The Stories of 2018
Since our founding in 1962, Raymond James has been in the business of planning – for private, corporate and governmental clients, for advisors, for the firm and always for the future.
In a changing world with growing technological mobility and shifting demographics, we are adapting, developing new solutions, innovating to advance our industry and continuing to invest in our infrastructure.
No matter the pace of change, we know our ability to achieve more than three decades of consecutive quarterly profitability, as well as the record performance we delivered in 2018, is reliant on staying true to the values that are the foundation for our success.
We know that in a fast-moving world, slowing down to really understand clients’ needs is fundamental to what we do, and that by helping them achieve their goals, we’ll do the same, as a firm and for our shareholders.
Americans produce 2.5 quintillion bytes of data every day.
The Raymond James technology team plans to use them wisely.
For the past several years, the group – more than 900 associates strong – has been laying the groundwork for a transformative advisor technology platform by gathering, analyzing, systematizing and protecting one of today’s most abundant and precious resources: data.
The assembled Raymond James Technology leadership team – (left to right) Dave Allen, Kevin Adams, Bruce Mellusi, Sateesh Prabakaran, Salit Nagy-Todd, Helen Rice-Devlin, Stuart Feld, Andy Zolper, Bella Allaire, David Lesser and Vin Campagnoli – brought more than seven years of data groundwork to life in 2018.
“Leveraging data to help advisors deliver even better, more timely, more seamless service to clients. That’s what we’ve been working toward, and we’re seeing that come to fruition now through applications that bring relevant information to the forefront, our mobile platform that makes it accessible anywhere and even our early steps into working with artificial intelligence,” said Chief Information Officer Vin Campagnoli.
The work is complex and in many cases highly technical, but underpinning it all is the human element, and a deeply held belief that all of the information gathered and technology tools created are only as good as the good they do for people.
“We’re harnessing the power of data and applying it to the whole life cycle of helping advisors take care of their clients,” explained Executive Vice President of Technology and Operations Bella Allaire.
In many cases that life cycle now starts with two custom applications. One, which garnered the firm’s sixth consecutive Technology Innovation Award from the Bank Insurance & Securities Association, brings information on thousands of financial products together with key research – both from external experts and Raymond James’ own analysts – and enables advisors to compare it all against a client’s current holdings to explore alternatives and opportunities.
The other, a portfolio construction and analysis tool, puts that information into action. “We wanted to build an integrated solution that took the advisor from investment research and decision-making all the way through the implementation of an investment plan for a client,” said Brian LaPierre, a vice president of technology.
Integration is a key priority for the technology team, including fully integrating technology into how – and where – advisors work. Introduced in 2017, Advisor Mobile enables advisors to run their businesses from virtually anywhere. According to Salit Nagy-Todd, a senior vice president of technology who was instrumental in the platform’s development and rollout, “Advisors can be at a lunch meeting, and when somebody asks them a question, they can pull up Advisor Mobile and get that information on the fly. It’s become one of the top applications our advisors use on a regular basis.”
The year also saw the debut of Connected Advisor, Raymond James’ answer to the roboadvisor trend that has gained momentum in financial services over the past few years. Intended for smaller relationships, including next-generation clients, Connected Advisor offers turnkey automation with ready access to the advice of a professional advisor.
“It’s a platform that allows a prospective client to become a client without needing to have a face-to-face interaction with the advisor, but while still getting the benefit of having an advisor there to review their information and offer support if and when necessary,” said Chief Technology Officer Dave Allen.
“Robo” in this case is not just a buzzword. “We actually built a robot, a piece of intelligent software, to read the information that comes in from the client and leverage our Client Onboarding application to open new accounts,” Dave said. “RPA – robotic process automation – is something we’ve started to leverage in many different areas.”
And robotics is not the only way the firm is shifting into ever-more-advanced technologies. Raymond James has also begun delving into the world of artificial intelligence (AI).
“AI is how we are taking all of the data we’ve spent years collecting and systematizing it to better respond to – and maybe even to anticipate – events and to answer deeper questions about and for our clients,” said Sateesh Prabakaran, a senior vice president and chief architect of technology.
Still in its nascence, but gaining momentum, the AI work being done at Raymond James will touch portfolio evaluation and management, internal workflows, client service, regulation and compliance, data security, and even help drive the firm’s overarching priorities.
“Artificial intelligence seeks to check if various hypotheses are indeed true, and then to generate new hypotheses for discussion,” continued Sateesh. “It can show firm leaders and advisors what they don’t know about their business, so they can even more effectively manage outcomes.”
“This is definitely not about hyper-automation, where humans will no longer be required,” Vin Campagnoli added. “People remain front and center to our business, and protecting them and their information is still paramount. We just want to leverage the power of data to provide insights and opportunities. The goal is always to help advisors better serve their clients.”
It was 1849, before Canada was Canada.
A Montreal stockbroker named MacDougall helped a few merchant marine captains invest their earnings.
Thus begins the compelling history of the 3Macs investment firm, which traces the varied accomplishments of many MacDougalls: helping found the Montreal Stock Exchange, skating to four Stanley Cup championships and new business connections, investing in a young nation’s infrastructure, and, remarkably, partnering with two unrelated Macs.
Raymond James Ltd. Chairman and CEO Paul Allison (far left) visits with top earners and long-time members of 3Macs, a division of Raymond James Ltd., during a recent professional conference (left to right): Bob McKenzie, Dominique Vincent, David MacDougall, the great-great-great-nephew of the firm’s founder, and Carmen Jankey.
Yet, for its fascinating past, this storied boutique firm’s decision two years ago to seek the support of a larger company was keenly about its future.
MacDougall, MacDougall & MacTier Inc. needed access to new technology and help managing increasing industry compliance requirements. The modern-day keepers of the 3Macs legacy also wanted to keep their identity.
Introducing 3Macs, a division of Raymond James Ltd.
“In the big picture, 3Macs needed to evolve and Raymond James presented the best option for that evolution,” said David MacDougall, a fifth-generation member of the firm who serves as senior vice president and advisor/ portfolio manager. “Uniting with Raymond James provided us with a more robust infrastructure, more opportunities for growth and for expanding our business. And we hoped we could keep the brand 3Macs because it has qualities and a history worth leveraging.”
In eastern Canada, especially, 3Macs stands for more than abbreviated surnames. It is synonymous with integrity, experience, independence and service – core values in which the firm is rooted. Values shared by Raymond James.
“Service to investors is the 3Macs motto,” said Carmen Jankey, a senior vice president and advisor/portfolio manager who began her career at 3Macs in the late 1980s. “We saw the similarities right away.”
“It was a natural fit with Raymond James because of the independence and respect for the client,” said Dominique Vincent, a vice president and advisor/portfolio manager who joined 3Macs in 2001. “And we are now backed by the power of the larger firm.”
Completed in 2016, the acquisition increased Raymond James Ltd.’s assets by CAD$6 billion, making it the largest independent investment firm in Canada, seventh-largest overall. With the firm’s presence anchored in western Canada, it also sent a strong signal.
“You can’t really celebrate yourself as being a Canadian firm without being able to serve 20% of the population, which is in the province of Quebec,” said Paul Allison, chairman and CEO of Raymond James Ltd. “Now, we’re pan-Canadian, from coast to coast. And this gives us the ability to serve clients in English and French.”
Headquartered in Montreal and with offices in Quebec City – cities where French is the primary language – 3Macs expanded to Toronto in the 1960s. In total, more than 70 advisors joined Raymond James Ltd. with the 3Macs acquisition – pretty much all of them.
“Well, we did have one guy retire, but he was 85,” said Bob McKenzie, an advisor/portfolio manager who joined 3Macs in 1995.
David, Carmen and Bob were on the board of directors at the time of the acquisition, so were part of the decision.
“We’re happy we ended up with Raymond James. We wanted to be able to tell our clients we were remaining independent. We’re part of a bigger firm with better technology, better research, a great culture – which we heard about and now we’re living it – and we didn’t have to change our emails, our phones or our fees.”
The 3Macs legacy continues.
“I’m proud of our position in the history of Canada,” David MacDougall said, “but I’m more proud of what we’ve done for the many families we’ve helped along the road.”
3Macs through the years
1849 – Donald Lorn MacDougall joins his brother in establishing MacDougall Brothers.
1850s – Through wise investments, Donald Lorn helps build the railroad system and marine industry.
1867 – The British colonies of Canada, Nova Scotia and New Brunswick unite to form the Dominion of Canada, a new country.
1874 – The MacDougall brothers help establish the Montreal Stock Exchange, with Donald Lorn serving as president.
1880s and 1890s – Donald Lorn’s nephew, Hartland B. MacDougall, establishes contacts in the business and sports worlds, playing on the same hockeyteam as Percival Molson and winning the Stanley Cup four times with the Montreal Victorias.
1921 – Hartland B. MacDougall and Robert E. MacDougall (no relation) establish an alliance, and the firm becomes MacDougall & MacDougall.
1960 – A merger with Stuart MacTier allows the firm to expand to Toronto, and changes the name to MacDougall, MacDougall & MacTier Inc.
2016 – The firm is acquired and becomes 3Macs, a division of Raymond James Ltd.
2018 – The 3Macs legacy continued, as additional advisors chose to join the firm to build their businesses with the support of Raymond James.
There’s no “I” in team.
But sometimes there’s approximately $90 million worth of growth – which has been the result of the Technology & Services Investment Banking group’s team-centric approach.
One of the biggest growth stories for the firm in 2018 was the M&A practice within Raymond James Equity Capital Markets. Several areas continued to generate significant success, and notable among them was the continued momentum of the Technology & Services team, which Brendan Ryan and Jon Steele, based in Boston, oversee.
Brendan Ryan and Jon Steele review the details of an upcoming transaction from Technology & Services team’s Boston-based office.
“We’ve gone from $40 million in revenue to $80 million to $130 million over the past three years,” Jon shared. “That growth is the result of great contributions – and development – from all of our bankers across the board.”
Both Brendan and Jon credit a uniquely cohesive, collaborative and encouraging environment for the group’s success, one that has grown organically out of their own shared professional history.
“The first deal I worked on, Jon was the vice president and Jim Bunn, co-president of Global Equities and Investment Banking, was the managing director. So, part of the foundational success of our group has been mentorship,” Brendan said. And they’ve made a conscious effort to weave that sense of shared purpose and collective achievement into each relationship across the team. “Jon and I are not here without Jim. He’s been instrumental to our success, and we have tried to pay that forward.”
Those “payments” have taken several forms – from traditional mentoring to celebrating individual achievements to fostering healthy competition, which is borne, according to Brendan, from his and Jon’s own dynamic. “Jon and I have always had a unique relationship in that we’re competitive without being competitive. We feed off of one another’s success. And we’ve tried to extend that across the group, to really encourage people to not just be happy for each other’s wins but to use them as motivation to ramp up their own efforts and be even better partners for their clients.”
That all-for-one approach, even as members of the team work separate deals, positioned the Technology & Services group to capitalize on fiscal 2018’s hot M&A market.
There is a tremendous amount of capital focused on acquiring technology businesses, which has aligned well with the group’s continued expansion across the broader technology landscape – leveraging historical success in the financial technology sector to replicate similar efforts across the software, IT services, information services and infrastructure technology markets.
Said Jon, “The traction we have now and the track record we’ve built over time are because of the cohesiveness of the team. And that has positioned the group to compete for larger transactions across multiple sectors, which we weren’t necessarily doing three or four years ago.”
Brendan added that the group has continued to move “up market,” increasingly competing with bulge-bracket firms and well-known boutiques over the past few years. Again, he credits the emphasis on empowering and accelerating the career development of the members of his team.
“The group’s growth has been remarkable to watch – one banker even completely re-engineered his approach to sector coverage after 20 years in the business. Seeing so many people graduate to that next role and next title has been so rewarding. They’re setting themselves and all of us up for what should be a terrific run over the coming years – which is a key area of focus for Jon and me, as we are far from achieving our objectives for the group.”
To be a fighter pilot, you have to have perfect eyes.
Ron Gula didn’t
After his just-impaired-enough eyesight disqualified him from piloting fighter jets, Ron passed on the offer to fly transport planes – it was fighter jets or nothing – and instead joined Air Force intelligence. That move led him to be among the first wave of “white hat hackers” at the National Security Agency in the 1990s, spending his days testing the U.S. government’s internet fence for weaknesses.
Advisor Doug Simon (left) and his colleagues Jeff Fishman and Leanne Evans pose with clients Ron and Cyndi Gula (right) during one of their regular team meetings in Baltimore.
It was a natural fit then, after years of public service, for Ron to take the skills he’d honed and – at the encouragement of his wife, Cyndi, an engineer – use them to provide a service he believed would soon be needed on a large scale.
“He may not have had the perfect eyesight needed to be a fighter pilot,” Doug Simon, a client advisor with Alex. Brown, a division of Raymond James, explained. “But Ron was a visionary. He saw this industry coming, years before people really recognized internet security as its own stand-alone business.”
Ron and Cyndi founded their first cybersecurity company in the late ′90s – one they had just sold when Doug began working with them around 2007. Before long, they set about building another – Tenable Network Security.
“They had 10 or 12 employees during our early conversations. But each new quarter when I would ask, there would be 20 employees, then 30 employees, and the business would be worth more and more.”
As the business grew, so did Doug’s relationship with the couple. In addition to helping them plan and manage their investments, Doug had a hand in connecting the Gulas with attorneys and accountants to help meet their increasingly complex planning needs.
“We, as a group, really function as a family office. There are daily emails, regular conference calls, and quarterly meetings with everyone in the room.”
And when Cyndi and Ron decided to bring in a venture capital firm to buy Tenable, to take the company public, and to start another new chapter of their lives, Doug was there.
“Tenable was the largest security IPO in five years when it debuted and the largest IPO of any U.S. company in the third quarter of 2018. The income generated from the sale was substantial.”
So, after spending years helping keep their country and the internet safe, Ron and Cyndi turned their attention to protecting their family.
“I’d talked about trust and estate planning with them from the beginning and emphasized that it was even more critical now,” Doug said.
He then reached out to Raymond James Trust. Soon the Gulas were working closely with Senior Trust Officer Julie Lyman on a family trust, on two trusts for their sons, and on revising an existing trust to ensure it could better meet the needs of its 18 beneficiaries – Cyndi and Ron’s nieces and nephews who range in age from 30-something years to mere months.
“I worked with their attorney and Doug to best determine how to manage things,” Julie said. “They originally had one trust for the multiple beneficiaries, so we split it into 18 to account for the different people and their individual needs.”
Julie also serves as corporate trustee on the accounts, something Doug strongly encouraged. “Cyndi’s brother was their designated trustee and he’s great, a very smart guy,” Doug said. “But it’s a lot to take on and could become deleterious if there wasn’t a corporate trustee with the resources to oversee everything and to say no at the appropriate times.”
Rick Biddison, senior portfolio manager, and Julie Lyman, senior trust officer, pictured at the firm’s St. Petersburg headquarters, have played a key role on Ron and Cyndi’s team.
The couple has plans for more trusts – one for each of their eight siblings – but for the time being, they have yet another new vision for the future of tech.They’ve launched Gula Tech Adventures, a venture capital firm focused on helping mid-Atlantic tech startups get off the ground.
And while the vision is bold, they remain grounded. “They’re not flashy people in any way,” Doug said. “They do use private jets occasionally now, but that’s about it.”
27 trillion gallons is a lot of rain.
By some calculations, it’s enough to fill Houston’s Astrodome 85,000 times.
Over six days in late August of 2017, Hurricane Harvey pummeled the Houston area with that deluge, leaving some areas submerged under more than four feet of water. In an area that had already proven itself prone to flooding, almost 7,000 homeowners realized too late just how vulnerable their homes were.
With the sudden need for housing in the communities affected by the hurricane, Raymond James Tax Credit Funds (RJTCF) saw an opportunity to make a difference.
RJTCF Vice President and Director of Acquisitions James Dunton (right) onsite at the Provision at West Bellfort apartment complex in Houston with Michael Gardner, whose firm is developing the project.
Raymond James is a leading sponsor of high-quality affordable housing developments throughout the nation and has syndicated more than 125 affordable housing funds since 1972 – even before the Low-Income Housing Tax Credit (LIHTC) program was created under the Tax Reform Act of 1986, which offers a dollar-for-dollar tax credit for affordable housing investments and gives incentives for the utilization of private equity in the development of affordable housing aimed at low-income Americans.
Formalized in January 2018, RJTCF sponsored the $100 million Raymond James Affordable Housing Fund Ι Ι L.L.C. The fund is focused on areas impacted by Hurricane Harvey, as well as rural markets and Native American housing, and provides a reliable source of capital for the rehabilitation or construction of multifamily projects in these underserved areas.
“There was a significant opportunity after Hurricane Harvey for us to help rebuild a community in the wake of an incredibly destructive event,” said James Dunton, vice president and director of acquisitions for RJTCF. “We knew that the fund could have a meaningful impact on underserved markets in Houston, and we moved quickly to respond.”
While building – and rebuilding – is always a process, the fund is well on its way to opening new doors for Houston residents. The Provision at West Bellfort apartment complex is well over halfway complete and features 116 units, as well as a 4,235-squarefoot community building, on its 11.2-acre site.
What’s more is the fund is working to account for future weather events and related impacts, as well. “This is the first fund we’ve syndicated with a stated intent to plan ahead for future weather impacts,” said Steve Kropf, president and CEO of RJTCF. “We established a Weather Resiliency Reserve to pay for features to better prepare the apartment properties for future weather events. Potential uses of the reserve include generators and solar powered charging stations, as well as providing for the formation and maintenance of evacuation plans.”
While the benefit of these building projects is clear, there are mounting challenges in executing them, particularly in Houston. Following recent corporate tax reform, there are fewer sources to cover construction costs and a shortage of construction labor post-Harvey, not to mention rising interest rates.
“It’s pretty much a perfect storm of issues impacting development post-Harvey in the Houston area,” said Steve.
However, despite this set of challenges, “Demand for affordable housing is insatiable,” he adds. That demand is clearly something RJTCF is committed to meeting, with $9 billion in equity invested to date and more than 2,000 projects sponsored.
“The LIHTC program is one of our nation’s most successful and impactful housing initiatives, and Raymond James has been a leader in the space since the beginning.”
$9 billion+ in equity syndicated through more than 100 tax credit funds
100,000+ units on 2,000+ properties in 47 states, serving 200,000+ people
It all started with a 60-year-old boiler.
A 60-year-old boiler supporting a 90-year-old hospital operated across two separate campuses – all meticulously well-maintained, but in need of an update and a reorganization to a single, highly functional and efficient campus.
Nonprofit hospital system Trinity Health is a linchpin healthcare provider for North Dakota and eastern Montana. Not only is it the community’s primary source of care and the only Level 2 trauma center in northwestern North Dakota, it’s also the largest employer in Minot where its main campus is located. But after nearly a century, it was time for new construction. And to help lay the groundwork, Trinity turned to another local institution.
Trinity board members John Kutch, president/CEO, far left, and Dennis Empey, vice president/CFO, far right, discuss project progress with advisor Layton White against the backdrop of a rendering of their new facility.
“Trinity had been a client of Bremer Bank for years,” said Layton White, a Bremer-based advisor affiliated with the Raymond James Financial Institutions Division. “I had a very good relationship with the CFO, and in casual conversations over the course of several years, the idea of a bond offering to fund a replacement hospital came up.”
Layton, who had paid a visit to Raymond James headquarters when Bremer first affiliated with the firm in 2009, remembered learning about the extensive municipal and equity underwriting capabilities.
“I’m not an investment banker, but I knew who to call. Basically, I connected the dots between Trinity and Natalie,” he said.
Natalie is Natalie Wabich, a senior banker with Raymond James Public Finance. “We were lucky enough, thanks to Layton’s relationship, to receive an early introduction to the team at Trinity, which was key. We kept in touch, knowing this project was coming,” she said.
That first connection, made in 2014, was the start of a multiyear process that would culminate in financing $407,205,000 of debt, including a $350,330,000 bond offering, to help fund the construction of a state-of-the-art hospital and medical office building. And just as being in the right place at the right time – and knowing the right people – was important at the outset, it turned out timing would again be of the essence in crossing the finish line.
“One of the interesting twists for this project was the congressional push for tax reform in November 2017. It seemed 501(c)(3) hospital bond deals might be on the chopping block – so nonprofit hospitals like Trinity would be unable to issue tax-exempt bonds,” Natalie said.
That possibility prompted all of the key players on the Raymond James side – including Natalie’s fellow bankers Casey Van De Walle, Andrew Dwoskin and Emily Carbone, as well as key players from the Municipal Underwriting team – to quickly regroup and make the decision to compress the timeline.
Key players from the team that structured and executed Trinity’s offering reunite during a recent Public Finance conference in St. Petersburg. (left to right) Emily Carbone, Andrew Dwoskin, Casey Van De Walle and Natalie Wabich.
“We were originally set to price the transaction in February 2018,” said Natalie. “Instead, we pushed as hard as we could to make sure it closed before December 31. In the end, the tax bill didn’t eliminate the ability of 501(c)(3) hospitals to issue debt; however, our industry was still greatly affected, so we took the prospect seriously and worked around the clock.”
Given the circumstances, Trinity’s was far from the only deal of its type trying to make it in under the presumed wire. But even with a crowded market and an accelerated process, the team was nimble enough to wait for the right time for pricing.
“Instead of one day, we had about five days we were targeting for the pricing. And our whole team was ready to go whenever the market looked strongest,” Natalie said.
And that day turned out to be December 14, which allowed for a December 28 closing – ahead of their end-of-year deadline.
Now, with the deal done, construction is underway. “They started on time and they’re on budget,” Layton said. And while there is still much work to be done – the main excavation is complete and the foundation walls are in progress – the health of the community is already improving in other ways.
“The hospital construction has been a boon to employment, and it’s impacted a lot of other clients in our network – both for myself and fellow Bremer advisors and for the other Raymond James offices in Minot. It’s a tremendous project.”
And, according to Natalie, Trinity is already embracing its soon-to-be cutting-edge status. “You can watch construction live via webcam.”