Raymond James’ Sweetened Recruiting Offers Bear Fruit
Raymond James Financial’s veteran broker recruiting is unexpectedly on pace for a record year across its employee and independent channels despite a “very slow” start, Chief Executive Paul Reilly said on Thursday.
Raymond James’ Private Client Group division reached 8,413 brokers, marking a net gain of 86 over the past three months and 258 year-over-year, the company reported. Its employee channel broker count of 3,423 reflected a net increase of 48, or around 1%, during the last three months, reversing two sequential quarters of declines, and was up by 44 year-over-year.
It had 4,990 independent contractors at the end of June, up 4% year-over-year and 1% from the prior quarter.
The advisors who joined over the past four quarters across both channels represented $325 million of trailing-12 month production and nearly $53 billion of assets at their prior firms, Reilly said.
The St. Petersburg, Florida-based company credited those gains with helping fuel higher customer assets in fee-based accounts, which helped propel the Private Client unit to record profits of $195 million, a 114% increase year-over-year, and a 36% jump in revenue to $1.7 billion in the fiscal third quarter.
Expenses, however, also rose 30% to $1.5 billion, an increase that Reilly said would likely continue as the firm resumed in-person events and conferences.
Total PCG assets hit $1.1 trillion, up 32% year-over-year. That included a 39% rise in fee-based accounts, which comprised $616.7 billion.
Raymond James’ recruiting revival comes as its regional competitors Ameriprise Financial and Stifel Financial both reported earlier this week slowdowns in veteran broker hiring this year, which executives attributed to an increasingly competitive market and challenges with brokers who are still working remotely.
After finding its own offers were well below market, Raymond James & Associates, the employee broker unit, earlier this year raised its offers for top teams to as much as 2.4 to 2.6 times a broker’s annual revenue, almost double what it had been, according to recruiters and managers at the firm. Reilly said at an industry conference in June that those deals were paying off, although he did not give numbers on new hires at that time.
Asked on the earnings call whether deal values have continued to climb in the market, Reilly said he did not see “anything different” in the last couple quarters. He appeared satisfied that Raymond James had found an offer to win over brokers in what he also characterized as a “very competitive” market. (Top-end offers from Raymond James’ larger wirehouse rivals can exceed 300% of trailing-12, including upfront and deferred bonuses.)
“There always seems to be an outlying offer here or there every time we recruit, but that’s not how we recruit,” Reilly said. “We give competitive packages that are often not the highest and stick to it. The results have been tremendous.”
Raymond James, which has operated in the United Kingdom for about two decades, also on Thursday announced plans to expand further in the region with an agreement to acquire London-based wealth manager Charles Stanley Group PLC, which has around 200 advisors, for $387 million. The firm was a good fit because it also offered multiple affiliation options, similar to Raymond James’ U.S. and Canada business, Reilly said.
“This combination with Charles Stanley would provide the opportunity for further accelerated growth in the U.K., the second largest English-speaking wealth management market,” Reilly said.
Overall, Raymond James, which drew 69% of its quarterly revenue and 64% of its profit from the Private Client division, reported record revenue of $2.47 billion and net income of $307 million in the fiscal third quarter.
Its stock was trading hands mostly flat at around $130 per share as of 10:23 on Thursday morning.