three months ago, we announced a newly created role and filled a newly created role called the Chief AI Officer. They already have a lot of exciting things.
I won't steal Ben and Andy's thunder, but a lot of exciting things, really with a focus on three things. One, increasing efficiencies for both the firm and financial professionals so they have more scale in the business, and so we have more scale as a firm. Two, data-driven insights so we can help find unique opportunities and bespoke opportunities in a more scalable way to provide financial advice that's tailored and bespoke to financial professionals and their clients. Three, to support the security and infrastructure of the firm. Cybersecurity, for example, where 10 years ago, 5- 10 years ago, a lot of the false positives were manually checked by humans. Now AI can do a lot of that to help protect the firm in a fraction of the time that it used to take for a human to check on those false positives.
Advisor Time is another important initiative that we rolled out. We literally have a team that's going to branches and watching how they spend time during the day, both the advisors and sales assistants, and doing process flows of where are they losing efficiencies in their day that take away from being able to spend more time with clients. We are automating things. We are getting rid of paperwork. We are getting to e-signature wherever we possibly can. This has been, just in the 12 weeks since it's rolled out, a huge hit with financial advisors because we go to their branches, we monitor how they're spending time, and literally, as soon as eight weeks later, they see improvements that reduce the amount of time they're spending on certain steps in the process. Then enhancing the infrastructure.
We talked about the cybersecurity and the infrastructure of the platform where we have to, I mean, there's a huge surge in volatility following Liberation Day and a huge surge in trade volumes. We have to be able to handle those surges for clients, right? They don't want to see an error message saying, "Sorry, your systems are down." That infrastructure, and knock on wood, our platform stayed open during that entire period of increased volatility. Those are the kind of things that we have to make sure we're putting ample investments in, not just to handle client activity during normal days, but during the surge days that we know come from time to time. M&A. I'll just say there's been a couple of large M&A transactions in the wealth space over the last year.
For M&A, for us, we've always said it has to be a good cultural fit because we're in the people business. If it's not a good cultural fit, no matter how great the business is, it's not going to work long-term. Cultural fit and the alignment of values that I talked about earlier is absolutely critical. Only then do we look at the strategic fit where one plus one gives us a chance of being something greater than two. We don't want to get bigger just for the sake of getting bigger. We want to do an acquisition to get better, to make Raymond James better, and to make the firm that we bring on better. Those are the best marriages that we've seen and that we've experienced in our business. Only then do we look at the financials.
It has to make sense for the firm and for shareholders using reasonable assumptions. It is particularly disappointing because there are such few opportunities in our space that are good cultural fits and strategic fits. I will say, personally, and for the company, it is very disappointing when it checks those first two boxes and either private equity or strategics that are even more competitive than private equity bid on an asset to a point where we cannot compete. Again, 15 years in a bull market with valuations where they are, with the amount of leverage-based acquisitions that are out there, that happens from time to time. We are not going to do a deal just to do a deal. It has to make sense for shareholders. We do not want to get bigger and do something that is splashy.
Even in the short term, if it's applauded by the street and by the investment community, if it's not going to put us in a good position in the long term, we're willing to turn it down as painful as that might be. RJ20 by 30. This is simply that by 2030, we want to exceed $20 billion in revenues. And we put plans in place that we'll share with you today that give us confidence that we can get there, and we can actually exceed that $20 billion revenue target by 2030. To recap, we'll continue to run this firm under our collective leadership that I showed you on the pages prior, driven by our values and based on the values that Bob James, Tom James built, and was reinforced by Paul Riley.
All of our businesses have critical mass to be competitive in their space, to make the investments necessary to be competitive, but also continued headroom to continue growing in our core businesses. Our financial strength and balance sheet not only provide us strength and stability in any kind of market environment, but it's also increasingly, in a 15-year bull market, becoming more of a competitive advantage than it has been since maybe the financial crisis. With that, I want to thank you again for attending our Analysts Investor Day, and I'll open it up to questions.
Devin?
Hey, Paul. Thanks for the update.
I guess maybe on the M&A side where you just left off, you just talked about, obviously, there's been some deals, but at the same time, it seems like there's going to be a lot of advisors potentially in motion or at least willing to have a conversation. Can you talk about what you're seeing there just based on all of the consolidation? Interrelated, we're also hearing about some of these private equity firms that are actually further increasing their recruiting packages. What you guys are seeing in the market there, just how important the economic package is for advisors relative to some of the other things you talked about at the beginning around culture and balance sheet strength and other products being kind of what gets you guys over the edge? I'd love to just get thoughts on both of those.
Great questions.
I would say from the financial aspect where private equity is getting more aggressive. If you step back and think about what's going on in private equity and wealth, it's actually really unique. I was speaking to Tom James about it last week. We can't think of an industry that's gone through a roll-up strategy, for a lack of a better way to describe it, this long, because it's been several years in, where the valuation that's being used for that roll-up strategy, that's used to justify the deals in the roll-up strategy, hasn't been validated by either an IPO or a sale to a strategic buyer, right? We haven't seen in any industry a roll-up strategy going this long where there's a multiple differential as big as it is, and that valuation hasn't been validated by either an IPO or a sale to a strategic buyer.
What have we seen instead? We've seen them selling to each other in private equity, right? Or sometimes selling to themselves in a continuation vehicle. The question is, where does that end? Where does that strategy end? Will the valuations be validated by the public markets? We sure hope so because that should be good for Raymond James if that's the case. If all of you in the room are 50% off on your PE ratios, that would be great for all of us and for Raymond James as well. It'll be interesting to see how that happens. In the meantime, it is creating disruption in our industry, and there are big deals going around. It puts more pressure on us, on all of the strategic incumbents in the industry, to really prove out that value proposition.
On the fringes, it does provide also pressure to make sure we're being competitive on upfront deals and ongoing payouts and retention packages and all the other things that we have to do to make sure we're providing a financially attractive proposition in addition to a value proposition that's unique and special to the advisor. As far as M&A disruption goes, we are absolutely seeing whenever there's M&A disruption, not in all cases because there's a lot of M&A disruption over the last five years where the profile of the advisor, the average production, was below our floors for recruiting. That didn't create opportunities for us. When there's M&A disruption for advisors that are similar profiles to Raymond James, that always creates opportunity for us. In the past, that has very typically created opportunities for us. I wouldn't say necessarily always.
We are absolutely seeing that, particularly on the independent side of the business. Our pipelines are very strong for recruiting. Now, we do not know how much of that will be realized over time. In terms of the activity levels that we are seeing, the number of meetings I am personally being invited to attend and participate in, it is higher than it has been for several years.
Thanks, Dan Fannon at Jefferies. You talked about market share gains in all of your businesses, and you mentioned a few examples. Could you just highlight, as you think about 2030 or whatever time period you want to look at, what are the two or three biggest market share opportunities this firm is looking to address?
I would say our biggest business is our wealth business. There is a significant opportunity in the West and the Northeast, but even in our backyard.
I look down at Sarasota, Florida, where we have a pretty good presence, but just three floors above us is a competitor with three or four times the number of advisors. We have a significant opportunity to gain market share in the wealth business. That is true in capital markets and M&A. Jim Bunn will get into that in a lot more detail in terms of not just in the U.S., but globally, our M&A franchise opportunity to gain market share, even in sales and trading, where our market share is relatively small. Then asset management. We have a $100 billion asset manager. There is a lot of opportunity to continue growing that over time as well. We have a lot of opportunities across all of our businesses to continue gaining share.
Thanks. Question.
You mentioned $2.5 billion of excess capital above your conservative targets, and that you have plans to address that. Can you elaborate on those plans, especially in the context of the sort of competition that you mentioned around on the M&A side? What is the sort of timeframe in place at which you think that $2.5 billion could meaningfully come down?
Yeah. M&A, we have a very focused M&A effort across all of those businesses that I just described. We want to use that capital to continue growing the top line. That is the focus.
In the meantime, we can at least help it from not continuing to grow further through stepped-up repurchases, which we'll talk about. The amount of repurchases that we're targeting, which we shared in the last earnings call, was about $400 million-$500 million a quarter, which should prevent the ratio from growing too much more from its current levels. Again, the recruiting opportunity that we're seeing, which is extremely robust now, we don't know how much of that will get converted. That uses a lot of cash, not a lot of regulatory capital, but a lot of cash that we hope to deploy to fuel growth.
Just a follow-up on the New York and California opportunity and gaining market share there.
You rewind maybe five or ten years ago, I think market share was relatively low in those markets as well.
I guess what's going to change on a go-forward basis that gives you confidence you're going to be able to take up market share in those markets? Do you think you need to adjust TA rates in those markets or acquire something in those markets in order to be successful in gaining market share?
I'll defer a little bit to Tash on that, who's presenting next. I would just say high level, 15 years ago, when we were a $3 billion market cap, our ability to be relevant and to be known in those other markets beyond our home markets was more difficult than it is when you're near a $30 billion market cap and all the resources that we have at our current level.
I think size and resources and capabilities when you're investing a billion dollars in technology, mostly going into the wealth business, that gives you the ability to be more competitive beyond your core home markets and the northeast and out west. We're also looking at, from a marketing perspective, what can we do to expand the awareness of our brand in those markets as well. We're looking closely at marketing investment and making sure we're tailoring our marketing investment to that opportunity. Most importantly, it goes back to what I was saying earlier, it's leadership. Tosh can get into this in much more detail, but making sure we have the right leadership out west, both on the employee side and independent contractor side of the business, and the right leadership in the northeast.
Because the single biggest driver of growth we've seen in our history across any of our geographies is whether you have the right leaders and the right bodies in the right seats to drive that growth and to tell the Raymond James story.
Just on platform and over the next 10 years, I think you talked about and talked about measuring success. Just kind of talk through where some of your priorities are if you look internally. Maybe it's tech and AI, but if you can flesh out where the priorities are for resource allocation, position that platform, maybe some incremental effort inside RCS or maybe some other areas of business. Just can you talk through the priorities internally as you think about resource allocation for setting up the platform?
That's a great question.
I think it's front and center is how can we continue to drive sustainable top-line growth across all of our businesses? Sustainable, which means profitable growth, growth with robust service levels, growth where we don't dilute the culture of the firm, where people still feel that Raymond James is a special place that they're proud to be affiliated with. And so all of the initiatives that we have, whether it's Advisor Time, business process improvement, which they'll talk about, the technology investment, the product investment, the leadership that we're putting in different markets, it all kind of revolves around our goal to continue generating sustainable growth. I mean, that 149 consecutive quarters of profitability, that doesn't come by accident. That comes through a continued focus on how can we drive sustainable growth, long-term growth, not short-term growth.
We want flexibility and capacity over the long term to continue driving sustainable growth.
Good deal. With that, I'll hand it back over to Kristie for the next section. Thanks again for attending the conference today.
Thank you, Paul. All right. Next up, we have Tash Elwyn, who is currently our President of the Private Client Group, the role he assumed in October of last year. Prior to that, you would know Tash as our leader of our employee affiliation, Raymond James and Associates, a role he held for some time helping to support advisors throughout that affiliation. Please welcome Tash Elwyn.
Thank you, Kristie. It's great to be here with all of you this afternoon, both those that are here in person as well as everyone that's online today as well.
It is my privilege this afternoon to walk you through an overview of our Private Client Group, both the state of the business today and then, even more importantly, where we believe we are headed together in the years to come. As you look at our Private Client Group at a high level, some of the key metrics that we think are important to start with are we have 8,731 advisors that are affiliated with us across all of the different channels of affiliation. Those advisors are collectively managing on behalf of their clients $1.48 trillion in assets. Those assets, when you drill down and you look more specifically at fee-based assets, we have seen great success with a 16% CAGR over the past five years in the growth of our fee-based assets. Fee-based assets now represent approximately 60% of the total assets in the Private Client Group.
Also, very notably, we've seen $52 billion in net new assets in PCG over the trailing 12 months as well. All of this growth that we've seen over the many years at Raymond James has been fueled by that unwavering focus and commitment we have on clients and on financial advisors as our clients. That's really what drives this long-term asset growth success that we've had. We see that as evidenced by the 14% CAGR in total assets under administration over the past five years. More specifically, looking at fee-based assets under administration, we've seen a 16% CAGR over the past five years.
As you look at the consistency of this growth, it's enabled us to outperform our peer group over every single one of the things that we present to you here when we look at total assets under administration within PCG. Whether it's the one, the three, five, or ten-year period, we've seen Raymond James, again, outperform our peer group. That comes from that consistent focus that we have on clients, on advisors as clients, and on long-term growth at Raymond James. We see this evidenced as well by the 12% CAGR that we've seen in revenue over the past five years. Not only a 12% revenue CAGR, but a 25% CAGR over the past five years on our pre-tax income as well. That takes us to today and looking forward.
As we look ahead to the next decade and beyond in the Private Client Group, we're excited to share with you our Private Client Group vision, which is to inspire and empower the world's best financial professionals. Short on words, perhaps, but we think each one of these words has great import. I would start with to inspire and to empower. Again, celebrating the independence and the autonomy that the financial advisors that are affiliated with Raymond James enjoy. It's core to our culture to always aspire to inspire and empower advisors and branch professionals to determine how best to weave together the resources and the capabilities of the firm in a way that's going to create even better client experiences, even better client outcomes.
As a consequence of that, reward our financial advisors and reward us as their partner with even more significant business growth and success. World's best, a lot of debate around that term. Certainly a very aspirational term, but as aspirational as it is with the vision statement to be the world's best, we could not have been more proud just a couple of months ago to see our financial advisors recognized by J.D. Power as the number one firm in the industry in advised investor satisfaction. Not only number one in advised investor satisfaction, but we were also named as the most trusted. That is a great testament to the important work that our financial advisors are doing as part of this noble profession.
It is also a great testament to the strength of the partnership, the value add that comes from this proverbial village, if you will, at our home office. Lastly, as part of our PCG vision, financial professionals. While you have heard us describe several times already this afternoon that we view and embrace the financial advisor to be our client, in addition, obviously, to the importance of their clients, we intentionally broadened this to say financial professionals because our vision is to inspire and empower everyone that is part of this commitment to serving clients and growing the business. It speaks not only to the importance of the financial advisors as part of our Private Client Group, but also all of the branch professionals that support them, and then the entirety of our home office here in St. Petersburg, in Memphis, Southfield, New York, and across the country.
Because again, it truly does take this proverbial village. We heard Paul Shoukry a moment ago reference the importance of Raymond James offering each and every affiliation that the industry has yet to ever create. Just as it's important that financial advisors help clients be diversified and be asset allocated and be all-weather, if you will, by the broad diversification we have of all of the affiliations that you see represented on this slide, Raymond James can meet advisors wherever they are in terms of their career needs and interests, such that whether it's affiliating with us in the traditional employee model, the independent contractor, the RIA model, or any of the others that are represented here, we're able to importantly meet advisors wherever they may be in the industry.
I think it's also important to note that as you continue to see this trend continue in terms of the move to independence, we remind you that independence is not channel specific. Rather, independence is really much more of a cultural view in terms of how do you support and empower financial professionals to be their very best. Raymond James is a tremendous beneficiary of the move to independence across all of these channels. Even though some may zig and zag a little bit differently in different market conditions, each and every one of these has been a consistent beneficiary, and we believe will continue to have great opportunities to continue to grow in the years ahead. Paul made reference to our competitive advantage in terms of the best of both worlds positioning.
I want to elaborate on that in just a moment this afternoon as well. Because as we think about how barbelled the industry has become over the years, barbelled in terms of just through consolidation and in some cases collapse, you have at one end of the barbell, you have very large competitors, large banks, wirehouses, etc., that have varying degrees of capabilities, but they in many cases have grown to such an extent or changed to such an extent that culturally they may scarcely resemble the types of firms that so many financial advisors may have grown up with. Then at the other end of the barbell, you'll find startups and boutiques and regionals.
These are firms that to varying degrees may have culture, but they just don't have the scale to have the full breadth and depth of the capabilities, the technology, the intellectual capital, the investment solution, what advisors need coming out of the other end of the barbell to really make a difference in their clients' lives and be rewarded with business growth. As we've described with the scale of Raymond James, advisors that we have an opportunity to recruit and to compete for no longer have to choose between this barbell capabilities or culture because Raymond James genuinely represents that best of both worlds where we're simultaneously big enough but small enough.
We have the solutions and we have the accessibility and the responsiveness, and we still have that family feel, whereas Paul described as part of his travels, he hears and we hear time and time again that the best decision I ever made was to join Raymond James. The only regret that I have is that I did not do it sooner. As we drill down then on the vision statement into the strategic initiatives that are going to support and fuel this continued growth and success into the years ahead, it is going to be driven by three core strategies as you see outlined here. It is the importance of advisor retention. Retention is always the most important foundation from which you can grow. It is the emphasis on recruiting.
The continued focus and even expansion, if you will, of our success from an advisor and a branch professional productivity standpoint. If we double-click first on retention, Paul did a terrific job just a moment ago highlighting the strength and the stability of Raymond James Financial as a partner to our financial advisors and to their clients. We can't ever overlook or take for granted the importance of that to an advisor's decision to continue to be affiliated with Raymond James given the many choices that they may have across the industry.
Beyond that, it is the commitment, as we just described again, with the best of both worlds of having all of the capabilities that they have come to expect and need coming out of some of the biggest firms that we may compete with, but then enjoying and accessing those solutions within a culture that is truly client-centric, advisor-centric. Pairing all of that with, very importantly, profession-leading levels of advisor satisfaction where as strong of a partner as Raymond James already is today, in no ways are we resting on our laurels or taking that for granted. Rather, we continue, as Paul described, with the focus on advisor time. We continue to make it even easier for financial advisors and branch professionals to work with Raymond James and even easier to make a difference in our clients' lives, which is most important.
As a consequence of all of that, for advisors to be rewarded with enhanced advisor productivity. That takes us to recruiting. Already a moment ago, a number of great questions on that topic. I'll be happy if anybody wants to dig deeper into that when we get to Q&A to do so. As you look at the success that we've had, consistently so year in and year out at Raymond James, and then you look at how we're going to amplify this in the years ahead, it begins first with a more collaborative and a more centralized recruiting process across all of the affiliation channels at Raymond James, where the aspiration is to create an even better experience than we already do for candidates that are considering affiliating with Raymond James.
Within the past year, we centralized many of our recruiting functions under the leadership of J.D. Perry, who for many years before that had served as President of our independent contractor division. She brought her passion and her leadership for recruiting to our advisor choice consulting team and has helped us create an even more collaborative process to create better experiences than we already do for the candidates, and then to create even better results from a recruiting standpoint through that enhanced collaboration across all of the affiliations. Heard reference from Paul a moment ago, both during his remarks and in his response to the questions of the importance of the focus on the West Coast and the Northeast.
As we look at where we are today in total assets under administration and we look out to 2030, 2035, and even beyond, we believe that well over half of our growth opportunities from an asset standpoint, better results, share of wealth standpoint are going to come from the West Coast and the Northeast. We both help advisors that are already affiliated with us even more deeply serve their clients and gain share of wallet. As part of that as well, we continue to see more success than we've already seen in those geographies as well. Asking a moment ago about what might be different as we look ahead, I won't say different, but what I'll say that we're going to continue to reaffirm is the importance of having the best athletes that we possibly can on the field from a talent standpoint.
That is investing in, as Paul described, really strong leaders in all of our geographies, and in particular in these geographies. So much potential upside in the years to come. Pairing that, as I just described a moment ago, with that forced collaborative process. Lastly, from a recruiting standpoint, certainly do not overlook in any way the importance of our next-gen strategy as well. We have all seen different consulting industry reports suggesting that there is potentially going to be a really significant shortfall in the number of advisors in the next decade to come. That shortfall of projected advisors would likely coincide with then having fewer advisors having to serve more clients than they have ever served before.
Not only fewer advisors in the industry serving more clients than ever before, but fewer advisors in the industry serving more clients with more complexity than ever before. There is a number of ways from a strategic standpoint, Raymond James, bless you, that Raymond James will solve for that. Technology will be a big enabler in terms of giving branch professionals and financial advisors more capacity to handle both a higher quantity of advisor clients as well as more complexity with their clients. In addition to that are the investments that we continue to make in attracting next-gen advisors. Next-gen is a reference both to those advisors that we source and attract and develop through our advisor mastery program. In addition to that, having a recruiting focus on attracting top-performing next-gen talent is a complement to our traditional advisor recruiting as well.
Obviously, when we look at our recruiting results and we look at the marriage of that with retention, we can see the benefits that that has from not only a total asset under administration growth standpoint, but then also the importance of that in terms of continuing to fuel over long periods of time consistent net new asset growth as well for the Private Client Group. We've seen, as a consequence of all that I've described, we've seen really strong asset growth across all of our affiliation models. Again, as you think about the diversification of our asset allocation, if you will, from an affiliation option standpoint, you can see very strong and competitive growth from each and every one of the PCG affiliations. That's something we continue to have confidence in as we look ahead as well.
Lastly, across the three primary strategic initiatives, I bring us to the focus on advisor productivity. Again, that comes back to how do we position Raymond James in the years ahead to be an even better partner than we already are to the advisors that we have the privilege of serving. Much of that will be technology-enabled and technology-driven. Hence the nearly $1 billion investment that Raymond James is making this year in technology, much of which, as Paul just described a few moments ago, is in advisor-facing technology to help them be even more efficient and productive in terms of how they serve clients, how they manage their business. The advancements that we're making, as described by Advisor Time, in making it even easier and more efficient to partner with Raymond James as an advisor.
The focus that we have on private wealth, and by no means is this an emergent focus. Raymond James has long been a very strong and capable player in the private wealth space. Within the last two years, we've invested even more significantly in that space, both in terms of the education, the training, the accreditation, as well as continuing to invest in the capabilities to help those advisors that are affiliated with Raymond James that have a high net worth and an ultra-high net worth focus be positioned to be even more successful in that regard. Not only is it enhancements in training and education, but also in the product solutions space as well.
Some examples there would be, while again, we've long had strength in terms of alternative investments and private market activities, we've seen significant investment by Raymond James in those regards as well to ensure we have best-in-class solutions that allow advisors to meet the needs on a continued basis of the most sophisticated clients. Last but not least, borrowing a page, if you will, from our own playbook with the success that we've enjoyed in the last two years with the emphasis I just described on private wealth, we're now extending that to a focus on business owners and workplace solutions as well. Just as I described with private wealth, this too is not new to Raymond James as a competency, but it will be reaffirmed by Raymond James as one of the most significant strategic drivers as we look ahead.
We've already seen great success over the past five years in terms of the synergies that have been created between Raymond James Investment Banking and the Raymond James Private Client Group, where our colleagues and teammates in investment banking have helped invest in the education of our advisors to be even more fluent in meeting the needs of business owners in terms of helping them unlock and ultimately monetize the equity they're building in their businesses. Taking a page from that playbook, we're extending that into an even broader focus on business owners, corporate retirement plan, and overall workplace wealth and workplace solutions. On that topic of synergies, I just described with the great example of that connectivity between our investment bank and our Private Client Group. Paul Shoukry made reference to this slide as well.
Our Private Client Group is a tremendous beneficiary of the breadth and depth that exists in Raymond James. The uniqueness of our advisors' ability to partner with Raymond James Bank and to leverage those tools and capabilities for the benefit of their clients, the way we can connect and access best-in-class solutions from our asset management business to connect with not only our equity capital markets business, but also our fixed income capital markets business, which Jim will talk more about in a moment, all of that allows advisors in a very client-centric way, which is always most important at Raymond James, to more deeply meet the needs of their clients, create better experiences and outcomes. As a consequence of that, be rewarded with business growth.
I'll conclude my formal remarks again with this slide, which reaffirms the vision, as I described a moment ago, which is to inspire and to empower the world's best financial advisors. We see all of that is fueled by the culture, the best of both worlds, the stability of the firm, our commitment to the advisors, book ownership, and having internal choice and external choice, and really positioning ourselves at all times to sit on the same side of the table as a partner to the financial advisors that we have the privileges of. I'll pause there and would love to open it up for Q&A.
Michael. Thank you. Appreciate the presentation. A question on the billion-dollar investment in technology. Just hoping you could unpack the key components of that.
How much of that is going into, say, compensation of technology-related employees and such versus hardware versus software or device? And then can you speak to some of the major initiatives that this investment is helping drive, what you expect from that, and then how this billion dollars compares versus, say, last year, the prior fiscal year?
Yeah. Terrific questions. As conversant and fluent as I am on much of that, I'm going to respectfully defer a good bit of that to Andy and to Ben, who are going to present just a bit later on the topic of these technology investments.
To get a little bit more granular, as we look at some of the immediate benefits that come from that, would be the, I think, very early and promising wins we're seeing with the investments that the firm is making, both internally and externally, in our AI capabilities. As an example of that, tying together a number of these different topics, just this morning, I had the opportunity to attend one of our Private Wealth Advisor Accreditation classes, which is in session on our campus today. Not only did I attend that this morning, but then right around the corner, I attended our next-gen technology advisory council breakfast. I heard, with no prompting from me, from both of those constituencies how much productivity lift they're getting from the investments that the firm is making in technology.
One advisor quoted this morning that he believes that in terms of client preparation for portfolio review meetings, leveraging our AI capabilities now is giving him back about 90 minutes per client per review. When you think about the productive capacity that comes from that, and you think about the importance with all of these technology investments that we're making of investing in a way that we automate what the machine does best, whether the machine is NLP or ML or AI, but investing in the machine to do what it does best, which is to analyze data and streamline processes.
Then in turn, that liberates the professionals that are affiliated with Raymond James, whether they're branch professionals or financial advisors, to do what they do best, which is to engage human to human and deepen relationships, add more value, and importantly, have more capacity to not only more deeply serve those clients, but also to attract new clients. Again, I'll defer to Andy and Ben to do a deeper dive on that D evin?
. Devin Ryan, Citizens JMP. Obviously, a lot of big themes in the space right now. You have the generational wealth transfer, little advisor headcount growth over the last 20 years, aging advisors, technology like AI, as you just talked about. I know these themes, they move slowly.
It seems like over time, when you zoom out and think back 25 years or so, the advisors' day-to-day job feels very different today than it did decades ago. When you look forward over the next 10 years, can you hit on what you think the characteristics of the firms that really separate themselves are going to be, like the key characteristics of who the winners are? Do these themes drive more consolidation? You're seeing consolidation now, but it seems like the gap is growing. The point on not having there isn't like a bench of younger advisors. Aging advisor, maybe we're getting to a cliff. Do we need to solve for that, or does technology really just solve for that? To your point, advisors are just much more productive. Yeah.
There's, I think, a lot in there.
A lot of impact there, but let me do my best to do so. As we look ahead, I think it's also important to look backwards. What I mean by that is I think back to a handful of years ago, a handful, say, five to seven years ago, where as we were being as attentive as we need to be, obviously, to advisor demographics and retirement trends, etc., and we began forecasting the probability of what advisor retirements might look like over the next 10- 20 years, we recognized what the consultants are now speaking of only today. Getting ahead of that, we began making investments in further developing our commitment to training and attracting next-generation advisors.
When some of our competitors have a much more short-term focus and a today focus and perhaps eating tomorrow's seed corn for today and so forth, we've consistently been making investments in attracting that next generation of advisors. As we look at the average age of an advisor that's affiliated with Raymond James today, it is younger, albeit slightly younger, but younger than it was five or ten years ago. Not only have we had great success in retaining advisors, not only have we had great success over the years in attracting advisors, but we've also seen a very positive demographic shift in terms of the age of the average advisor that's affiliated with us, but still much, much more work to do in that regard.
As you look forward, I think it's also important to continue to be seen as a firm that is focused on human advice and not only focused on human advice, but focused on the independence of that human advice. I think there's a temptation by so many in the profession to try to take out cost, if you will, through standardization, and at times even to think of this as a financial services factory. While there are absolutely, as I've described, there are efficiencies to be gained from technology, Raymond James is appropriately making those investments, you can't overlook how bespoke and individualized advice needs to be for clients.
By being seen as a firm that continues to value the independence and the autonomy of advisors to act independently on behalf of their clients, said another way, I believe the more Raymond James stays true to our values and our culture and who we are, I think the more unique we are going to look in the industry over the next five to ten years as others try to standardize and commoditize advice to take out cost. I believe that is going to only further cement and reaffirm our unique positioning in the firm as a terrific partner for advisors. Michael. Sorry. I'm sorry. It's all right. No, no, Michael. I thought it was going to be on you.
There continues to be an asset mix shift into the RIA segment within your PCG business.
I think it's about 14% of the AUM or the AUA that you have now. When we think about what's driving that, I'm assuming it's mostly coming from the independent contractor side that assets are migrating there. Can you just kind of talk a little bit about that broader trend just because of how quickly that segment's growing? When we think about the pre-tax profitability per asset, we have to think about material differences in that as we go from the employee to the independent to the RIA agent.
Yeah. Good questions there. As we look at the success of RCS, our RIA custody business at Raymond James, roughly speaking in recent years, the asset growth there has been fueled roughly 50/50 between internal transition and external recruitment and attracting of assets and clients and custody firms.
A bit internal and a bit external and fairly equally weighted. To your point, Kyle, where we could be advisors choosing a different affiliation internally, and if that affiliation is, in this case, the RIA affiliation, you are correct that generally speaking, that's an advisor that's in the independent contractor affiliation choosing for various reasons the RIA model is potentially a better fit for their practice and/or, of course, for their clients as well. It is less common to see an advisor, whether internally or externally, make the leap fully from being a W-2 affiliation with us or anyone else to an RIA, just given some of the complexities in terms of business structure and your compliance functions and so forth. That's generally been what the trends have been in recent years. Thanks. Michael.
I think there was a little bit of a comment in there about, in general, getting more expensive to recruit. Maybe you can help us kind of contextualize what that is today, how it compares to a couple of years ago. How much cash do you budget each year for that recruiting?
I have been affiliated now with Raymond James for coming up on 32 years this October. In one shape, form, or fashion, I have been involved in recruiting for 24 of those 32 years. As we talk about the expense of recruiting, I do not ever remember a time period where it was inexpensive. I think it is important to have that context. While certainly with each passing year, it does seem to become even more competitive and more expensive to recruit.
While Raymond James obviously is as attractive as the culture and the value proposition is, we do have to be competitive. To a large extent, why Raymond James is so competitive from a recruiting standpoint, despite the escalation of cost, has been our ability to consistently monetize the culture and recognize that as advisors are contemplating where best to partner, every firm, to a large extent, tells the same story. They all say, "Incredibly client-centered." They all say, "We love advisors." It is incumbent upon us, as we share the Raymond James story, to help put actions behind words and really demonstrate what the proof points are of why advisors are not only going to be happier at Raymond James, but also going to be better able to serve their clients and grow.
Regardless of what the spreads may be, and there will always be spreads, I believe, between our economics and that of others, there are a tremendous number of advisors in this industry that what they most want is to be compensated fairly. They want to be treated with dignity and respect, and they want to affiliate with a partner that is going to help them put their clients first and be rewarded with business growth. That has been an all-weather strategy for Raymond James for many decades, and I expect it is going to continue to serve us well in the decades to come.
. Howard Venezia with Healthcare Capital Advisors. I want to ask a specific question along growth.
Do you see the Alex Brown brand and culture as a platform for Raymond James to grow in the ultra-high-net-worth sector or those other geographies in the Northeast or California, or better just left independent and left as a regional presence?
Yeah. Great question. Alex Brown is very proudly a part of Raymond James and has been a terrific catalyst over the last seven to eight years for so much of what I've described in terms of that commitment to the private wealth markets. While the advisors that joined Alex Brown brought with them tremendous expertise, what they also brought was a lot of strong interest in helping the entirety of Raymond James become even better at what we do. It's been a rising tide, if you will, that has lifted all boats.
As we look at the different affiliations, as we have described them, the Alex Brown brand continues to be a very important part of the brand. The advisors are very near and dear to us, and their joining the Raymond James family has been, as I said, a great catalyst for us to continue to make a number of the investments that I described.
We have probably got it in there. Okay. Great.
Thank you, Kristie. Yeah. Thank you, everyone.
All right. We will try to keep on schedule here. Next up is Steve Raney. Steve oversees the firm's bank segment. He also serves as the Executive Chairman of Raymond James Bank and is on the board of Tri-State Capital Bank. Steve joined the firm as CEO of Raymond James Bank in 2006. Please join me in welcoming Steve.
Thank you, Kristie. Good afternoon, everybody.
Let me introduce Amanda Stevens, who's the new CEO of Raymond James Bank. Amanda, say hello to everybody. I don't know, you know some folks, but Amanda, we were fortunate enough to get her about seven or eight years ago to join as our Chief Operating Officer and took over as the CEO this fiscal year. She's doing a great job of leading our RJ Bank team here in St. Petersburg. Let me hit a couple of the financial highlights. The bank segment now between Raymond James Bank and Tri-State Capital Bank is around $63 billion of total assets of our combined $83 billion of holding company assets. So $63 billion of those assets sit in the banking segment. You may have noticed over the last few quarters, the total bank assets have been relatively flat.
We've been growing loans, and we've been doing that by virtue of converting some of our lower-yielding securities as we're getting paid out on those securities and putting them into more profitable, higher-yielding loans. That dynamic will probably end kind of toward the end of this year, and you'll start to see some asset growth as we continue to grow the enterprise inside the banking segment. I know everybody's well aware that we enjoy this very unique funding from our Private Client Group clients that provide a big chunk of the funding for both RJ Bank in particular, but also at Tri-State. That flexible and diversified deposit base has been a very powerful part of our economics as a banking enterprise.
I know you saw the capital ratios from Paul Shoukry earlier at the holding company, and both banks enjoy very strong capital positions while it acts as the regulatory minimums. RJ Bank has actually been, the last several years, actually generating more earnings than we need to grow our balance sheets. We have been in dividend mode. More recently, Tri-State has actually been generating enough earnings so it does not need additional capital. It is in dividend mode, but it has those strong earnings. It is supporting its growth. I know we will talk a lot about the way we work with the other business units, but a lot of RJ Bank in particular, a lot of our business is tied directly to the financial advisors, Private Client Group, as well as our institutional clients that are covered in Jim Bunn's Capital Markets Organization.
Out of the $63 billion in total assets, almost $49 billion in total loans in various categories that we'll get into. We're continuing on this march to really focus on our private client banking assets, our securities-based lines of credit that exist at both Raymond James Bank as well as Tri-State Capital Bank. An important element for both institutions is really sticking to our knitting and a very conservative credit culture. One of the things that we pride ourselves on is the capital management, the risk management that is, I think, very consistent with the overall approach to how Raymond James runs our business. We've been able to manage through that for a long time at both institutions. We've been a vital part of the company in terms of revenue growth as well as earnings growth.
It looks a little odd here where you see fiscal 2023 and fiscal 2024 compared to 2023. That was all interest rate related when you got the rate reduction that impacted our net revenues. Now we are in the process of stabilizing and growing revenues. Our profitability trends are very positive at both banks as well. We have enjoyed strong loan growth. You see some of these compound annual growth rates. Part of that is impacted by the Tri-State combination. We just celebrated our three-year anniversary early this week. June 1st of 2022, we combined with Tri-State, a little over three years now. They have been part of the Raymond James family. At the time, they contributed about $12 billion of total loans or about $15 billion in assets at that time, growing to $21 billion in total assets.
I think we've done a pretty effective job in this interest rate environment of actually stabilizing. Actually, now we're starting to see maybe a slight increase in our net interest margin. We've been relatively stable at a little over 2.60%, approaching 2.7% on a combined basis between the two banks on our net interest margin. As I shared earlier, with this continued focus on growing our private client loans, including mortgages and our SBLs, you see here how that's become a bigger part of the enterprise. While we're continuing to grow our commercial and corporate lending, commercial real estate business, it's just growing at a lower rate as we continue to focus on these lower risks, as well as in some ways a lot more creative and partnered with our Private Client Group financial advisors. We have a very diverse asset mix in our loan portfolio.
We talked about the SBLs and our residential mortgages. Our commercial and industrial business across the two banks are highly diverse across a broad spectrum of industries. We have some fund finance business, subscription line business, traditional C&I across a wide variety of industries, healthcare, technology, consumer, a small portfolio of energy loans. We have a very diverse commercial real estate portfolio, a very low level of office exposure. For example, I know that's gotten maybe a little bit less attention in the last year or so, but very low level, very diverse portfolio across a wide spectrum of property types as well as wide geographies that we benefit from having a really national business. We have this tax-exempt business where we make loans to municipalities and nonprofits that are almost 100% referred to us from Raymond James Public Finance.
We cover that market with providing some relatively short-term loans on a tax-exempt basis to them. The funding mix is also kind of notable. If you look back, in 2019, we were 97% funded with sweep balances. As a result of dynamics with rapidly changing deposits, as well as the addition of the Tri-State Capital Bank enterprise three years ago, we have a much more diverse funding. We launched this enhanced savings program three years ago that just turned out to be a great way to attract new deposits of roughly $13.5 billion, all of which is clients of Raymond James that are opening an account through their financial advisor and their sales assistant opening a bank account. That account yields around 4% right now.
One of the benefits of this Tri-State combination has been they had a more traditional deposit-gathering apparatus that we knew one day that we were going to need to tap into. It has actually expedited itself just given some of the changes in the deposit dynamics in the banking community. To the extent that they have what we refer to as national sales as well as a traditional commercial banking treasury management offering that provides diverse funding, we are trying to leverage that in a bigger way as well going forward. We will talk a little bit about that. I have hit on some of this already, but the Raymond James Bank deposit program has been in existence now for, we started in July of 2006, so quite a while now, almost 19 years since we flipped the switch and started that program. It has provided this great funding.
A big chunk of it is at RJ Bank, but a little over $3 billion of our sweep money is actually funding part of the Tri-State portfolio as well. We have these other, as I just referenced, these other deposit capabilities primarily at Tri-State now that we're working on expanding that we'll talk about. Some real quick credit statistics. We're once again very prideful of how we do the risk management around the loan portfolio and long track record here of having substantial reserves or allowance to loans. You see the trend has actually come down a little bit in the bottom right, but that's also reflective of this asset mix where we have a lot lower reserve levels on our securities-based lines of credit as well as our residential portfolio.
To the extent that those assets become a bigger percentage, it just drives down your total allowance, your allowance to total loan percentage. I still feel like we're, on a relative basis, very well reserved against any future loan losses. Some of the things that you've already heard from Paul and Tash, and you'll hear from some of the other leaders today, the bank adopts that same service-first culture that you hear about inside of Raymond James in terms of how we are very uniquely positioned to support our financial advisors as well as our end clients with really kind of world-class service. We really pride ourselves on that. To the extent that we find something that didn't go perfect, we do our best to take that into account and make improvements in terms of how our service delivers.
We have tremendous respect for how these financial advisors conduct their business. While it would be awesome from my vantage point of running this business if we were to do more direct marketing, that's just not part of the culture at Raymond James. We work through these financial advisors, build their confidence that we will do a great job with their client, and then ultimately that leads to greater business for us. We will talk a little bit about the growing product and solution set that we continue to evolve over time. I did want to mention there's three initiatives that are kind of part of our strategic plan over the next few years in expanding our securities-based lending business. We will talk a little bit about that. The treasury management offering that Tri-State has 15+ years now of expertise.
We're leveraging some of that, and I'll explain how we're trying to expand that inside of the Raymond James ecosystem. What are we going to do to do our institutional lending inside of the Raymond James enterprise to support our capital markets clients? I know you've already seen this slide. A lot of our reliance and a lot of our partnership is with these other business units, the capital markets team and Private Client Group in particular, where there's business going on both directions: deposits, loans, advisory work. I know that we launched within the last year this private credit initiative to be more supportive of the financial sponsor community. That's a very important client base of our capital markets professionals. We did that in a way with another financial partner from a risk management standpoint where we have the last loss piece.
They have the first loss piece, but it's a way for us to be more relevant to sponsors on M&A transactions. That effort's really just in its infancy and just kind of getting kicked off. We've only closed a few loans that are in that vein. Some of the things that we're doing to expand our securities-based lending business, and this applies at both banks, is we're adding to our banking consultant coverage model, if you will, of how we cover the financial advisors, the over 8,000 financial advisors at Raymond James. I would say one of the strong tailwinds that the Tri-State team has is you've already heard about the growing RIA sector. They support and do business with a lot of third-party and custodial firms that are attracting new advisors to those platforms, and they need a loan solution.
There are now over 16,000 financial advisors with these custodial firms that Tri-State does business with that are connected to what we call the digital lending platform. This is the proprietary Tri-State technology platform and how an advisor would get a loan application to them for their clients. There are over 16,000 of them now. Every year it has been growing. The underlying custodial firms are actually growing their advisor base, which is great for our Tri-State team. Both bank enterprises are adding to our sales force to be able to penetrate more advisors and be more responsive to being able to meet the needs of their clients. That is one investment we are making. We continue to make automation and enhancements to reporting both from an advisor as well as the end client so that they can see, for example, transactional information on their SBLs.
If they're doing it alone and then pay down, we want them to see transactional information. That's an example of something that's going to be forthcoming very soon. Also, just in general, are there other potential collateral types that we could take in addition to what we're already lending against from an SBL standpoint? The product evolution of certain alternatives for our high-net-worth clients continues to evolve from kind of a straightforward vanilla collateral type. Are there certain clients that we would be comfortable with expanding into, in some cases, a little bit more esoteric collateral? We're evaluating that from a risk management standpoint. I mentioned the treasury management offering that Tri-State has.
One of the things that we've not done historically, but we're in the middle of a very serious evaluation right now, is how could we tap into the very large number of business owners that have a relationship with Raymond James already? There's almost 50,000 business accounts that are on the Raymond James platform already. We're not providing them with their commercial deposits and treasury management offering. We're evaluating what we would need from a product set from an operational standpoint. What do we need to do to be able to offer that product more broadly to our Raymond James client base? As that evolves, we look forward to discussing that with you in greater detail as that work continues to evolve. We think that's a very nice opportunity inside of the Raymond James client base.
As I mentioned, we're looking at ways to expand our corporate lending that's supportive of our institutional clients. There's a variety of different ways, things we could do more strategically with the private equity community, with the financial sponsor community. You'll hear from Jim later. We've expanded our public finance practice, which is a great business. We want to be even more responsive to the needs of those public finance and municipal clients and just continue working with the ever-growing investment banking practice and how can we be even more relevant to those types of clients going forward. With that, I'll open it up to any questions. We've got a few minutes before the break. Yeah, Michael.
Mike Cyprys, Morgan Stanley . You mentioned that asset growth should materialize for the bank towards the end of this fiscal year.
If you could elaborate on the moving pieces that you see driving that, what sort of magnitude of balance sheet growth could we see? How do you expect the pace of that to evolve as we look out over the next couple of years?
Yeah. I would say, Michael, that I would say the balance sheet growth for the bank segment, the two banks combined, will probably be in the high single-digit range in terms of assets. So that's kind of a good target for us. It could be lumpy at times. Our corporate lending business, in particular, we're very nimble. There are periods of time when spreads are wider and the opportunities are more robust. We're in an environment right now where spreads are pretty tight and the opportunities are just not that prevalent.
Loans have been relatively flat in our corporate lending book at both businesses. At the same time, both banks have enjoyed the last four months or so of kind of record SBL volume. It's an area that we like to focus. I would say, Michael, in general, over the next couple of years, once we get to this point where the securities portfolio runoff, we'll get to a point where we want to keep it stable just for liquidity management purposes. I would say kind of high single-digit balance sheet growth would be kind of a good number for us to focus in on. Yeah, Devin?
Hey, Steve. Devin Ryan, Citizens JMP. On the treasury management, sounds pretty interesting. Any sense if you're the primary relationship for a certain percentage of that 50,000?
What else do you need to do to kind of build out the capabilities there? Any sense on just timing? It seems interesting.
Yeah. I would say for the most part, we are not the primary bank, if you will, for almost—it's a very small number where we're the primary bank. A lot of these are business owners that have part of their business accounts with us, and the advisor is managing some of those cash balances as well as maybe some investments that are actually technically owned by the business. It is a very small number, but we like that number that we already have a relationship with a very large number already.
There is a big number of these 8,000+ financial advisors that we do not have business accounts with, but they are doing business with the principals or the management teams of businesses around the country. We know it is a very competitive business, so we are not going to get all of it. We think that given some of the strong relationships, there is going to be enough opportunity for us to make this investment. In terms of the timing, we are pretty early on in the evaluation. We are going through what we would need from a technology. The good news is a lot of the technology through a lot of the normal bank providers that you would imagine, like both banks use Fiserv as our core processor. There is a lot of the technology that is relatively easy to plug in to be able to provide.
We're still going through the evaluation. We want to make sure we understand exactly what we'd need to spend to get this thing up and running and want to make sure that we've fully evaluated. Is the opportunity significant enough for us to be able to launch this? We think the early indication is that it will be, but we want to go through that exercise. That being said, it's probably still the end of 2026 before we would even be able to launch it. There's an evaluation process and then also getting the technology set up as well as the sales and support and everything you have to do to be able to provide that.
It's been very educational that although we don't have brick-and-mortar branches and we don't have that and we don't have bankers on the ground, and the treasury management business in particular, you can do that. A lot of the Tri-State accounts are all over the country because they've got some specialization in certain industries with certain types of businesses that are conducive to being able to do that. I would say we're not going to do this in a way where we would be able to anything that's currency-related, we will not be delivering currency or taking cash deposits and things like that. There are certain businesses that we won't be well-suited for, like really small businesses either.
We do think that there's going to be enough of an opportunity that are inside the Raymond James system to us be able to attract some new deposits and further diversify our funding. Yes, Dan.
Yeah. Thanks, Steve. Just in the opportunity within PCG, what is a reasonable expectation for the amount of a dollar-round percentage of lending that you guys think is appropriate for your current customer base?
Every financial institution wants to lend more to their high-net-worth customers. What is, for your guys' goal over the next couple of years, what's a reasonable level of penetration in that? Yeah. Our penetration, Dan, has been on an upward trend for about 10 years in both SBL and mortgage. SBLs are easier to advisor and the client to sign up.
We're over 70%, for example, of all of our financial advisors that have at least one client that has an SBL with us. Mortgages, it's a little under 50%. Every year, both of those product types continue to increase. There's room for improvement. There's still some advisors that we've not gotten to use the lending business with, and that's totally fine. We continue to educate them so there's more opportunity. Also, just the recruitment. Virtually every new advisor is going to be bringing loan opportunities with them. We're an integral part of the transition process when they're bringing their clients over, and we're needing to accommodate those loans. I think a combination of more penetration as well as just a higher advisor count will continue to support that business.
To the extent that our product offering, I mentioned some of the collateral types, can that evolve over time? We do commercial real estate to some very high-net-worth clients. We typically are doing larger loan sizes. Is there a way to do that in a more efficient way and do it at a greater scale? That is something that is under consideration. There is a lot of opportunity inside of the Raymond James client base that we continue to enjoy. Okay. Thanks again, everybody. Appreciate it.
Steve? Okay. That actually brings us to our break. We will go ahead and break for about 15 minutes. We will probably return a little bit around 3:20 P.M. Thank you very much. Okay. We are back. Thank you all for continuing to stay on and join us. Next, we will start the next portion of our session with Jim Bunn.
Jim is the President of Capital Markets and Advisory for Raymond James. Prior to this role, he served as President of Global Equities and Investment Banking and was also Head of Investment Banking. He joined Raymond James through the 2009 acquisition of Lane Berry. Jim, please help me welcome Jim.
Thanks, Kristie. I'm going to start by reorganization that's created this business. While you have seen in our public reporting for years, we reported one Capital Markets. It's actually not the way we've historically been organized internally. We had what we called the Global Equities and Investment Banking, Fixed Income, and Affordable Housing businesses to run separately and not part of one business unit.
As part of the reorganization and some of the succession within the company over the last year, it actually brought all of those businesses together, effectively all of our institutional businesses together under one umbrella for the first time. That is having some really positive benefits to us as a business. We are finding a lot of ways for each of these businesses to work together in new ways that historically we have not. You might think, "We are all part of the same company." Could not that have happened before? Certainly, it could have. Now, operating under common management with our leadership operating as one team is really helping us identify and bring some of those synergies between the businesses to life.
Just to give you a few examples of what some of those might be, in investment banking, we cover financial institutions with a particular focus on community and regional banks. Within our fixed income brokerage business, our fixed income capital markets business, their largest client constituency is community and regional banks. Historically, there was not as much collaboration between those organizations as there was not as much sharing of relationships. We are really doing a terrific job now of using bankers to our good trading relationships and vice versa to take advantage of that. We are able to distribute debt for our real estate investment banking clients through our fixed income sales force to their bank clients. Our affordable housing business, their biggest investor base in their deals are community and regional banks. The fixed income brokerage business is now introducing those opportunities to their clients.
We're finding a lot of different ways to now synergize these businesses, harmonize them, and work together much more comfortably than we have. That's really paying a lot of dividends for us and driving a lot of our growth strategies going forward. Just to give you some perspective on where we play in each of the businesses, what differentiates us, how we compete, what are some of the key metrics. I'll start with our advisory business. That's really that together with our equity and debt capital markets is what we refer to as our investment banking business and how we organize. That's a very sort of middle market, upper middle market type of focus business, very focused on sell-side M&A. We do some buy-side work. We do some other types of transactions. Sell-side M&A is the bread and butter and the core strategic focus.
In particular for private companies and in particular for private equity-owned private companies. We do some public company work that tends to be focused in some of our more public company-oriented practices like financials and oil and gas, cross-technology, healthcare, consumer, industrials, very private equity-focused. That has been the biggest, the fastest-growing part of our business. That has been a big part of what has been driving improvement in a lot of the key metrics. As we have grown our M&A, I will show you how that has progressed. We have got a real focus on moving that business up market to larger and larger transactions with larger and larger fees. In this last year, our average enterprise value in our advisory business from a sell-side perspective was about $250 million. Our average fee was north of $3 million. We are very pleased with those.
Those are more than double what those metrics were just five or six years ago. We have really seen a lot of good progress in those metrics as we continue to push consistently up market into larger and larger transactions. The private equity relationship is a big part of what has propelled that. Equity and debt capital markets, somewhat self-explanatory, very focused on IPOs and follow-ons. We are also building a private placement focus within that business, institutional private placements. We just recently added a team to focus on that in a very deliberate way. Our average equity underwriting fee last year was $1,400,000. We are pretty proud of that number. That is a very strong number and reflects us taking, I believe, last-term book one position on a very high number of transactions. The absolute number of offerings last year was 58. That is a pretty muted year.
Typically, in a more active year for IPOs and follow-ons, that's going to be well north of 100. We are pleased that in a slower year from a capital markets perspective, we are still able to achieve such a strong average fee. At the center of our global equities business is our equity research product. One of our equity research analysts is sitting in the room with Bertis. That is what we are really known for in that business. Within equity research, our niche, our focus, our definition, it is mid-cap or small and mid-cap equity research, very much with a domestic focus. The vast majority of our equity research will be on companies sub-$10 billion in market cap, typically $1 billion to $10 billion. That niche is where we differentiate versus the larger, the bulge bracket, the warehouse firms. We tend to focus on large-cap companies.
We're extremely highly ranked within that market. We're typically, traditionally, top three, often top two ranked for mid-cap research. Most of our strategy and what we do in equities is building other products and capabilities that leverage the relationships with those equity research projects to enable our institutional investors. As you see, I'm introducing high-touch, low-touch, which is electronic trading, program trading, options trading. A lot of that is focused on taking advantage of the relationships that our equity research allows us to establish with institutional investors and work to create those clients with additional products. We've got 50 analysts covering close to 1,000 companies in the United States. That's supported by 65 salespeople, almost 20 traders. Fixed income capital markets is one of very few businesses within the whole of Raymond James where we can definitively say we are number one in what we do.
Amongst middle market, fixed income sales and trading firms, we are number one firm by market share, by revenues, by number of salespeople and number of traders, and have been for several years. We're particularly effective in the depository segment. There are two aspects to the fixed income sales and trading business. They're servicing small, mid-sized community and regional banks who are very active in trading bonds, typically to match duration within their portfolios, less to achieve optimal yield or to make sure their balance sheet durations are matched. We are excellent and market-leading at that. The second aspect of that business is what we call the total return business, which services more yield-focused accounts, credit investment managers, insurance companies. Strong in that business, but that's an area we have a lot of opportunity to grow that I'm going to talk a little bit more about.
Public finance sits within our fixed income business, but it's really an investment banking-like service. This is the underwriting of bonds for state and local government agencies, typically to support some sort of project for airports, utilities, for building roads, for building schools. We've been growing this business very nicely. We've been adding a lot of very good bankers, climbing the league tables. We were number eight in this business last year. Surpassed a number of our direct peers, all the firms ahead of us. We would consider to be bulge bracket or warehouse type of players. We've established a really strong position in this market, very synergistic with our fixed income sales and trading business, where the trading of municipal bonds is one of their strongest capabilities.
The issuance from public finance and the secondary market trading from fixed income complement each other really, really nicely and allow us to compete effectively. We've also been propelled to be able to grow this business by some of our competitors exiting this business. Citigroup, publicly, decided to exit this business a little over a year ago. We added about 12 senior bankers from that team, a number of whom are very, very strong, put us into some new geographies, added some new product capabilities, really hit the ground running or helping drive some of the initial seeing in that business. Affordable housing is maybe a bit of a below-the-radar screen business from a lot of investors, I'm guessing, but it's a pretty neat business and creates some interesting growth opportunities.
Simply stated, what this business does is helps property developers leveraging some tax incentives provided by the government, whereby if you invest in portions of the equity of an affordable housing development, you get tax deduction for those investments. Our affordable housing business helps syndicate those tax equity investments to investors looking to take advantage of those tax credits. Very frequently, those tax credits are marketed to banks who are mandated through the CRA or Community Reinvestment Act to reinvest a portion of their earnings back in the communities in which they operate. These affordable housing tax credits are a big way they do this. This is another business where we're actually number one in this market. It's a very nice business, very profitable. We're now leveraging that capability to take advantage of the same tax credit investing opportunity that exists in the renewables market.
I'll come back and spend a bit more time on that. Lastly, the other component of the segment is RGL, which is our Canadian business. Actually, operationally, it isn't managed as part of the rest of the Capital Markets business that I have responsibility for, but reports up into it. It's effectively a captive Canadian version of most of what I've described. They don't have all the components we have. It's largely an equities and investment banking business. Our affordable housing is fixed equities professionals doing research and trading stocks of Canadian companies and working on Canadian investment banking transactions, often on a cross-border basis together with our U.S., their U.S. counterparts. We've been able to grow the overall top line from 2019- 2024 to a 6% compound annual growth rate.
I was asking if I could show this chart through 2021 or 2022 when that number was closer to about $1.9 billion. Unfortunately, I could not do that. But we have achieved almost $2 billion of revenue. We did a bit of an air pocket in the markets in 2023 and 2024. We did see nice growth in 2024 over 2023. Really started off the year very strongly in the first six months of the year. We are up almost 35% year- over- year. Within the overall capital markets business, our September and December quarters were our third and fourth best quarters in our history in the capital markets business overall. If I was sitting here in January, I would have told you we are up into the right and the recovery is here. That type of growth will be sustained or perhaps even improved upon as the year progresses.
Everything that's happened with tariffs has had a pretty dampening impact on the equity market and brought a lot of the deals in process, either taking deals in process, put them to the sidelines, and caused a lot of other deals in backlog to wait for some clarity around that whole picture before transactions can resume. We do expect some slowing in that type of growth rate as we go throughout the year, but feel extremely positive about the potential for that type of growth for better to recharge us from a lot of the tariff slowdown. How we compete, how we differentiate, the comments that Paul and Natasha made saying, "Best of both worlds," that very much applies in our business as well.
The way we like to compete, the way we position ourselves, is offering all of the product, mobile capabilities, service capabilities of a bulge bracket firm, but very much focused on the middle market. You can see our average deal size is about $250 million, typically focused on within the banking business, companies between $100 million and $750 million in value. We bring bulge bracket capabilities, but with intense senior banker focus and attention on those opportunities, typically with two managing directors focusing on those transactions. We do not outsource execution to more junior bankers. Our senior bankers drive those transactions. We lead with advice, very different from saying we lead with capital, not to say we are not ever working with our partners, Raymond James Bank, to provide capital to our clients where that can provide a further edge. It is definitely not how we compete and lead.
We lead with sector expertise and advice. We've been fortunate to experience very low turnover across all of our businesses from a senior producer perspective. I'd attribute that to a few things. I think we're known for having a very entrepreneurial culture, very meritocratic. I think I'm probably a good example of that, having come in from an acquisition, been able to establish some good things and be promoted throughout the organization. We've seen a number of folks like that. You find bankers who've been here for 20, 30 years. You also find people who are able to ascend and be very successful and improve themselves, very capable, very quickly. It is a true meritocracy, very respectful, very collaborative.
A lot of people come here who have been at other firms and say, "Wow, we have all the capabilities and sophistication, but it's just a much more culturally pleasant place to work than other places." Again, very similar to some of the points you heard from Tash about our PCG business. The growth orientation of our business is an attraction to a lot of people. I'll come back and talk about our relationship with the management business, the Private Client Group, Raymond James Bank, which are also capabilities a lot of our direct competitors and peers don't have or don't do nearly as well as we do. How are we growing the business? Top left, within investment banking, it's continuing to do a lot of what we've been doing successfully over the last several years, recruiting and acquiring to deepen and expand our capabilities and footprint.
We've been pretty successful thus far on the acquisition front. We've completed five acquisitions over the last several years. I score us pretty highly in terms of how those acquisitions have gone, our ability to retain the teams, grow their businesses once they're part of Raymond James and have a broader network of colleagues, products, and services that they can offer. We're going to continue to do that. We often view acquisitions strictly as boutiques and recruiting fungibly, whereas if we're looking to expand in a certain sector, we're typically evaluating opportunities to acquire a business or recruit an individual to build a team or to bring a team over and choosing whatever's sort of the most actionable and expedient path. In many cases where there is an acquisition opportunity, that can get us faster, but that's not always an option in certain situations.
We're going to continue to do recruiting and acquiring to build out our capabilities. Within our fixed income business, we have a lot of opportunities to leverage that client footprint, the number one market position I mentioned, to add some more capabilities. I'll drill down on that a little bit. Within the equities business, it's really leveraging that research platform, that 50 research analysts covering 900 companies, thousands of institutional investor relationships that that research business up empowers with additional products to capture wallet share from our institutional clients. Within the affordable housing and tax credit business, we recently acquired a business.
I'd say it's actually an acquire that we did of a business called Trekk, T-R-E-K-K, that effectively does something very similar to what we do in the affordable housing market in the renewables space to take advantage of the same tax credit syndication opportunities that are available in the renewables market for the housing business. Investing a lot behind that business. We think over time, provided we have favorable regulatory backdrop to be able to do that, the opportunity exists for that business to be even larger a few years down the road than our affordable housing business is today. When I talk about recruiting and deepening our investment banking capabilities and footprint, a couple of things I mean by that. We have some practices, I'd say quick consumer, financials, industrials, and tech community, as examples of practices that are fairly built out and developed.
These are hundreds, short of million-dollar-plus revenue practices inside of Raymond James. In many cases, our work over the last several years has focused on filling in white space. You take a sector like industrials, just to give one example. If you rolled back the clock five years ago, we would have only covered two or three of the 10 sectors most people would consider to be core middle market investment banking sectors. We would not have had coverage of packaging or the chemical sector, for example. Now we have added a banker in most cases and a team covering those spaces, but best in class in many of those sectors is having three, four, or five senior bankers covering those spaces, having teams of 20 cover those spaces versus teams of three or four.
A lot of our work in those sectors is taking areas we've established a presence and had some success and expanding that footprint to take more share from our competitors who have a deeper history in some of those sectors. We have in almost every one of these sub-verticals within those more established practices, we have a lot of opportunities to do so. We have other practices that are newer to us or earlier on the maturity curve. Healthcare and in particular biotech, private capital advisory, which is the private equity fund placement and secondary advisory business, which we established through the acquisition of a business called Siebel a few years ago. Institutionally focused private placements, which is a brand new effort we just established earlier this year, restructuring where we can say we planted a flag.
We have a footprint, but we're very far today from being the best version of ourselves and what we could ultimately look like. There is tremendous upside to grow those businesses. Lastly, expanding globally. Not dramatically, but Paul mentioned Paris earlier. We have a very strong European investment banking presence. It's been a great growth story for us. Operates today from London and Germany. We've done a few deals in the French market. Had some relationships that allowed us to win those. In order to really capitalize on the French investment banking opportunity, which by the way, is the second largest wallet in Europe. It's actually second behind the U.K., larger than the German market. You're not going to fully crack that market if you don't have French folks on the ground in Paris competing.
In order to take advantage of that, we're opening a Paris office in the very near future here, hiring a banker who's going to build out a team. I can see us doing that in other markets, such as the Nordics, other places where we've had some success, but we can have even more success if we establish more of a beachhead there. We're always looking for opportunities to expand that geographic coverage where it can really move the needle for us and leverage success that we've already had. We did top over $1 billion in investment banking revenue in both 2021 and 2022. We've been very consistently growing our managing director headcount. Ultimately, this business is a product of a number of revenue-producing managing directors times productivity. Average revenue per managing director drives the success of that business. We have 135 MDs in our business today.
Most of those, if you break down where they came from, the number one source of how those folks came to be managing directors at Raymond James would be promotions from within. That would be more than 50% of our managing directors were promoted internally, started here in some cases as analysts, associates, VPs, but ultimately were promoted up to the managing director level. Second would be through recruiting from other firms. That would be the second largest. The third would be acquisitions. While we've had success acquiring, the number one and number two sources of MD growth within our capital market practice has been developing talent internally and recruiting, very similar to the PCG business in that regard. That's something we're going to continue to do.
Our peak productivity from a revenue per managing director standpoint, when things were really blowing and going in 2021, we hit almost $10 million of revenue per MD. I would not tell you that's a target. I'd say it's an aspirational target, but it's probably not the most likely or realistic target for me to have. Where historically, the venture capital has been operating sort of in the $5 million of revenue per MD, that's in a somewhat depressed activity level. I would say over the next few years, as activity levels recover, we would hope to see that number be in sort of the $7 million-$8 million of revenue per MD. That together with continuing to grow that MD headcount and retaining the folks, the productive folks who are with us is going to drive that investment banking revenue growth.
Within fixed income and equity, a couple of things you should expect to see us invest in are our structured products business. This would be things like mortgage-backed and asset-backed securities, CLOs. That will actually be within our fixed income business. That and municipal bonds are our two largest trading businesses. Structured products will actually be, for the first time in its history, our number one fixed income trading business behind munis. First time it'll surpass munis. We have a very strong secondary trading capability. We have a somewhat nascent origination capability. As I was describing earlier when I talked about public finance, the origination and the secondary trading very much complement one another. We think we have a tremendous opportunity to invest in the development of origination of structured products.
Success there will leverage the existing footprint we have in secondary products trading and both those businesses can make each other better. I think there's a lot of upside in that area for us. Electronic trading is important on both the equity and the fixed income side. On the equity side, that's been built organically. We have a product called RJET, Raymond James Electronic Trading, that's been built internally organically, a homegrown electronic trading solution, leveraging a third-party provider, but that's grown from zero to meaningful revenue to us and driving nice growth in our equities business. In fixed income, you might recall we acquired a business called Sumridge Partners, an electronic market maker in the bond world, really sort of cutting-edge technology.
As we integrate that electronic trading capability with our traditional high-touch bond trading capability, offer both of those to clients, the marriage of those two sales efforts is really going to drive a lot of growth in client wallet and be differentiated, particularly in the middle market, because nobody else in the middle market has a comparable electronic fixed income trading capability to what we acquired with Sumridge. You've seen this chart a couple of times, but I'll expand a bit on how the capital markets business works with other parts of the firm. There's a lot of, and Tash touched on this, but there's a lot of work we do with the Private Client Group. Probably 15%-ish of our investment banking business comes from referrals from the Private Client Group.
Every time there's a wealth capture of any successful transaction, there's an opportunity for the wealth management team to capture those assets when there's a successful transaction. That sort of loop and that ecosystem is something I think we do better than anybody else within the others. There are other firms that have a wealth management and investment banking business and try to do this. We have a team that focuses intensely on this. We have both financial advisors and bankers who join us from other firms that try to do this. We very consistently hear, "Wow, you guys have sort of cracked the code on this.
You've figured out how to build trust between these advisors and the bankers to really drive success here. I think it's really something we're really proud of, the success that we have and the relationship between many of our advisors and our bankers. Steve Raney talked about how we've developed a joint venture with Eldridge and Bank to support, provide the provision of credit to our private equity clients. Again, that's distinctive relative to many of our middle market peers who don't have that capability, who don't have the ability to commit capital on a lead basis, lead agent basis to transactions where they're involved. The joint venture we have with Eldridge and Raymond James Bank is allowing us to do that. That's really resonating in the market and differentiating us from competitors who don't have that capability. I'll close with this.
One of the things that gets me really excited, if you look at what's happened and really the upside that it gives us. From an M&A market perspective, from 2015- 2024, our market share increased from 0.8%- 1.4%. Accompanying that growth in market share was about a fourfold increase in our advisory revenues. And that's because we were increasing our share of a growing market. But I look at that and say, "0.8%- 1.4%, that's great." That still means there's 98.6% of the market available to us. So while we're very excited about the growth we've had, I never say unlimited upside, but there's tremendous upside to continue to grow our share of the M&A market, penetrate new transaction types, continue to move up market. There's tremendous opportunity. We could quadruple this business again. It would still be single-digit percentage market share.
That's one of the biggest focus for us, is to continue to take share of the M&A market. I am asked often about margins. We're not blessed with a high degree of recurring revenue. As a result of that, our margins tend to be more volatile than other parts of Raymond James. Our peak in 2021 and 2022 was almost 30% in 2021, north of 22%, almost 23% in 2022. I encourage you not to see that replicated. That was a perfect nirvana of intense transaction activity with nobody traveling, no conferences, so people were not even on planes. That is unlikely to be repeated, that you can generate that type of revenue without spending any money on business development.
I would say, if you look at full-service peers, you look at what their margins are in what I call a good market environment, they tend to be in the 14%-17% across our capital markets business. That is a good, I think a good and reasonable target for us to have. If you look at our first two quarters, we were better than that in our first quarter of this year, a little worse than that in the second quarter as activity started to slow, particularly toward the second half of the quarter, blended to 12.6%. I think that is a reasonable margin expectation for us to have in a good market as a full-service business.
I do not have any questions. Thank you.
Devin Ryan, Citizens JMP. I want to ask about the private capital market overall and then kind of how you guys are positioned.
Seems like a very hot theme right now, but there's a secular trend of just capital flows into private capital. I think you guys acquired Siebel in 2021. Outside of kind of the primary fundraising side of the equation, where are you guys with respect to continuation vehicles or kind of thoughts around secondaries advisory? Where is that within Raymond James today, if at all? How are you thinking about just that broader opportunity as maybe a growth engine for you?
I'd say a couple of things. One, we acquired Siebel because private equity is a core strategic growth focus for us from recruiting, from everything we do. We also, as I said, we do not have a lot of recurring revenue, but private equity can represent our recurring relationships.
If you can build strong relationships with private equity firms, they will find ways to compensate you on a somewhat consistent basis. We are trying to cement ourselves, attach ourselves to private equity firms and become one of their, if not their top one, two or three most important relationships for everything that they do. We feel like that will be rewarded. Siebel was a big part of that because they are very effective with private equity. From the time we acquired that business to last year, their revenues grew roughly fourfold. We have expanded their headcount. A big part of the investment, they had success doing both primaries and secondaries. I mean, continuation vehicles and LP secondaries. There are two flavors of secondaries, you acknowledged. Continuation vehicles, which are secondaries focused on the GP, private equity firm itself, or LPs, where LPs are looking for people.
We do both of those. We've done 16 secondaries over the last 12 months. We're seeing a lot of traction there. We've just hired a banker to further bolster our secondaries practice in the U.S. He actually just started this week. I was with him at a private equity conference in Germany this week. I think part of how we're differentiating is back to the collaboration point versus just being a pure secondary advisor, marrying industry coverage. So with the CV in the industrial space, the tech space, partnering secondary transaction structuring experts with industry bankers who can help investors understand the asset or the assets that are within that, how those businesses should be valued and positioned. That's how we're going to market. We're having good success. I mentioned 16 deals.
We still think if we look at best-in-class peers within that full market of PCA or private capital advisory, primary and secondary, it's not hard to see. We have peers we can see on public disclosures are four or five times our size. So we'll quadruple the business in a few years. Quadrupling again would sort of catch us up with sort of those best-in-class peers. We see a ton of upside. The secondaries are a huge part of that. That's why, again, we just added a senior banker in that space. Thanks.
Michael Cyprys for Stanley. I was hoping maybe you could elaborate on that 15% of the investment banking business that you're getting from referrals from PCG. Can you speak to the connectivity that you have, the sort of drivers of the success?
Where do you think you could take that 15% to as you look out over the next five years? You've mentioned a team that you have set up. Can you talk about how that team is resourced, sort of their role, how they contribute to that?
Sure. I spent a lot of time on this, so I'll try to hit it efficiently. We have a team that sits within investment banking. We call it our business development team, senior team, all of whom have experience as investment bankers in prior experience. They spend a tremendous amount of time going to many of the events that our Private Client Group hosts where advisors gather. Conferences are the big ones.
We spend a lot of time making presentations about what an investment banking transaction entails, what types of transactions we work on, what are the characteristics to look for in your clients, Mr. and Mrs. Financial Advisor, what types of characteristics of your business owner clients represent good prospects for us, training them about how to open that conversation, what are the types of questions to ask, and then very quickly encouraging them to bring those opportunities where they identify them to our business development team, which is sort of the first level of screen to get on the phone with the advisor and then the business owner client to qualify the opportunity, make sure it fits with us. If it does not fit with us, we have a network of firms we can refer those out to for whatever reason.
It's a sector of size that doesn't fit with us. A lot of it's about education of the advisors, getting them comfortable and confident to have that conversation with their business owner client, and getting the advisors to trust the investment bankers to introduce them to their clients. Once investors have a taste of that success, it's a home run. We share a percentage of the success feedback with the advisors, but importantly, when their client sells a business, they convert an illiquid asset, i.e., an ownership stake in a privately held business, to a liquid asset, a part of their EOM. It's a pretty powerful one-two punch for the advisor. We have a lot of advisors who've had success with that, get on stage at these events and give sort of live testimonials for how impactful this has been on their business.
We put a lot of attention on this. In terms of how big it could be, I have sort of a constant push-pull with the team that leads this because I would like it to continue to be 15% of a growing stock. I do not want a bunch of bankers sitting around waiting for the phone to ring from an advisor for a trade. They need to be out hunting for their own transactions. The real power of being an investment banker with Raymond James should be if you would find four transactions on your own out in the market from your own business development activities. If you are an investment banker at Raymond James, there will probably be one incremental opportunity, one incremental transaction that will come to you from the wealth management channel.
I think that 10%-20% is the right range, but very much expect that to be part of a growing client.
I'm Mike Brown from Wells Fargo Securities. Looking at page 63 and 64, you've got a very broad breadth of capabilities across the entire business. Just curious, what's on your wish list from a capability standpoint when you think about inorganic growth and then specifically in the advisory business? Where's the best white space opportunities today? World domination is on my wish list. Seriously, I think about that in three vectors. We have a lot more we could do in sort of that core private company space. We can double or triple that without having to really reinvent what we do at all, just by plugging 20 more industrial bankers tomorrow, take share without stepping on each other's toes and grow that capability.
A couple of areas where we are more aspirationally focused would be areas that would represent part of that 98.6% of the M&A market that we're not capturing, the advisory market. A lot of that would be public company M&A. We do some of that. There's hundreds of millions of revenue opportunity that is generally not what we're pursuing today. It's a pretty specialized capability, the type of thing you'd probably be more likely to acquire than build organically. Skill set to be a public company banker is different than a private company banker. That is something I have my eye on for something to do that'd be more impactful and open up a whole new revenue wallet. The restructuring market, we have a restructuring team. We're happy with its performance.
But again, if I study some of our peers and the revenues they generate from restructuring, there is hundreds of millions of dollars of upside. Again, the type of thing that would perhaps be more likely to come to us inorganically than organically, although we have been growing it growth. Thank you.
Thank you, Jim. All right. Moving right along. Next up, we have Butch Oorlog. Butch is our current CFO, a role he took on just at the end of 2024. Prior to that, he held a number of leadership roles within the finance organization, most recently Chief Accounting Officer. Please welcome Butch Oorlog.
Good afternoon. It is good to be here. And I want to start out by first thanking you all, as Paul did, for being here, coming here, investing your time in Raymond James. We appreciate your interest, and we do not take it for granted.
I want to start by saying we, at Raymond James, have a long track record of producing solid financial results. We start there with rooted in the core values that Paul mentioned. We are going to talk about our ability to generate operating leverage over time. We are going to talk about our strong balance sheet. We are going to talk about our consistent capital priorities, which are focused on growth. All of those and our ability to achieve and produce consistent results are all rooted back in our core values, which are centered and focused on our clients and doing what is best for them. Really, the financials reflect that story and demonstrate it end to end and is at the core and at the root of everything we do.
Starting with our track record on operating revenues, our operating leverage, this chart we demonstrate 11% five-year compound annual growth rate on consolidated net revenues. What I want to point out here is consistent growth in net revenues each and every year. We think about the economic environments that we were operating these businesses in in these years, 2021, pandemic, near-zero interest rate environment, 2022 and 2023. We have increasing interest rates. Of course, in 2024, the easing cycle begins. Because of our diverse and complementary businesses, we're able to produce revenue growth in each of those years and in each of those environments. That's unique to the businesses of Raymond James. I'll also point out here, for the first six months of the fiscal year, we've been able to continue that growth trajectory with 13% year-over-year growth for that six-month period.
We're off to a good start in FY 2025. Coupled with that revenue growth, we have a highly variable cost expense model. I'll just point out 61% of our consolidated expenses are PCG financial advisor compensation and incentive compensation. As revenues move up or down, those expenses are going to move up and down and are part and parcel to one of the reasons that Paul's able to talk about our 149 consecutive quarters of profitability. It's the nature under which our business is constructed and built. I'll also point out, our total compensation expenses are about 81% of our total expenses, leaving 19% of our expenses to be non-compensation expenses. Even within that bucket, we have elements of those expenses that are highly variable and move and scale up or down with our revenues, levers we can pull.
Examples are our recruiting expenses as we invest more in recruiting and grow our businesses. Those would tend to increase in our business development line. Also, even within our other expense categories, we have things like FDIC insurance. As our bank deposit balances grow and our FDIC insurance premiums increase, that would be reflected and scale with the growth in the business. Marrying those two concepts together, we're able to demonstrate the positive effect of generating operating leverage. You'll notice our consolidated pre-tax income grew at 14% over that five-year period compared to the 11% growth in net revenues, demonstrating the consistent development of increasing operating leverage in our businesses. Also, I want to point out that that's on a GAAP basis. We're able to demonstrate the clear financial performance. We also present our adjusted pre-tax basis.
The nature of our adjustments are pretty minor in terms of the adjustments we make. Our constituencies and stakeholders can really clearly understand on a GAAP basis how these businesses are performing. Last thing I want to point out on the slide is we have a track record of increasing our pre-tax margin. We were able to create a 26% pre-tax margin in fiscal 2024. That margin is still over 20% in 2025 and the first quarter. Shifting to the, with that strong P&L performance, coupled with the disciplined management of our balance sheet, which we'll review in a minute, we're able to demonstrate a consistent level of very solid returns on common equity.
You'll notice over that five-year period, those returns ranging from 17%-17.5% as a return on common equity and a return on tangible common equity north of 20% in each of those periods. I also want to point out that we're able to produce those returns with very conservative levels of capital in our business. Even though we have conservative levels of capital, we're still able to produce those returns. Moving on to the balance sheet. Steve mentioned in his remarks, the total firm's balance sheet is $83.1 billion as of March 31st, 2025. When you compare that to the balance sheet as of September 30th, it was roughly in the same place, about $83 billion. We haven't had overall balance sheet growth. As Steve mentioned, we have had growth in our loans.
We've just been able to fund that growth with other assets, cash and securities, these freezes that we use. We do see that $83 billion growing, starting to grow back once we get to the end of this calendar year. Also note that we have $2.5 billion of cash at our parent. That's our liquidity measure. Our target level for cash at the parent is $1.2 billion, which is a pretty conservative target. We have about $1.3 billion of excess liquidity at our parent that is available to invest in our businesses and in these strategic opportunities that you've heard described today. I also want to point out, Paul mentioned our tier one leverage ratio, 13.3%. We operate with a target level of 10%, which is still two times the regulatory minimum. 10% is a conservative target level.
With our current position at 13.3% of Tier 1 leverage, that equates to about $2.7 billion of excess capital that we can deploy in our business to fund the growth initiatives that you've heard described today. The last point I want to make on this slide is our A-rated credit rating from each of the credit rating agencies. I want to point out that those rating agencies just completed their annual review within the last couple of months and affirmed their ratings and affirmed their stable outlooks. In terms of our liability and capital side of our balance sheet, we have a very simple liability and capital side structure. You'll notice that the majority of those liabilities are in bank deposits. Steve described for you our diversified funding sources and our goals to continue to diversify the funding sources.
I do want to highlight the 86% of those bank deposit balances are FDIC insured, with 95% of those balances at Raymond James Bank specifically being FDIC insured. I am going to go back to our core values. We are able to do that through our BDP program and our third-party bank structure. That is not easy to do. We do that because that is what is best for our clients. It provides us the opportunity to provide that differentiated level of service to our clients. I also want to point out on this slide, and Paul mentioned our senior notes, very small percentage portion of those liabilities. With an average maturity remaining on those notes of 19 years, we have a long runway before those maturities. They are low-cost instruments, and they provide good value.
The next maturity date, earliest maturity date for the first tranche under those senior notes does not arise for five years. We have five years before that first tranche matures. In terms of funding, this was a topic for many years, of course. Our PCG client cash balances continue to provide a stable, low-cost funding source to the bank. We heard Steve talk about the unique nature of those funding sources to our bank. What you notice here is that over the last couple of years, those funding levels and sweep program balance levels have stabilized. Cash sorting, I would say that we have not necessarily declared cash sorting over, but it certainly seems to be we have concluded it to be less prevalent than it had been for many years. We will not conclude that the sorting dynamic is over until we see those sweep balances grow.
We would expect them to grow proportionally to the growth in client assets. At that point, I think we would conclude that sorting is over. We're not there yet. Certainly a stable environment. In terms of our consistent capital priorities focused on growth, our capital priorities have not changed. Our first goal and objective in deploying capital is in support of top-line growth, organic growth investments. You've heard Jim talk about a number of those sorts of investments as he talked about different MDs that we've brought on over the years. That's an example of organic growth, capital deployment, and investments. They're not always acquisitions in that space. Same in terms of financial advisors, investing in the recruiting efforts and everything that it takes to support the growth of those financial advisors. That's organic growth.
There are many examples of what that organic growth looks like. We have heard from different leaders today what the opportunities are for us going forward. The last element in that organic growth investment, we are going to hear from Finn and Andy in a minute on our IT, strategic IT investments, which is another area where we are making investments and deploying that in our growth. To the extent that at the next tier in our capital deployment priorities is for M&A acquisitions, and Paul mentioned what our criteria is for those. After that, we will continue to provide dividends on our common stock. Our dividend payout ratio is about 20%-30%. That is our targeted range. As of the beginning of this fiscal year, we increased our dividend to $0.50 per share. That is an 11% increase in our dividend.
That still keeps us down in that low end of that 20%-30% dividend payout ratio range. In addition to the payment of dividends, we remain committed to repurchase shares to offset share-based compensation. Finally, we will make other share in addition to the share-based comp dilution repurchases. Since fiscal 2019, we've returned $5.1 billion to shareholders through either dividends or the share repurchases. In terms of our recent communic repurchases ations, and I say recent, I go back to the beginning of the fiscal year. We talked about, as we continue to see that tier one leverage ratio grow, we talked about accelerating the amount of our, increasing the amount of our dividend, excuse me, of our share repurchases. We actually executed on that.
In the most recent earnings period, we provided guidance to size that level of share repurchases in the $400 million-$500 million a quarter range. At that level, that is just providing us basically stability. We are not further growing our tier one leverage ratio at repurchases at that level from the 13% range that it currently sits. Even though we are deploying capital at that $400 million-$500 million a quarter range, it does not negatively impact our ability to have plenty of excess capital available to us to support and grow in the organic opportunities or strategic opportunities. It is just maintained, it is basically keeping us from further growing that tier one leverage ratio from that level. Next up, we will talk about our financial targets. I am sure that you will note that these targets are unchanged from last year, and last year was unchanged from the year before.
They still represent appropriate levels. We try to be conservative when we evaluate these targets. We certainly hope that we are able to outperform these targets. Based upon our key assumptions and the current equity markets and short-term interest rate environment, we believe these to continue to be appropriate targets. Adjusted comp ratio of 65% or less, adjusted pre-tax margin of 20% or higher, adjusted return on common equity of 17% or higher, and adjusted return on tangible common equity of 20% or higher. Embedded in these targets, they reflect the consistent share repurchases at the level that I just described. Similarly, in terms of the long-term capital targets, we discussed our tier one leverage target of 10%. We are not changing that target level. Over time, over the long run, we do expect to operate the businesses at that 10% target level.
We also have not updated, did not change our corporate cash liquidity at the parent target of $1.2 billion. In terms of the total debt-to-book capital ratio, Paul mentioned that our current is a 32% is really a limit. We are currently operating at 15% total debt, which is mostly senior notes to the book capital ratio. That provides us plenty of capacity to go out and raise debt capital in order to further create liquidity to invest in our businesses. With the combination of our excess, with our liquidity on hand, with our additional capital ready to deploy, we have the funding capacity and the ability to pursue the strategies that you have heard from our business leaders earlier today. We expect to be generating at least $20 billion in net revenues by 2030. With that, I will open it up for questions.
Devin Ryan, Citizens JMP.
Just on kind of bringing together all the points on customer cash and some stabilization there, what Steve spoke about with the expectation for the balance sheet to grow and the NIM stabilizing. Can you give us a sense of how you're thinking about net interest income growth over the next couple of years and some of the puts and takes there? Because there's still a little bit of room on deposit rates, it seems, to come down. It'd be great to get an update on how you're thinking about that for the firm.
Yeah. We'll continue to grow. We have plans to continue to grow our securities-based loans. We've heard that discussed and also our residential mortgage. Really focused on using our capacity and balances to support our client-focused lending needs first and foremost.
To the extent that spreads widen in the corporate loans and there are good risk-adjusted return opportunities, then we would become more active in those products.
I was hoping to dive into the billion dollars that's being spent on technology. When I look at your income statement, where is that showing up? Because it's really hard to disaggregate where that is. Maybe from your perspective, budgeting a little bit more color around what the actual spend is.
Yeah. The dispersion of that billion dollars is across different line items on our P&L. There is a significant element of that in compensation expenses for employee developers. We also utilize a lot of contract developers. The contract developers get included in the communication and information processing line. It's not an aggregation.
The equipment and the depreciation would be in the occupancy and equipment line. There is not a clear, clean way for you to look at the P&L and identify, "Oh, this is specific IT support."
Thanks. Michael Cypress from Morgan Stanley . You mentioned $20 billion by 2030. Maybe you could help unpack the building blocks for how you see the progression for there in terms of the key contributors. What do you see as some of the biggest ones? How do you see the mix of the business evolving over that timeframe?
Yeah. That is the output of a strategic planning process. Many of those strategic plans and strategic initiatives are the foundation of what you are presented here by our different business leaders.
The way we think about it is we see opportunities to grow our business in its same proportional form as today that it is today is how we see it growing in opportunities in 2030 in support of that total.
In terms of the repurchase activity in this $400 million-$500 million range, I hear your point about tier one leverage kind of staying flat near term based off that level. As we think about what was stated earlier about the balance sheet growth starting to kind of accelerate into fiscal 2026 a little bit and 2027, that'll start to kind of bleed down the Tier 1 leverage ratio if you kind of continue on that $400 million-$500 million path. I'm just curious how you're thinking about, is there a buffer above the 10% level that you want to keep?
Is it 200 basis points for flexibility around M&A? I'm just wondering if $400 million-$500 million is the right way to think about penciling in over the next couple of years. Is that what we should think about, just the normal course run rate, or do you get down to a certain level where you want to meet optionality?
Yeah. We will be continually reevaluating that based upon the opportunities that we have. Our commitment is we do not want to continue to grow the tier one leverage ratio from that point. Our ideal, as we have said before, and focused on what our capital deployment priorities are, we really, from there, from that level, want to deploy in organic growth and M&A opportunities.
We still believe that we'll have plenty of capacity to do that, to do the types of M&A that we've done in the past at today's current excess capital levels.
Ask another one on operating leverage. You talked at the beginning kind of driving operating leverage. Obviously, the targets aren't changing, but we're not in maybe a perfect environment for every business. You also talked about a lot of variable expenses. Kind of as revenues go up, some of those expenses. Where do you see the opportunities for operating leverage as you kind of play this out over the next few years? Where can you really leverage fixed infrastructure? How much is from kind of slowing expense growth rate versus kind of accelerating the revenue growth rate?
Yeah.
I would say we just have demonstrated through our track record that we have the ability to manage both the top line growth and manage our expenses. We do see you heard discussed the mention of Advisor Time as an example. You are going to hear Andy and Vin talk about some specific opportunities that we are pursuing. Although the purpose of them is not necessarily to drive operating leverage, we do believe that successful execution of many of those initiatives and Advisor Time as an example will produce opportunities that will enhance our operating leverage going forward. We probably better wrap it up there.
Thank you. Thank you much. All right. Our last presenter, so we can try to stay on time here. Please help me welcome Vin Campagnoli and Andy Zilber.
Vin is our Executive Vice President of Technology and Operations and is responsible for managing all aspects of our technology and operations of the firm. Andy is currently Chief Information Officer of the firm. Please help me welcome Vin.
Good afternoon, everybody. I guess I'm the last thing before the tour and then dinner. I'm going to cover a couple of slides. Primarily, what I'm going to try to cover is how we align technology with our business. I'm going to go through a handful of things of how that integrates, how we support our business going forward. Andy's going to come up and talk a little bit about the overview of our IT investment, where our focus area is on IT investment.
I'll talk a little bit about the strategy, and we'll close with some of the work we're doing in AI, what we've implemented, and what we're working on. I'm going to start with a slide that you've seen a handful of times today and talk a little bit about how we look at our business and technology to enable it. You heard from each of the business segments about how they're interacting. Our architecture, our data platform, specifically our data platform, which we've put investment dollars in over the years, is there to support this type of integration. A lot of that doesn't happen without technology, as you can imagine. You look at technology and financial services. It is clearly significantly important to every firm. At Raymond James, a lot of the discussion today was around technology. It is a big priority.
It's a big priority on how we integrate what you see here and what we're doing going forward with each of the businesses. I'm going to touch on Private Client Group specifically in this slide. For those that have heard me speak before, I talk a lot about building technology from the mind of the advisor. This slide is talking about the advisor, but where you see advisor, I could substitute an investment bank or a banker, someone in asset management, or somebody in any one of the corporate functions. What we do, and we really believe it's our secret sauce, especially on the advisor side, is we spend a lot of time with our advisors. Tash mentioned this morning that he was with our next-gen advisors. There's about 15 advisors in the other building that are literally sitting down with us and going through the things we're working on.
We literally have them writing requirements with us on how they work. Just imagine sitting over their shoulder and watching how they spend their time. How do we save them time? How do we make them more productive? That is a really big focus of ours. We have a technology advisory council that sits above them, goes across every one of our Private Client Group businesses. There are about 18 advisors across the U.S. They come in. We meet with them monthly. They come in twice a year. We drive requirements with them. We drive our prioritization with them. If you look up there, we are very focused on trying to build a platform that we feel is sophisticated but simple to use that any one of them could use. How do we know that we are doing a decent job with this? We survey our advisors.
On the left-hand side of this page, we just finished a survey, and we asked them about their technology satisfaction. As you can see, that was a 90% satisfaction rate. We also asked them about our service, which was also 90%. On the right side, and I do not expect you to look at this slide immediately, but hopefully, you have a—you can take a look. We want to know from recruits. It is a great way for us to learn from somebody who just joined a firm. It could be from any firm. We want to know what they miss from their competitor. It is a way of us potentially filling a gap. We also want to know, what do they think about our technology now that they have come here? They have come from the competition. I love these three quotes.
We ask them all to comment because it's a great way for us to do some fact-finding. If you look at these three quotes, they have similar comments. The comments are around saving time, making them more efficient so that they can be more productive with their clients. That goes back to the previous slide that I said of how we're building technology to support the advisors, support their business. I'm going to turn it over to Andy. We'll both be here for Q&A. Again, he's going to start with just a brief overview of technologies and hopefully answer some of the questions that came up during the session.
Thank you, Vin. I appreciate it. Thank you all for your attention. As Vin said, let me just start with painting a little bit of a picture of our technology organization.
As all the growth has been going on in the firm that you heard each of the business leaders describing, our technology organization has been expanding as well. I've talked quite a bit about the billion-dollar number, rounding up slightly, a $975 million tech spend planned for this fiscal year. We have 1,900 associates in our IT organization globally, and we very much look and act as a global organization. St. Petersburg is certainly a major tech center for us from a work center perspective, but we actually operate now from six locations around the world here in the U.S. We also leverage Vancouver and London, which have turned out to be tremendous labor pools for us. We have businesses in those locations, but we actually have built up teams there to work on our enterprise across the board.
A lot of discussion on AI, and I'm going to give some more details of what we're working on there in the business areas, but I really wanted to make sure you understood how effectively we're deploying AI in our software engineering activity. In that population of 1,900, just under 600 of those individuals every day writing code with an AI assistant, they're helping them do that. We can actually measure that quite effectively. We're seeing 10%-20% productivity gains in the coding activities of those individuals, relatively early days. If you think about some of the activities that are typical for a software engineer, we're seeing really big gains as we bring new staff on, whether that's from turnover or we actually have a very successful early career program, our accelerated development program.
In a large organization like ours, traditionally, it might take days or even weeks for a new software engineer who's experienced to get their head around the code base that they're being asked to work for. That is really one of the sweet spots we found with a large language model. It can dive into that code and summarize for the engineer, "These are what the functions do. These are the technical dependencies." That is saving a ton of time, just one example. Finally, on the right-hand side there, just a summary of some awards and recognition activity over time. We have 10 years in a row won an industry award for our technology development in our wealth management space. This year, actually, the Banking Insurance and Securities Association Award was actually for deploying innovative AI for financial advisors.
Although I have to say, for me, for our team, the kind of recognition that you heard from Vin from our financial advisors, that's what really matters the most to us. Are we solving problems for them? Are we creating opportunities for them? Are we buying them time back in their day? I'll talk a little bit more about some specifics of how we do that. If you look at that technology spend breakdown, you can see double-digit increases in that percentage wise over the last five years. Frankly, similar story the last five years before that. Where are we focusing on that investment? There's been a lot of discussion of advisor productivity and buying them time back. That same group of next-gen advisors I had dinner with last night, tremendous roundtable discussion on how they're leveraging AI.
Simple examples, we actually were an early mover in making generative AI available across the firm. That was 14 months ago. More recently, still a relatively early mover in financial services of making meeting summary generative AI available. That is buying them back two, three, four, five, six hours a week, which they are then plowing back into prospecting, into relationship building, into growing NNA. You can really clearly see the benefits there. The investment in that space is obviously not just all AI, and it is not just all in Private Client Group. We just rolled out a new collaboration platform for all of Jim Bunn's investment bankers, for example, giving them the best state-of-the-art tools and available on their mobile platform. That is meeting with great success. We are ramping up investment in our asset management area. We have great projects going on in the banking segment.
Really widespread distribution of those investment dollars. We talked a ton about artificial intelligence. I will show a couple of specific examples in a second. Cybersecurity is an ongoing area of focused investment. My first nine years here, I ran the information security program, so it is certainly near and dear to my heart. Afterwards, we are going to go upstairs to see our cyber threat center. Another version of best of both worlds that was told to me when I joined here is we are big enough to matter, but small enough to get things done. With the right investments in cybersecurity and the right nimbleness of our team, I will tell you we have an absolute world-class cybersecurity capability here. I touched on globalization and things we are doing to be more effective from an enterprise technology perspective.
We certainly want to continue to support the entrepreneurial spirit, the independent spirit at Raymond James. We also, as we get larger and more sophisticated, have opportunities to, frankly, save the firm money, provide better service, standardized solutions. An easy example would be licensing FactSet across the firm, which used to be done by business area. We went to an enterprise licensing scheme, great volume discounts, saved our Canadian business almost 50% on their license costs for FactSet. Quite a bit of that is going on across the enterprise. Last, but it should not be least, is investment in solutions that are helping make sure we meet the regulatory bars that we have to meet. We are really operating now and thinking about the capabilities that we need to deliver to support the business strategies that you heard before.
I'll just focus for a minute on those five, what we call strategic levers. I would argue, when we think about IT 2030, the capabilities that we need in our organization, we have to be world-class in those five domains. That's the demand on our technology organization so that we continue to support the business success of Raymond James. I touched on security, and every financial services firm is certainly going to rate cybersecurity as a high priority. For us, though, we really take it a step further when we think about the anchor to business strategy. Again, back to the financial advisors, at the core of their relationship with their clients is trust. We think of that information security requirement as making sure that we don't do anything to grade that trust relationship between the advisor and the client. Ditto service first.
We're here primarily to take care of our business users, make sure they have the capabilities they need. They, in turn, can take good care of their clients. People, as we mentioned, core to our strategy and appropriately at the center of this chart, making sure we have the capabilities that are required. I mentioned our early career program. We have really amazing levels of engagement, surveying our associates in IT and looking at engagement scores. We have super respectable attrition levels, mid-single digits, far, far better than, frankly, anything I've seen at previous firms where I've worked and a really, really engaged workforce. That makes a huge difference for us. Data as an area, particularly as an enabler for AI, has really been a focus over the last 10 years and will continue to be a high focus.
I'm sure you've heard the expression, "Data is the new oil." When we think about AI over time, today we talk a lot about tooling and maybe which LLM is better than another LLM. The tooling will tend to converge over time to common capabilities, and the differentiator will be what proprietary data do you have to gain business insights, as was mentioned before, that your competitors do not have. We even take data to that extent. Again, in the PCG space, we've built our own proprietary CRM fully integrated with our whole wealth tech platform. Our coaching to the advisors is enrich your CRM notes with as much information as you possibly can. That will be that advisor's oil and gaining unique insights on their client base over time. Lastly, but not least, this is just a slightly different way of saying what Vin said.
Our secret sauce is focusing on business value and alignment to our business areas and what do they need. Technologists, might shock you, can get a little distracted by the latest sort of shiny toy and maybe want to play with a new technology. We stay really hyper-focused on what solutions will generate business value. That tagline, which should be trademarked, Vincamp and Oli, designing technology from the mind of the advisor, is really what it's all about for our technology team. Let's talk a little bit more about AI and give you some sense of where we're focused. First, how are we thinking about this? Paul Shoukry mentioned the areas in which we're focusing our AI efforts. Number one, driving operational excellence and operational efficiency.
Even things we do in the back office, for example, we've deployed some really creative and very effective machine learning AI around our communications supervision capabilities. We've eliminated 50% of the human work in looking at those emails. That also translates to less friction for the advisors because when the humans are going through those emails, there's a lot of back and forth with the advisors. "What did you mean when you sent this email to a client?" Right? By eliminating that workload, it certainly saves the supervision team quite a bit of time, but it also reduces friction for the advisors so they can focus their time on their clients. Providing data-driven insights across the board, whether that's in PCG or other business areas. Just finished a great pilot of some generative AI with our asset management, our portfolio managers, tremendous results.
In some cases, saying, "Hey, we, frankly, had an outsourced data analyst doing some of the grunt work for us. We can eliminate that. We can get this done work more quickly and keep it in-house." A lot of examples like that. We've touched quite a bit about empowering advisors and, again, giving them time back to focus on their clients and growing their book. We want to do all of that, balancing, being forward-leaning in terms of innovation across the board, but staying within some very well-defined guardrails, both from a security and regulatory expectation standpoint. When we look at our sort of board there and what we're focused on from an AI perspective, we are building some of our AI capabilities internally. We have a center of excellence in the technology department that's called Carillon Labs.
They're both the engineering center of excellence as well as the user education and capability center of excellence. These are some of the firms we're partnering with to build out capabilities, OpenAI and Microsoft being the primary two partners for building out our internally developed AI and ML use cases. We've actually established partnerships with the firms on the right. We can do continuous and ongoing assessment of whether we're meeting the goals that I described before. Are we being as forward-leaning as we can be? Are we also staying within sound guideposts? Particularly in the regulatory space, there are some very high-level sort of statements about safety and security in AI. We really need to be constantly assessing how are we interpreting that and what do our competitors and other industries look like in that space.
This has been really exciting to find the right strategic partners who are willing to work with us, share feedback, make their solutions better, and there will be a lot of this ongoing. Finally, looking at the pipeline we have of AI projects, we have overall, just look internally, we have 10 AI use cases already in full production, providing value across the firm. We have a list here on the right that is just a partial list. We actually have 35 use cases in full development right now, either in development or in testing, and dozens more queued up behind that as we prioritize those lists with our business areas. At the same time, again, if you look at our PCG business specifically, we do do a lot of custom code development.
About 80% of our leading wealth management tech platform is bespoke code that we've developed ourself. That still leaves room for external capabilities that we can integrate with the platform. Our rule of thumb, as long as we can seamlessly integrate and, again, just present a unified view and capabilities to our advisors, then we'll make that buy versus build decision use case by use case and move forward from there. I think that is everything I wanted to cover. We'll see what questions there are in the group. Yeah.
Hi. Michael Schell, JPMorgan. Vin and Andy, talk through the pace of tech spend over the recent years. I'm not asking for forecasts or anything, but how do you anchor the pace of tech spend when you go through your own business planning?
Clearly, as the business has grown, there's some part of tech that's going to grow with that as well that you just talked through. You have 35 different use cases. I'm sure there's hundreds more that you've considered. How do you anchor the pace of tech spend there? If I could just add a second one. If I think about, again, tech spend, and you're at $1 billion today or $975 million, right? From an operational capacity perspective, not asking about forecasts, but today, what's the capacity of tech spend that you could be comfortable with from an operational perspective above the $975 million?
Yeah. I think in a way that the answer to both is actually the same, in that our investment appetite is really established by Paul and the business leaders of how much technology investment do we want to make.
We go through an annual process with the executive leadership team of establishing that at a high level and then looking at our investment by line of business, many of which we have multi-year solution roadmaps for each of our spaces. It is very seldom that there is a brand new idea on the table versus something that, hey, we have already been thinking about how are we going to evolve a capability over time. We start to dial in up or down the investment in each one of those slices of the pie, if you will, and then being very business case driven. If there is an opportunity that would necessitate us dialing up capacity in a business area, that is a business decision. Now, Michael, to your point, my job is to make sure we have the delivery capability behind that.
I'll just say that there hasn't been a—demand is insatiable, right? If I said I had twice as much capacity, there would probably still be demand. Within reason of what we want to deliver the business, we have not had a challenge making sure we have the capacity to deliver. The single biggest category, if you look at our year-over-year increase in technology spend, the single biggest category in that, around 35%, is adding engineering capacity to our team, right? We've been very successful in our recruiting, very successful in our build-up of internal resources, and never say never, but I'm not going to be the speed bump to delivering capability to the business. Do
yes that answer your question?
Yes. Devin Ryan, Citizens JMP.
Kind of two-part here, but just based on what you either know in the market or hearing from advisors, where do you think you are relative to competition on implementing AI? Appreciate everyone's going to kind of build differently, but where you feel like you are. The second piece is you hear examples of bankers making their own pitch deck or analysts gathering information in seconds, which could take an associate days to pull together, or you gave the example for asset management. Do you see an opportunity down the road where this actually can bend the compensation curve? I know that's a big theme out there, but does that ever actually happen, or does it just make people more productive? We obviously see your—
To answer your first part of your question, where do we see ourselves competitively? We're super happy with where we are.
I would say, in thinking of ourselves as forward-leaning, I think we're above the median in terms of embracing use cases and actually delivering. What we see a lot of our competitors is there's a flashy press release. We talk to our industry contacts, and it turns out, well, I mean, it's in pilot with 10 people. Like, oh, the press release certainly made it sound like everyone in the firm had it, right? We tend to do the opposite. Like, geez, maybe we really should put some publicity around the fact that we've rolled the capability out. As we talk to our industry contacts and as we talk to some of those partners, like a PwC, for example, like a McKinsey, what are you seeing out there? We actually feel really good about where we are.
Now, to your point, different business mixes at different competitors, their focus might be more on a different business area, whereas we're not exclusively but heavily focused on PCG. In terms of what we can expect, the hype cycle around AI is insane, right? I mean, there's always hype around technology, but it's insane. Certainly in the software engineering space, you're hearing people saying, "We'll turn everybody into a 10x developer." I know a 100x developer. I would like, let's kind of come down to earth, right? The way I think of it, and this was actually solidified with the advisors I was speaking to yesterday, if you could have a 1% increase in productivity each month by embracing tools, whether it was AI or, frankly, other capabilities we have, think of a compounding effect.
That would be an insane increase in amounts of productivity improvement over a five-year period. I think that AI deployment will be much more that. A lot of singles and doubles, that the compound effect is tremendous versus a home-run killer app that suddenly says, "Hey, we don't need junior analysts anymore." Certainly, our current landscape of AI tools really will not take a human out of the loop anytime soon. If we're wondering, is AGI, general intelligence, just around the corner where we could have the digital worker do it all? From my position, I would say the capabilities aren't out there.
We'd need a new architecture for AI that would get us to the point where we would say, "We don't need the human in the loop." It is going to be the human with a powerful assistant, maybe getting to the point with a human with a sidekick who's almost as capable, but the human is still accountable. I think that gets us to the kind of 2X level of productivity over a three- to five-year period. My humble opinion.
Thanks. Michael Cyprys,Morgan Stanley . Thank you for all the detail and the color here. We greatly appreciate it. Just curious what learnings you've had as you have implemented and put in place the 10 AI use cases into production, as well as the pilot team experiment.
Maybe just talk to some of the best practices as you think about driving the success factors and what challenges that you have faced along the way and how you overcame them. Yeah.
Great question. What have we noticed from the best practices and sort of lessons learned in implementing some of the AI use cases we have? Number one is investing the time to bring the knowledge base of your associates up to an acceptable level so they can really engage with the tools and understand what they're doing. There's a tendency to see a tool and want to roll it out very quickly, and then you can lose a lot of time upfront if they really do not understand the tools, what they can do, what they cannot do. The example came up about investment banking analysts creating pitch decks.
We're actually running parallel tests right now, pilots with a sort of niche commercial tool and an internally developed AI tool for that exact use case. What we found was just because of the nature of the tool, we spent a bit more time on the internal GenAI tool with those bankers than we did with the third-party tool. The third-party tool group in the early days looked like they were out ahead, but very quickly, the team that was using the internal tool started to move much quicker. It really wasn't because the tool was better. It's because they actually understood it a bit. I think that's a huge takeaway for us. The importance of the human in the loop is probably the single biggest sort of takeaway and lesson learned has to be focused on.
I think the analogy, again, or the example would be individuals creating content with the AI in which there is no deterministic answer can produce phenomenal results. A fancy way of saying, if you're doing a client communication, you're going to be super happy with that letter. It's been tweaked and personalized to the information provided, let's say, about the client. You're looking at that and saying, "Not only did I get it really quickly, but I really, really like this letter." Maybe I'm sort of having flashbacks to high school English class, but there's no right answer for that letter, right? It just looks really good versus doing a mathematical function and doing the type of analysis that we saw in some of these slides. You'd be better checking each and every one of those numbers. If it's LLM-based, it's a probabilistic, plausibly correct answer.
It's not a deterministic exact answer. I think making sure users understand that. Again, in some use cases, we're doing automated checking, but in other use cases, it's up to the user to make sure that the results are correct.
Okay.
All the time. All right. Thank you very much.
That concludes our presentations today. Again, thank you all for attending in person. Thank you to those who joined online as well. We do really value your attendance, and we certainly appreciate your interest in Raymond James. Thank you so much.