RayJay CEO Vows Enhanced Recruiting Deals Will Pay Off
Raymond James Financial’s employee broker headcount stagnated over the past year, but Chief Executive Paul Reilly reassured analysts on Thursday that the more lucrative bonuses it began offering this year are bearing fruit.
His remarks came as the St. Petersburg, Fla.-based company reported that its advisor roster across its private client group, which includes around 5,000 independent contractors, grew by a net 94 advisors over the quarter to 8,327 and was up 197 year-over-year. But its employee headcount of 3,375 employee advisors was flat sequentially and down by a net 11 year-over-year.
“We continue to focus on long term growth, and our priorities remain unchanged,” Reilly said. “Our top priority is organic growth, which is primarily driven by retaining and recruiting advisors in the private client group.”
For the quarter, the private client group earned a record $192 million in pre-tax income, up 13% year-over-year. Revenue was also up 10% to a high water mark of $1.65 billion, attributed to higher fee-based assets due to market appreciation and net addition of advisors across its channels.
Client assets at the private client group increased to a record $1.03 trillion, up 40% year-over-year and 6% from the prior quarter. The unit’s fee-based accounts rose to $567.6 billion, up 48% year-over-year and up 7% from the prior quarter.
Reilly, who telegraphed the firm’s employee deal hikes in January, said those who have joined in the independent and employee channels over the past 12 months had generated $285 million in annual fees and commissions and oversaw $44 billion in client assets at their prior firms.
Those gains, however, were offset by a “higher number of retirements” and a smaller training class, according to Reilly. He did not discuss specifics of Raymond James’ offers, which recruiters have said nearly doubled to around 2.4 to 2.6 times trailing-12 production for top-tier advisors.
“Now when we come into the finals, we aren’t the highest, but we’re in the ballpark,” Reilly said, noting that some competitors offered “almost twice as much” as Raymond James’ previously proposed deals. “We think it’s a fair package, and a good return for us.”
His comments come as its major regional competitors have also been grappling with a more competitive recruiting environment.
St. Louis-based Stifel Financial reported on Tuesday that its salesforce of 2,182 financial advisors at the end of the first quarter was down a net of 5 from 2,187 at the end of 2020, although it was still up 2% from 2,130 at the end of March 2020. Stifel CEO Ron Kruszewski attributed the slowdown to logistical hurdles related to the Covid-19 pandemic.
Minneapolis-based Ameriprise Financial reported on Monday that its headcount rose by a net 109 in the first quarter to 10,031. The majority–7,924–were in its franchisee channel while headcount of 2,107 in the employee unit was flat year-over-year.
Asked by an analyst whether Ameriprise will be more aggressive in recruiting or make an acquisition to boost headcount, Chief Executive James Cracchiolo acknowledged that the firm could do “a bit more there” and was “reviewing it.”
“We’ll continue to look at whether we could step that up or there may be some other, smaller firms suited to our cultural mix,” Cracchiolo said, emphasizing that the firm was primarily focused on increasing productivity of its existing salesforce.
Cracchiolo did not address its own recruiting offers. Ameriprise since 2018 has dangled bonuses to top brokers of over 300% of their trailing-12 production in deals that recruiters say rival high-end wirehouse offers.
Shares of Raymond James Financial, which drew 70% of its revenue and 54% of its profit from the private client group in the quarter, were trading slightly higher at $132.21 as of midday.