Subject: File No. S7-25-99
From: barry augenbraun
Affiliation: senior vice president, raymond james financial, inc

September 21, 2004

September 21, 2004

Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, DC 20549-0609

Re: File No. S7-25-99 Release No. IA-2278

Dear Mr. Katz:

On behalf of Raymond James Financial, Inc. RJF, or the Company, we are pleased to submit the following comments with respect to Release No. IA-2278.

RJF is a diversified financial services holding company whose subsidiaries engage in securities brokerage, investment banking, asset management and other financial services throughout the United States and internationally. The Companys two domestic broker-dealer subsidiaries, Raymond James Associates, Inc. RJA and Raymond James Financial Services, Inc., RJFS have approximately 5,000 financial advisors in more than 2,100 locations world-wide.

As of August 31, 2004, RJA had approximately 7,500 brokerage accounts that were fee based and RJFS had approximately 20,000 brokerage accounts that were fee based. In addition, RJA had approximately 15,000 fee based investment advisory accounts and RJFS had approximately 72,000 fee based investment advisory accounts. Based on our experience, we believe that fee based brokerage accounts serve the interests of retail customers and support action by the Commission to adopt Rule 202 a 11 - 1.

1. Fee based brokerage accounts serve the interests of retail customers.

As the Commission recognized in its proposing release, fee based brokerage accounts can benefit customers by aligning their interests with those of their broker-dealers Release IA-1845. There are many benefits that an investor receives from this compensation structure:

It facilitates regular contact between the customer and his financial advisor.
It promotes communication that allows for a broad financial planning perspective, rather than product-oriented contact.
It provides a transparent compensation format, allowing the customer to evaluate the value he is receiving each time he receives a statement reflecting the compensation charge.

For this reason, fee based compensation arrangements have been recognized as a best practice by the Securities Industry Association.

Because of these benefits, we believe that the regulatory structure should encourage the continued and expanded use of such programs, rather than discourage them. We do not believe that any argument based on public policy or the interests of the investing public can be made for curtailing the use of these programs. However, we recognize the need for appropriate disclosure to investors and would support steps designed to improve the quality of such disclosure.

2. Disclosure to clients should be clear and effective.

In some respects, the fee based compensation structure is more transparent and readily understandable by clients than the transaction based alternative. For example, while transaction confirmations disclose the cost for the purchase and sale of securities, there are few ways the investor can measure that cost against charges made by competing firms to assess whether the transaction cost is reasonable. With a fee based account, the client knows exactly what he/she is being charged for the maintenance of the account, and is able to assess whether he/she is receiving value for the compensation that is being charged.

In order to make certain that customers understand the nature of the compensation structure and their right to consider alternative compensation formats, we would support the following additional requirements in order for a broker/dealer to qualify for the exemption under the proposed rule:

a. The customer must receive notice on a quarterly basis of the amount charged for compensation during that quarter or to be charged for the following quarter, if charges are assessed in advance and the basis on which the charge was computed.

b. At least annually, the customer must receive a notice explaining:

That the fee based compensation structure is one alternative available to the customer.
That fee based compensation may result in the customer paying more than, or less than, he/she might otherwise pay based on a commission alternative.
The customer should consult his financial advisor or other designated persons at the broker-dealer if he/she wishes to discuss whether this form of compensation continues to be suitable for his/her needs.

We believe that improving the disclosure structure for these compensation arrangements in this manner should eliminate any possible question regarding the customers understanding of the compensation structure.

Respectfully submitted,

Barry S. Augenbraun
Senior Vice President and
Corporate Secretary


H:SEC Release No. IA-2278