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                Message from the Chairman and CEO

                Ten years ago, we were in the midst of the worst financial crisis since the Great Depression. Too many firms in our industry suffered from excessive leverage and overexposure to illiquid assets, which caused many to fail and some to rely on government support through the Troubled Asset Relief Program (TARP). Raymond James not only survived the financial crisis but did so without a government lifeline. Our long-term success reflects our mission of always putting the financial well-being of our clients first, which ultimately serves the best interests of our shareholders, associates and communities.

                That approach led to outstanding results in fiscal 2018. A decade after the financial crisis we finished the fiscal year with our 123rd consecutive quarter of profitability and record annual net revenues and earnings. Record net revenues of $7.27 billion increased 14%, record pre-tax income of $1.31 billion increased 42%, and record net income of $856.7 million represented a 35% increase over fiscal 2017. Adjusted net income of $964.8 million1 , which excludes the $105.3 million impact of the Tax Cuts and Jobs Act, increased 26% compared to fiscal year 2017. Record financial results were driven by growth of client assets, record investment banking revenues and the positive impact from higher short-term interest rates. Client assets under administration increased 14% during the year to $790.4 billion, another record, lifted by equity market appreciation and the net addition of financial advisors in the Private Client Group (PCG) segment. Our return on average total equity for the year was 14.4%, very good given our strong capital position throughout the year. Our shareholders’ equity of $6.4 billion on September 30, 2018, increased 14% over September 2017, resulting in a book value per share of $43.73.

                During the fiscal year we increased our quarterly dividend twice, moving from $0.22 to $0.30 per quarter. In addition, in November 2018 the quarterly dividend was increased to $0.34 per quarter, resulting in 55% growth over a 12-month period. In May, our board of directors also approved a $250 million securities repurchase authorization. The firm repurchased nearly 3.17 million shares of common stock for an average of $78.94 per share. With the prior authorization fully utilized, the board approved an additional authorization of $500 million in late November 2018. While we strive to maintain ample levels of capital and liquidity, we are deliberate about returning capital to our shareholders, as appropriate.

                Turning to our segment results, the Private Client Group generated record net revenues of $5.09 billion, an increase of 15% over fiscal 2017, and record pre-tax income of $576.1 million, a 54% increase over 2017, which was negatively impacted by $130 million of reserves associated with a legal settlement. Fiscal 2018 concluded with records for PCG assets under administration of $755.7 billion and PCG assets in fee-based accounts of $366.3 billion.

                A significant driver of PCG results in 2018 was our ability to retain and attract quality financial advisors who appreciate the unique combination of a client-first focused culture along with robust technology and product offerings. More than 7,800 advisors are now affiliated with the firm. Fiscal year 2018 established a new milestone for financial advisor recruiting with over $300 million of trailing 12-month production joining the firm. In addition to attracting experienced advisors, we continued investing in the future by expanding our financial advisor training program, with over 250 associates starting the program during fiscal 2018.

                That view to the future was also clear as we implemented an important succession plan, with Chief Operating Officer Dennis Zank announcing his retirement from that role and as leader of PCG. We’re grateful for Dennis’ 40 years of committed service to Raymond James, where during his career he successfully led operations and administration, and the Private Client Group. Most importantly, he helped prepare the firm for continued success, including those who took on his responsibilities, namely Raymond James Financial Services (RJFS) President Scott Curtis, who we named head of PCG, and Raymond James & Associates (RJA) President Tash Elwyn, who expanded his role to become CEO of the RJA broker/dealer. In addition to these changes, Jodi Perry replaced Scott Curtis as leader of the RJFS Independent Contractor Division and was appointed to the Raymond James Financial (RJF) Executive Committee, and Alex. Brown President Haig Ariyan took on leadership of the firm’s Investment and Wealth Solutions departments. I have utmost confidence in these leaders and am pleased we have a strong team in place to continue propelling our Private Client Group forward.

                Notable for the firm and our industry this year was the reversal of the Department of Labor’s fiduciary rule by a federal court of appeals in June. While Raymond James has long advocated for a uniform best interest standard, we as a firm and I personally were outspoken against the DOL’s fiduciary rule and were pleased by the outcome. We are encouraged by the SEC’s Regulation Best Interest proposal, which, once finalized, is expected to require the same standard of care for all investors and account types. We will implement any necessary changes with a consistent approach to putting clients first, minimizing disruptions, and maintaining flexibility and choice for advisors and clients.

                Whatever the years ahead bring, I know with strong leadership in place and a commitment to our advisors and their clients, PCG is well positioned to continue its record of growth and success as we enter 2019.

                Moving on to the Capital Markets segment, net revenues of $963.8 million and pre-tax income of $90.6 million declined 5% and 36%, respectively, compared to fiscal 2017, in spite of record M&A results that drove record total investment banking revenues of $440.8 million, up 11% over last year’s record. The strong M&A results reflected a favorable market environment and the substantial investments we made to strengthen our capabilities over the past several years. The broader story for the segment was less positive. Equity underwriting revenues declined 27% and institutional commissions remained challenged in fiscal 2018, as the equity business was negatively impacted by both structural and cyclical factors, and a flattening yield curve hurt the fixed income business.

                The Asset Management segment produced record net revenues of $654.4 million and record pre-tax income of $235.3 million, increasing 34% and 37% over fiscal 2017, respectively, driven by financial assets under management, which ended the fiscal year up 46% at a record $140.9 billion. The increase in financial assets under management reflected market appreciation and increased utilization of fee-based accounts in PCG, with a large influx due to aspects of the now-defunct DOL fiduciary rule, as well as interest in newer products such as Freedom Foundations and environmental, social and governance (ESG) portfolios, both of which offer professional management at significantly lower asset levels than the segment’s typical offering. Also meaningful was the addition of $27 billion of assets from the acquisition of Scout Investments and Reams Asset Management in November 2017. This acquisition, which significantly expanded and diversified Carillon Tower Advisers’ product offering, has been successful to date with strong asset retention and a seamless integration during the fiscal year.

                Also of note for the year was RJF Executive Committee member and Asset Management Group President Jeff Dowdle being named as RJF Chief Administrative Officer, expanding his role over several administrative areas of the firm.

                For Raymond James Bank, record net revenues of $726.7 million were up 23% and record pre-tax income of $491.8 million increased 20% over fiscal 2017. By continuing to focus on providing solutions to clients in our PCG and Capital Markets segments, the bank’s loan portfolio grew 15% to a record $19.5 billion during the year. Most importantly, the bank’s credit metrics improved, with nonperforming assets declining 36% and criticized loans declining 12%. Net interest margin expanded 12 basis points to 3.22% in fiscal 2018, helped by the increases in short-term interest rates, which more than offset the growth of lower yielding assets such as residential mortgages to PCG clients and the agency-backed securities portfolio.

                Complementing the strong performance within our businesses, we also achieved several other notable accomplishments during the fiscal year:
                • Giving back to our communities is an integral aspect of our mission, and we certainly exhibited that in fiscal 2018. Between associate contributions and a company match, Raymond James raised more than $6 million for communities across the country through its annual United Way campaign. Additionally, our associates raised more than $250,000 for the American Heart Association through the 2017 Heart Walk, and during the firm’s annual Raymond James Cares Month, more than 2,500 advisors and associates volunteered over 7,250 hours to benefit 172 charitable organizations, reflecting an 18% increase in the number of volunteer hours over 2017. Raymond James also donated $150,000 to recovery efforts in the areas most affected by Hurricane Michael and $250,000 to the American Red Cross to support Hurricane Florence relief efforts
                • The firm appointed two new directors to its board of directors – retail and consumer products veteran Anne Gates and information technology executive Bob Dutkowsky – and both were named to the Audit and Risk Committee. I am confident that Anne and Bob share our firm’s values and will be excellent additions to our board of directors.
                • We also formed an Operating Committee – this committee is comprised of executive leaders representing different business units and diverse perspectives from across the firm and will work with the Executive Committee to participate in decision-making and setting strategy.
                • We’re continuing our long-term focus on having a more inclusive and diverse workforce, and received recognition for our efforts, including the Bank Insurance & Securities Association 2018 BISA Diversity Award, which annually recognizes successful diversity efforts of organizations from the financial industry. InvestmentNews also recognized the firm as a “Diversity Champion,” two of our advisors – RJA’s Tony Barrett and RJFS’ Joshua Charles – as “See It Be It Role Models,” and EVP of Technology and Operations Bella Allaire and financial advisor Sacha Millstone as “Women to Watch.”
                • Raymond James was named to Fortune’s list of the World’s Most Admired Companies and was also ranked 58th on Forbes’ list of America’s Best Employers.
                • Chairman Emeritus Tom James was recognized by InvestmentNews as one of two “Icons” of our industry, alongside Fidelity Investments Chairman Emeritus Edward “Ned” Johnson III, on its 2017 list of Icons & Innovators.
                • Several Raymond James-affiliated advisors were recognized during the year, including eight advisors named to Forbes’ list of America’s Top Women Advisors, 30 advisors named to the Financial Times “FT 400” list of top financial advisors, 55 advisors named to Barron’s Top Advisors ranking, three advisors named to Barron’s list of the Top 100 Women Financial Advisors, and 74 advisors named to Forbes’ list of America’s Top Next Generation Wealth Advisors.
                • Raymond James earned numerous investment banking awards during the year, including several awards from the M&A Advisor, comprised of three “Deal of the Year” awards and five “International Deal of the Year” awards.

                In short, it was a superb year for Raymond James. We are entering fiscal 2019 with records for our key revenue drivers, including client assets under administration, financial assets under management, the number of PCG financial advisors, and net loans at Raymond James Bank, capping off a very strong run of growth in recent years.

                However, we are very aware that maintaining our strong position is reliant on continuing to look forward and being vigilant about continuing to evolve our business for the needs of the future, while remaining rooted in the values that have defined our firm for the past 55-plus years.

                That includes managing our business with a thoughtful, conservative approach. Volatility in the S&P 500 index late in 2018 reminds us that we are 10 years into one of the longest bull markets in history, and we should always be prepared for an eventual prolonged downturn in the equity markets. Furthermore, the industry is starting to experience significant competition for client cash balances, which could also create headwinds for our financial results, particularly when short-term interest rates stop rising.

                Nonetheless, I am confident about our ability to navigate these potential challenges, growing our businesses with our clients at the forefront while delivering superior returns to our shareholders over the long term.

                Thank you for your trust and confidence in Raymond James.

                Sincerely,

                Paul C. Reilly Signature

                Paul C. Reilly
                Chairman and
                Chief Executive Officer

                Raymond James Financial
                December 14, 2018

                1 “Adjusted net income” is a non-GAAP financial measure. Please see the “reconciliation of GAAP measures to non-GAAP measures” on page 38 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures, and for other important disclosures.

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