Brokerage Raymond James reported its latest quarterly earnings yesterday (see the Seeking Alpha transcript here), and the topic of AI and cash sweep accounts was again a big topic. CFO Jonathan Oorlog comments, "Clients' domestic cash sweep and enhanced savings program balances ended the quarter at $57.8 billion, down 1% compared to the preceding quarter and representing 3.7% of domestic ... client assets. Based on April activity to date, domestic cash sweep and enhanced savings program balances have declined due to the collection of record quarterly fee billings of approximately $1.9 billion along with further declines largely driven by the seasonal impact of client tax activity. Combined net interest income and RJBDP fees from third-party banks declined 3% from the prior quarter to $650 million.... The average yield on RJBDP balances with third-party banks decreased 6 basis points to 2.7%, primarily due to the full quarter impact of the Fed interest rate cuts in the December quarter."
During the Q&A, Devin Ryan from Citizens JMP Securities says, "It sounds like you think AI will be a net positive for the business versus an overall risk. So would love to hear a little bit more about why. And then if you can just weigh in on how you're thinking about implications of this potential agentic cash sweep optimization, which I think some people think in theory could pressure transactional cash balances, and whether you would consider kind of evolving the monetization with like a platform fee or something else?"
CEO Paul Shoukry responds, "Maybe on your second question first around the agentic AI cash optimization tool, which I think is conceptual, I haven't seen it yet, but I think when you step back, it's really the dynamic that the industry has been seeing since rates started rising. And we were talking about before, as you recall, Devin, before rates started rising, which is as rates rise, advisers will help clients invest in higher-yielding alternatives."
He continues, "At Raymond James, we've been offering one of the most open platforms of higher-yielding alternatives, whether it's the enhanced savings program, which offers a very competitive rate with up to $50 million of FDIC insurance, as well as the purchase money market funds, which we let all clients avail themselves to the institutional share class to get higher rates, and a whole host of other higher-yielding alternatives for their cash."
Shoukry states, "And because of that, you've seen in our industry, transactional or sweep cash balances go down 40% to 50%. And now in fee-based accounts, the average cash balance per account is less than $10,000. So without AI, you've seen that trend happen, and I don't think it requires AI for that cash to be invested in higher-yielding alternatives. I think AI is kind of being ... used to describe the phenomenon that we already anticipated would happen."
He adds, "So I don't see much more of an incremental threat maybe to the e-brokers where there's not a financial adviser involved that's been helping clients reinvest those cash balances. Perhaps, I'm not sure. We're not an e-broker, so I'm not an expert in that space. But I don't see it really impacting our space much more incrementally. But again, I haven't seen the AI agentic solution either that everyone is talking about, so I'm not sure to tell you the truth. But we feel like the sweep balances have stabilized over the last several quarters. We have the quarterly fee billings. We have the tax dynamic every year that we talked about. But outside of that, there's not a whole lot of cash in movement right now given where rates are at. It's been pretty stable across the industry overall."
Wolfe Research's Steven Chubak then asks, "I did want to dig into some of the comments you made around agentic AI, specifically, as it relates to the impact that, that could have on cash levels. Paul, you made compelling points about easy access to cash alternatives, you cited lower sweep cash per account, but it's also pretty clear that the market is ascribing a lower terminal value to cash-derived profits just given the risk from whether it's agentic AI, tokenization, pick your poison here."
He says, "Just trying to gauge in a scenario where competitors in the event that they pivot to more of a fee-based model or approach to reduce the reliance on cash economics, is that something that you're amenable to? And are there barriers to introducing things like platform fees given the fact that you service multiple affiliation options with your omnichannel approach?"
Shoukry replies, "I mean, ultimately, we want to have a profitable and competitive and fair pricing structure. Fair, most importantly, for the clients, [but] also the financial professionals and the firm. And so if that evolves in the industry, based on competitive pressures and competitive dynamics and the client preferences, most importantly, then of course, we would be flexible and open to evolving with where clients and advisers in the industry is evolving to. I mean we look at that on an ongoing basis for all of our pricing fees and payout."
Finally, James Mitchell of Seaport Research Partners queries, "Maybe a follow-up just on TriState [Bank]. You don't talk about it a lot, but it looks like the deposit growth there has been pretty substantial since you acquired it, maybe over 50%, and has picked up over the last year. So how is that helping -- what are the spreads on those deposits? And do you see it as a big contributor to profitable growth in the lending channel?"
Shoukry answers, "Yes, absolutely. The reason that we had TriState join the Raymond James family is because, one, their SBL [securities-based lending] capability, their lending capability more broadly, and also it diversifies the funding sources through its various deposit products. So you're absolutely right. It's been a contributor on all fronts, very successful. The leadership team, again, going back to culture and joining a family is still in place. They're still independent, branded independently, still separately chartered bank, and so just been a really great addition to the Raymond James family."
For more on AI and cash sweeps, see our recent Crane Data News stories: "Barron's on Schwab AI Sweeps Worries" (4/21/26), "Earnings: JP Morgan Talks AI Cash Allocation Tool; BNY on Tokenization" (4/20/26), "Schwab Says AI a Tailwind, Not a Threat to Cash Sweeps on Q1 Update" (4/17) and "Morgan Stanley Q1 Call: AI & Sweeps" (4/16).
