STRATEGIC MANAGEMENT PROJECT REPORT

Raymond James
Financial Inc.
Atish Bakshi (U113076) Section B

Acknowledgement
I would like to express my sincere gratitude to Prof. Anshuman Tripathy for providing me the
opportunity to work on this project which has been a source of great learning for me. This was
my first interaction with Strategic Management as a course and it could not have been better. I
am certain that the knowledge I acquired during the course of this project will offer me a
platform for my future endeavors in this and related fields.

Contents

1. Introduction............................................................................Page
2. Business
3. Activity
4. Vision,
5

Model Comparisons................................................Page 8

System Map.............................................................Page 15

Mission and Objectives Comparisons......................Page 16

PESTEL and 5-Forces Analysis............................................Page 21-22

6. Strategy

of Nearest Competitor.............................................Page 23

7. Evolution
8. Industry

and Future of US Financial Services Industry.....Page 27

Key Success Factors...............................................Page 30

9. References.............................................................................Page

32

Introduction

Raymond James Financial is a diversified holding company, founded in 1962 through merger of
two companies owned by Robert A. James and Edward Raymond. The company became public
in 1983 and now trades in the New York Stock Exchange. The firm provides financial services to
individuals, corporations and municipalities. The subsidiary companies of Raymond James
Financial are primarily in the business of Investment and Financial Planning, Investment
Banking and Asset Management. Apart from the subsidiaries, Raymond James Financial has 3
wholly owned broker-dealers which are Raymond James & Associates (RJ&A), Raymond James
Financial Services (RJFS) and Raymond James Limited (RJL). It also has a majority stake in an
independent contractor subsidiary in the U.K. named Raymond James Investment Services
Limited (RJIS). On 2 April, 2012, there was a merger between Raymond James and Morgan
Keegan and Company which created one of the largest wealth management and investment
banking firms in the U.S., which are not headquartered in New York.
The corporate headquarters of Raymond James are located in St. Petersburg, Florida and it serves
more than 2.5 million accounts in about 2,500 locations throughout the US, Canada and abroad.
Raymond James is lauded nationally for its whole-hearted community support and corporate
philanthropic activities. It has been consistently ranked as one of the best customer services
providers in the US and also as a great place to work. It is also one of the leading companies in
support of arts.
Raymond James has been a profit making concern since its going public. The only unprofitable
quarter it had came during the Black Monday period in 1987 when the Dow Jones Industrial
Average lost 23% of its value on a single day.
Given below are some charts taken from the company's website depicting how it has performed
in the last 10 years.

(Source: http://www.raymondjames.com/annualreport/10year.htm)

(Source: http://www.raymondjames.com/annualreport/10year.htm)

(Source: http://www.raymondjames.com/annualreport/10year.htm)

(Source: http://www.raymondjames.com/annualreport/10year.htm)

Business Model Comparisons

A business model can be defined as the manner in which an organization creates and delivers
economic, social and cultural values. A business model is used to describe the core aspects of a
company, including its mission, target markets, product/service offerings, business strategies,
infrastructure, structure of organization, operating procedures and policies.

Here, we will look at the following:

Business Model of Raymond James under the heads Mission, Target Customers,
Product/Service Offerings and Corporate Social Responsibility.

Business Model of Barclays under the heads Mission, Target Customers, Product/Service
Offerings and Corporate Social Responsibility.

Business Model of Muthoot Finance under the heads Mission, Target Customers,
Product/Service Offerings and Corporate Social Responsibility.

Business Model of SBI Capital Markets under the heads Mission, Target Customers,
Product/Service Offerings and Corporate Social Responsibility.

The objective of the next few pages is to provide a comparison between the business models of
Raymond James and those of an international firm (Barclays), a domestic firm (Muthoot
Finance), and a Government-owned corporation (SBI Capital Markets).
It is to be noted that pricing forms an integral part of a business model. However, in the financial
services industry, pricing of services depends on the amount of work to be done, the client's
reputation, availability of resources (human or otherwise) etc. Thus there exists no fixed price of
8

a service and it is determined on a case to case basis. Moreover, it is difficult to determine

prices of services provided abroad due to currency changes. Hence, for the purpose of this report,
pricing has been omitted.
Barclays, selected for comparing Raymond James with an international firm in similar industry,
is primarily a provider of banking services. However, it does also provide asset management
and investment banking services and hence has been included.

Business Model of Raymond James

Mission (taken from http://www.raymondjames.com/about/mission.htm)

We must provide the highest level of service with integrity.

Assisting our clients in the attainment of their financial objectives is our most worthy
enterprise.

We must communicate with our clients clearly and frequently.

Our investments and services must be of superior quality.

Teamwork cooperating with and providing assistance and support to our fellow
associates is fundamental to sustaining a quality work environment that nurtures
opportunities for unparalleled service, personal growth and job satisfaction.

Continuing education is necessary to maintain the timeliness of investment knowledge,

tax law information and financial planning techniques.

Innovation is requisite to our survival in a changing world.

To emulate other members of our industry requires us to continue to work hard; to excel
beyond our peers requires us to provide an even higher caliber of service to our clients.

We must give something back to the communities in which we live and work.

Target Customers and Product/Service Offerings

The 'Private Client Group', the retail segment of Raymond James comprises around
6200 financial advisors, affiliated to the company as employees, independent contractors,
registered independent investment advisors or local bank and credit union employees.
They provide services like securities transaction, investment advisory and financial
planning for individual investors.

The 'Capital Markets Group' is the institutional segment of the company. It has two
divisions : the Equity Capital Markets, which includes services like investment
banking, equity research and equity sales and trading, and the Fixed Income, which
includes services like Municipal and Taxable Fixed Income, Public Finance, and
Research on Fixed Income. The company also has a Tax Credit Funds which syndicates
low-income housing investments.

The 'Asset Management Group' includes Asset Management Services providing feebased management of individual portfolios of clients. Eagle Asset Management, a
subsidiary of Raymond James provides options and products of mutual funds through
separately managed accounts.

Raymond James Bank, a federally chartered national bank, provides loans for
residential, consumption and commercial purposes as well as deposits. It participates
actively in syndications of corporate loans.

Other services include proprietary capital operations, international joint-venture

operations, stock loan/borrow, and other corporate activities.

Corporate Social Responsibility

Raymond James believes on the principle that the right thing to do is putting others ie, from
clients to customers first. Raymond James invests time, money and talent into the communities it
serves. This 'giving back to community' is done through different ways like supporting arts,
10

United Way and Junior Achievements and a lot of educational, civil, social and philanthropic
activities.

ACTIVITY SYSTEMS MAP OF RAYMOND JAMES

Frequent
Client
Interactio
n

Superior
Investment
Alternatives

Highest possible
level of services

Innovation

Varied
range of
services
offered

Continuousl
y Educating
Employees

Social
Responsibility

Over
6200

Client's Financial
Well-being

'Giving back
to
community'
Initiatives

Business Model of Barclays

Mission, Purpose and Values (taken from http://group.barclays.com/about-barclays/aboutus#transform)

Becoming the 'Go-To' bank
Helping people achieve their ambitions in the right way.
Build trust with the colleagues and partners we work with
Seek out alternative perspectives and put our shared interests ahead of any individual or
team
Collaborate proactively with colleagues across all of Barclays to get the best results
11

Embrace, and seek to increase, the diversity of our organization.

Show the courage to do and say the right thing

Act in private as I do in public, and honor my commitments
Challenge things I believe to be wrong and be open to challenge from others
Be accountable for failure as well as success, and not allocate blame.
Take the time to understand clients and customers needs, regardless of my role
Always strive to surpass clients and customers expectations
Create and provide solutions for clients and customers that balance the short and long
term
In serving my clients and customers, incorporate the perspectives of all our stakeholders.
Aim for flawless delivery and learn from my mistakes
Take pride in both my own work and that of the team
Actively contribute to the performance, development and engagement of my colleagues
Create the environment to attract and keep the best people who share our values
Pioneer innovative and better ways to do things
Protect and enhance our reputation and legacy at all times
Find ways to positively impact all of the communities we interact with
Value sustainable progress as much as immediate achievements

Target Customers and Product/Service Offerings

Individuals:

World class Personal Banking services in 20 countries around the world.

Premier Banking for eligible customers in selected countries.
Wealth Management
Brokerage Services
Business Banking for small and medium sized business with specialist advice.
International Banking

Corporates and Institutions:

Business Banking
Corporate Banking ie integrated banking solutions across the world.
Investment Banking
Best-in-class Research Services
Global Markets
Offshore Services

Corporate Social Responsibility

12

Barclays believes in contributing not only financially, but impacting society at large by aligning
their community investment strategy to banking skills and experience.
5 Million Young Futures" is a program wherein Barclays commits to invest not only money, but
colleagues time and expertise in welfare of community that will enhance the enterprise,
employability and financial skills of young people aged 10 to 35, by 2015.
"

Other ways in which Barclays carries out its social responsibilities are investing skills, time and
money in partnerships with NGOs and charitable organizations.

Business Model of Muthoot Finance

Mission, Purpose and Values (taken from http://www.muthootfinance.com/about-us/)

To build leading customer-centric businesses enabled by technology, maintaining the

highest standards of corporate governance and uncompromising values.

The purpose at hand is to identify and utilize untapped sections of the market and reach
out to as wide an audience as possible.

Our main aim is to put the needs of the customer first before anything else. We strive to
provide you with the best quality of service under the Muthoot Brand Umbrella and we
do the same with a smile.

Accountability for all our operations & services and towards the society makes us a
socially responsible and intelligent citizen. Our empire has grown leaps and bounds on
the basis of these values. The times may change, but our values will remain unchanged.

With an unblemished track record throughout the markets we serve; and across national
as well as global boundaries, Muthoot Finance values its commitment to customerservice.

We do not judge ourselves by the profit we make but by the trust and confidence that
people have shown in us for the past 127 years. Over 6 million people have turned to us
for help in their hour of need just because of this guiding principal of ours.
13

We pledge loyalty in our operations, fairness in our dealings and openness in our
practices. At Muthoot Finance Ltd., we embrace policies and practices that fortify trust.

The value is innate to a corruption-free atmosphere and an open work culture. We at

Muthoot Finance Ltd. therefore cultivate transparency as a work ethic.

Muthoot Finance serves more than 6 million customers across the country. We add over
80000 customers each day to our customer base. With an unmatched goodwill, the
company shoulders the responsibility of creating a deserving brand image.

Target Customers and Product/Service Offerings

India's largest Gold Loan service provider.

Leading Gold and Silver Coins provider.

Muthoot Money Transfer.

Foreign Exchange services.

Muthoot Travelsmart, a leading travel services provider.

Muthoot Insurance Brokers Ltd.

Corporate Social Responsibility

The Muthoot Group has a strong commitment of giving back to the society. Sustainability is the
major focus of their CSR activities. The activities comprise, but are not limited to, education,
healthcare, sanitation, financial parity and the environment. The objective is to balance corporate
practices with welfare of the community by utilizing untapped resources to enhance economic
and social health.
Some noteworthy activities and initiatives: Muthoot M. George Foundation Excellence Awards
for Government School children, Muthoot M. George Memorial Tanker & Kerala Kidney
Research Foundation, Muthoot Snehasraya etc.
14

Business Model of SBI Capital Markets Limited

Mission, Purpose and Values (taken from http://www.sbicaps.com/Aboutus/Corp_Profile.aspx)

To provide Credible, Professional and Customer Focused world-class investment banking

services.

Target Customers and Product/Service Offerings

Complete end to end corporate finance solutions to clients at all levels.

Seamless investment banking advice and execution in capital market deals.

Innovative fund raising solutions, both domestically and internationally in debt, equity
and hybrids.

Cross border transactions.

15

ACTIVITY SYSTEMS MAPS

As Raymond James operates in the financial services industry and offers a wide array of
services, we can draw an Activity Systems Map of another highly diversified financial services
provider and compare it to Raymond James' activity systems map detailed earlier.
Since, financial services are not products, they do not have uniform prices throughout the
industry but depend largely on client needs and requirements. Thus there is no so-called "low
cost" financial services provider.
However, we can take an example of a highly diversified financial services provider and here, we
will take Citigroup as our example.

ACTIVITY SYSTEMS MAP OF CITIGROUP

Banking
Services to
100,000
SMEs

Urban
Infrastructure
Development

One Goal : Serving

clients and
stakeholders

Citi Mortgage

4600 global
branches,
1000 private
bankers

World-class
financial
products and
solutions

World's
largest Credit
16
Cards issuer

Innovation and
Ingenuity

State-of-the-art
digitized Citi
Smart Retail
Banking

Responsible Finance

Investment
Research And
Analysis

Merchant
Loyalty
Program
(Europe)

9 Athletes, 9
Programs

Enterprise
Development

Transparent,
Prudent &
Dependable
Conduct
Talented and
best-trained
people

Exemplary
Leadership

Neighborhoo
d
Revitalization

VISION, MISSION, OBJECTIVES COMPARISONS

AFRICA:
INVESTEC :
VISION AND MISSION
1. Distinctive Performance
o Outstanding talent - empowered, enabled and inspired
o Meritocracy
o Passion, energy, stamina, tenacity
o Entreprenuerial Spirit
2. Client Focus
o Distinctive Offering
o Leverage resources
o Break china for the client
17

3. Dedicated Partnerships
o Respect for others
o Embrace diversity
o Open and honest dialogue
o Unselfish contribution to colleagues, clients and society
4. Cast-iron Integrity
o Moral Strength
o Risk Consciousness
o Highest Ethical Standards

KEY SUCCESS FACTORS

Meritocracy.
Entrepreneurial spirit.
Varied range of offerings.
Diversity.
MISSION STATEMENT EVALUATION

DOES IT INCLUDE ?

DOES IT MENTION VALUES

Customers
Yes

Products/Services
No

Markets
Citizenship
LIKE.......?
No
Yes

Teamwork
No

Technology

Concern for Survival

Integrity

No
Self-concept

No
Concern for Public
Image
Yes

Philosoph
y
Yes
Employees

Yes

Excellence
No
OVERALL

No
Average

Yes

SOUTH AMERICA:
BANCO SANTANDER :
VISION AND MISSION
(taken from www.santanderconsumerusa.com)

18

To be recognized as a highly respected originator and servicer that delivers specialized solutions
to consumers across the full credit spectrum while providing exceptional service, responsibly
managing risk and fulfilling our responsibilities to stakeholders: associates, customers, investors
and shareholders.

Our People - Our people are our greatest asset. We strive to create a collaborative
environment where we value each other's efforts and contributions.

Respect - We treat each other with the highest degree of dignity, equality and trust. We
are committed to communicating openly and clearly, and we pledge to remain
professional at all times.

Excellence - We see ourselves as best in class, continually improving and constantly

exceeding standards. We strive to exceed expectations and hold ourselves to high
standards of performance.

Service - We are in business to serve our customers, our community, and our colleagues.
We work to identify customer needs and solve issues in a timely manner.

Performance - We are a fast-paced, results-driven company, constantly striving to reach

new goals and objectives.

Fiscal Responsibility - We are efficient, accountable, and honest as we support a

conservative use of resources.

Entrepreneurial - We are innovators, we think like owners and we work collaboratively.

We identify opportunities to learn new skills and share new ideas.

KEY SUCCESS FACTORS

Collaborative and congenial work environment.

Timely solutions of customer issues.
Accountability of activities.
Innovation.
MISSION STATEMENT EVALUATION
DOES IT INCLUDE ?

Customers
No

Products/Services
No

DOES IT MENTION VALUES

LIKE.......?

Markets
No

Citizenship
Yes

Teamwork
Yes

19

Technology

Concern for Survival

No
Self-concept

No
Concern for Public
Image
No

No

Philosoph
y
Yes
Employees

Excellence

Integrity

Yes
OVERALL

Yes
Poor

Yes

EUROPE :
SOCIETE GENERALE :
VISION AND MISSION
(taken from http://www.societegenerale.com/en/about-us/our-identity)
To achieve mutual long-term sustainable growth and operational excellence with clients through:

Focusing on our core values of professionalism, innovation, and team spirit

Growing human capital
Commitment to the long-term development of the local financial industry

KEY SUCCESS FACTORS

Relationship of trust with clients.

Anticipating future practices and staying a step ahead of customers needs.
Utmost professionalism in daily interactions with customers and major projects for the
future.

MISSION STATEMENT EVALUATION

DOES IT INCLUDE ?

DOES IT MENTION VALUES

Customers
Yes

Products/Services
No

Markets
Citizenship
LIKE.......?
Yes
No

Teamwork
Yes

Technology
Yes
Self-concept

Concern for Survival

No
Concern for Public
Image
Yes

Philosophy Excellence
No
No
Employees
OVERALL

Integrity
No
Average

No

Yes
20

NORTH AMERICA :
BLACKROCK
VISION AND MISSION
(taken from http://www.blackrock.com/corporate/en-in/about-us/mission-and-principles)

We are fiduciary to our clients.

We are passionate about performance.
We are one Blackrock.
We are innovators.

KEY SUCCESS FACTORS

Fair and equal representation of clients.

Out-think and out-work competitors.
Strength in diversity.
Continuous innovation.
MISSION STATEMENT EVALUATION

DOES IT INCLUDE ?

DOES IT MENTION VALUES

Customers
Yes

Products/Services
No

Markets
Citizenship
LIKE.......?
No
No

Teamwork
No

Technology
No
Self-concept

Concern for Survival

No
Concern for Public
Image
No

Philosophy Excellence
Yes
Yes
Employees
OVERALL

Integrity
No
Poor

Yes

No

ASIA (INDIA) :
MOTILAL OSWAL FINANCIAL SERVICES
VISION AND MISSION
(taken http://www.motilaloswal.com/Financial-Services/About-Us/Who-WeAre/content/C6/Tab42)
To be a well respected and preferred global financial services organization enabling wealth
creation for all our customers.
21

Integrity
Team Work
Meritocracy
Passion and Attitude
Excellence in Execution
MISSION STATEMENT EVALUATION
DOES IT INCLUDE
?
Customers
Products/Services
No
No

DOES IT Citizenship
MENTION VALUES
Markets
Teamwork
LIKE.......?
No
No
Yes

Technology
No
Self-concept

Philosophy Excellence
No
Yes
Employees
OVERALL

No

Concern for Survival

No
Concern for Public
Image
No

Integrity
Yes
Poor

No

External And Industry Environment Analysis

PESTEL ANALYSIS
POLITICAL

Political connections
Obama's QE
tapering

ECONOMIC

Interest rate
changes
Unemployment
Inflation
Economic growth
Exchange rates

SOCIAL

Investing in clean
energy projects
Corporate Social
Responsibility

22

TECHNOLOGICAL

ENVIRONMENTAL

Reducing energy
consumption
Increasing
utilization by
virtualizing software
Employee-owned
remote access
technology
Virtual desktop
infrastructure

LEGAL

Green initiatives

Sarbanes-Oxley Act
Basel III
requirements

PORTER'S 5-FORCES ANALYSIS

Bargaining Power of
Suppliers : LOW

No product suppliers.
Suppliers of equipment
have very little power
due to high number of
suppliers.
Services are created by
the firm itself.

Threat of Substitutes :
MODERATE

Bargaining Power of
Customers : HIGH

Significant costs of many

services.
Large number of reputed
competitors.
Client contracts are
usually short term in
nature.

Intensity of Existing
Rivalry : HIGH

New substitute services

possible by continuous
innovation.
However, customers are
not easily attracted to
new financial products.

Presence of huge global

players like Goldman
Sachs, Bank of America
Meryll Lynch, Barclays
etc.
Services offered by rivals
are almost similar in
nature.

23

Threat of New
Competitors : LOW

High sunk costs serve as

barrier to competition.
Strong brand reputation
important.
Customers do not easily
switch.
Initial capital
requirement is high.
Legal formalities are
stringent.

Strategy Of Closest Competitor

(Goldman Sachs)

In the following few pages the strategy of Raymond James' closest competitor, Goldman Sachs is
analyzed. We first see the initial strategic orientation of Goldman Sachs, followed by their
current orientation. Then we look at their strategies specifically relating to the internal and
external environments.
Goldman Sachs, a global investment banking, security management and investments
management firm, provides financial services to a huge client base consisting of corporations,
governments, financial institutions and HNIs.
Goldman Sachs was founded in 1869 and presently has headquarters in New York and offices in
Frankfurt, Tokyo, London, Hong Kong and other global financial centers.
Goldman Sachs has around 35000 employees.

Initial Strategic Orientation

Goldman Sachs initially focused more on Investment Banking activities, which are more
lucrative than other services. The firm had a reputation of being a high risk-appetite company
and not customer-oriented. Goldman Sachs was oriented towards making money in the long run
and any short term trading losses were ignored.
24

At Goldman Sachs customer were never been put into the centre of the companys strategy, the
firm was more focused on sales and profits. Jobber explained that
A sales-orientated company has little focus on customer needs and wants, and does
not try hard to create products or services that are suitable for their customers needs.
Jobber, D. (2007)
This sales strategy has been heavily criticized with many financial issues, the biggest being
USA's sub-prime mortgage crisis. Even in midst of the mortgage crisis, Goldman profited from
the collapse of subprime mortgage bonds. As the crisis began to unravel the firms brand image
and reputation took a bad hit due to allegations of fraud and collusion.

Current Strategic Orientation

Goldman Sachs realized that the existing sales approach was not doing any good for the image of
the company and there was a need for focusing more on a customer-oriented strategy.
Goldman Sachs is currently attempting to clear its supposedly shady image and has shifted focus
into more societal and ethical issues. The firm has become more involved in giving back to the
society. It has realized the importance of consumer's right issues.
The company has 14 clear operating business principles outlined on the companys website along
with the tagline Progress is everyones business'. But it has emphasized more on its first
business principle ie, providing value to their client.
Below is a diagram showing some of the important principles outlined by Goldman Sachs.

25

Strategy related to Internal(micro) Environment

Goldman Sachs always carefully selects its resources. They hire the best brains in the industry
and usually recruit the best students from the best universities across the world. The selection
process is extremely rigorous and consists of multiple rounds.
When it comes to selecting suppliers/vendors, Goldman Sachs' strategy is to broaden its supplier
base to help it gain new ideas, better competition and better overall value for their money.
Vendor selection is a rigorous process at Goldman Sachs. The following criteria need to be
fulfilled by prospective vendors to be selected:

top quality products/services

best-in-class customer service
competitive pricing
ability to help Goldman Sachs achieve their business goal
26

impact on environment and society at large

The strategy for Goldman Sachs towards customer acquisition involves targeting HNIs, large
corporations, financial institutions, Insurance companies, public pension funds, Non-profit
institutions etc.

Strategy related to External(macro) Environment

Goldman Sachs has displayed excellent business farsightedness in considering demographic
changes. A lot of effort and vigilance has been undertaken to factor in the consequences of
possible future changes relating to population like spending patterns, preference of certain
specific financial services etc.
Furthermore, Goldman Sachs attempts to leverage the most underutilized asset for any nationwomen.
Goldman Sachs' close connection with political parties worldwide, especially with the U.S. Govt.
is an important part of its strategy. In fact, powerful posts in the U.S. Govt. like Treasury, Federal
Reserve have been held by Goldman Sachs employees.
On the technological front, Goldman's strategy is to harness the latest technological
developments to provide quality products/services at lower prices.
Goldman Sachs' Environmental Policy Framework states their commitment to ensuring effective,
market-based solutions for addressing climatic changes, ecosystem degradation and other issues
to create business opportunities which also benefit the environment.

27

Evolution And Future Of The Financial Services

Industry In USA

The financial system in any country basically serves three functions:

a) It transfers funds from the savers (mainly households) to the borrowers (mainly
corporate). For this the financial system pools funds and monitors borrowers.
b) It provides a means of payments and aids in the exchange of goods/services.
c) It provides insurance and information related to trading.

28

When we look at the financial services industry in the U.S., we find large variations in the
economic importance of Finance. From being high in 1920s, it collapsed in the 1930s and 40s,
down to only 2.5% of GDP in 1947. This was followed by a slow recovery until the late 70s and
then a rapid growth to reach 8% of GDP in 2006. There is a complex relationship between
Finance and the rest of the economy. This can be seen from the fact that 1960s was a period of
high economic growth but low financial intermediation. The pattern was reversed in 1980s and
then again in 1990s.
The 1890s and 1920s were periods of rapid entry and investment by firms with large financial
needs. These needs reduced during the two World Wars. After World War II, the market was
dominated mainly by large established firms with huge cash flows. Thus demand for financial
intermediation was low. In the 1970s, new and young firms with low cash flows began to bite
away investment opportunities from the big players. This increased the demand for financial
intermediaries.
From the supply side, 1930s was a bleak period for financial services. The financial industry was
hit by inefficiency and a large number of firms faced credit crisis. This led to the Great
Depression. Efficiency increased somewhat after the War but still remained low till the 1990s
when the investment boom occurred.

29

Fig: 1 GDP Share of U.S. Financial

Industry

Figure 1 depicts the share of the Finance industry in the U.S. GDP estimated from 1850 to 2007.
We can see that the story is one of three waves and two crashes (2008 crisis not included). The
financial industry was around 1.5% of GDP in the 1850s. The first major increase (1880-1900)
was due to financing of railroads and heavy industries.
The second big increase (1918-1933) was owing to the Electricity Revolution and the growth
automobile and pharmaceutical industries.
After a steady collapse in the 1930s and 40s, the share of finance in U.S. GDP fell to 2.5% in
1947. Recovering after the war, it was stable at around 4% until the late 1970s.
The third large increase, from 1980 to 2001, was down to the IT revolution and the share went up
to 8.3% of GDP.

30

Fig 2: GDP Shares of Finance Industries

Figure 2 shows the evolution of the various subsections (Credit Intermediation, Insurance, Trusts
and Funds, Private Equity and Investment Banking) of the finance industry from 1977 to 2006.
We see that credit intermediation dominates the industry and is growing the fastest with
investment banking and brokerage activities.

The Future
After the massive consolidation of commercial banking since the 1980s experts are expecting
further consolidation both within and across segments of the financial industry. The number of
commercial banks is expected to decline over the years, with growth in other financial businesses
specializing in providing a narrower range of financial services. An increase in number of
combinations between U.S.-based and foreign-based entities is predicted. With such
expectations, supervisory and regulatory priorities need to be defined in the areas of safety and
soundness and competition policies. The current state of regulations for maintaining capital
adequacy, currently governed by the Basel Accord, needs reforms. A second priority for
31

regulators is to develop rules and policies to ensure that no bank is too big to fail. This is
especially required after the recent crisis involving Lehman Brothers.

Key Industry Success Factors

What Raymond James is doing?

Measuring Marketing Efforts: According to

Raymond James financial advisors have access

the Journal of Financial Services Marketing,

to a full-service, in-house marketing and

tracking the results of marketing activities is

advertising agency made up of seasoned

key to building a successful financial services

professionals with one goal: to help financial

business . The tracking system has to take

advisors grow their businesses.

consider how marketing efforts improve return

Every year hundreds of advisors help develop

on investment while solving clients financial

marketing plans that help them build their

needs. Consistent tracking helps to identify

brands, enhance their communications and

which marketing strategies provide best value

increase their visibility in their communities.

and sell the most number of financial

products/services.
Communicating Brand: Getting both

The marketing division at Raymond James

employees and customers to recognize the

consistently strives for understanding client

brand and buy into it. Implementation and

needs and delivering the best service possible.

communication of brand promises and delivery

based on clients' challenges, needs and feelings
are crucial. At the same time, you need to
encourage management to understand the
importance of establishing your brand through
identifying and educating your target market as
to the importance of buying financial services
from your company rather than from a
competitor.
Focus on Needs: The ever-increasing needs of

Raymond James provides a range of

baby boomers and Gen-Y require financial

investment products that is both broad and

32

services providers to come up with specific and deep, because it feels that clients' strategies
specialized product and services, according to

change with their lifestyle and needs and a

a report by Banking.com. These customers

changing strategy requires alterations to

require consulting and products/services that

portfolios.

aid in better financial decision-making. Small

businesses that credit, insurance and
investment advice may be the next big clients
of financial services providers.

Utilizing Technology: Customers want instant

Raymond James operates most recent

accessibility to their accounts, marking the

technology to keep ahead of its competitors. It

importance of wireless networks and Internet.

even provides technology consulting to clients.

By investing in applications powered by cloud

computing and social media sites and handheld
devices, companies can help customers easily
manage investments and purchase financial
products. By utilizing data gathered from use
of technology, companies can respond more
quickly to customers needs and come up with
new offerings. This gives the company a
competitive advantage over other financial
service providers who are slow to react.

References
1. http://www.raymondjames.com/ecm/rjtechnologybanking/

33

2. http://smallbusiness.chron.com/key-success-factors-financial-services63370.html
3. http://mcorpconsulting.com/about/media/a-survey-of-key-success-factors-infinancial-services-marketing-and-brand-management/
4. http://www.raymondjames.com/about/social_responsibility/
5. http://en.wikipedia.org/wiki/Raymond_James_Financial
6. http://en.wikipedia.org/wiki/Business_model
7. http://www.investor.barclays.com/results/2001results/annual_report/website/l
blue/lblue.html
8. http://group.barclays.com/about-barclays/about-us/transform/values
9. http://en.wikipedia.org/wiki/Ginnie_Mae

34