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Rating:RayJay Will Eat the Cost of Some Missed Fund Fee Rebates Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, February 12, 2015

RayJay Will Eat the Cost of Some Missed Fund Fee Rebates

News summary by MFWire's editors

Raymond James is jumping on a mutual fund fee rebate grenade to shield some of its advisors.

Last month the St. Petersburg, Florida-based broker-dealer's senior leadership told analysts about a "$10.5 million kind of mutual fund adjustment," where some charity trust and retirement plan clients didn't receive fee waivers for which they were eligible. A RayJay spokeswoman later told MFWire that the B-D was "working with financial advisors to ensure fees are rebated in a fair and reasonable manner to affected clients along with interest."

Now Megan Leonhardt of WealthManagement.com reports that the B-D reversed course and decided that RayJay, not its advisors, "would pay all of the rebates." The trade pub wonders if that means that it will cost RayJay more than the disclosed $10.5-million hit.

"After continued dialogue with advisors, Raymond James will absorb the cost of mutual fund sales charges and fee rebates to clients with eligible retirement plan and charitable trust accounts, and not require advisors to return commissions received on the mutual fund purchase transactions ... We felt this would be the best way to limit distraction for advisors and minimize confusion for clients," a RayJay spokesperson told WealthManagement.com. "In addition, our decision should serve to eliminate any concerns that the chargebacks may have implied negligent or deliberate actions by advisors. As always, we are confident our advisors are working in the best interest of their clients."

The clawbacks stem from A shares sold to these institutional clients for whom the upfront load should have been waived, and C shares sold to such clients when they could've been sold load-waived A shares instead. Advisors told the trade pub that, as of last Thursday, RayJay plans to send out client notices on March 23 and checks by April 13. 

Edited by: Neil Anderson, Managing Editor


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