Stifel CEO: Broker Recruiting to ‘Accelerate’ in 2021

Stifel Financial recruited 131 advisors last year, including 32 in the fourth quarter, as its Chief Executive Ron Kruszewski said its hiring efforts remain “robust” even as one of its rivals warned this week that competition is heating up.

The advisors Stifel recruited last year had generated $102 million in annual revenue at their prior firms, the company said. That represented a decline from the 150 advisors with $119 million in production that it added in 2019, but Kruszewski said that he expects recruiting to “accelerate” as the company added technology such as video conferencing features, e-signatures and client text capabilities that would appeal to advisors in a work-from-home era.

“Recruiting has been and will continue to be a key driver in our wealth management franchise,” Kruszewski said on the company’s earnings call on Friday.

Stifel’s wealth management unit, which comprised 54% of the company’s net revenue and 84% of its profit in the fourth quarter, reported its second-best earnings quarter, the company said.

Net income was virtually flat at $196 million as revenue rose 4% to $575 million from $552 million a year ago.

Stifel ended the year with a total of 2,280 advisors, up 2.6% from 2,222 a year ago, including 93 brokers in its small independent broker-dealer unit. It added just nine brokers on a net basis over the last three months of the year.

Kruszewski’s strong recruiting forecast came as Stifel’s regional competitor, Florida-based Raymond James, reported on Thursday that its employee channel headcount of 3,387 was down by a net 17 in the quarter as its Chief Executive Paul Reilly said recruiting was becoming increasingly competitive and the company had to raise hiring offers.

Asked about whether Stifel was also seeing a tougher recruiting environment, Kruszewski said he was unaware of the competitor’s remarks but attempted to take some credit and touted a recent hire as evidence of its success.

“I’d like to think that one of the reasons that it has gotten very competitive is that we have gotten very active,” Kruszewski said. “We hired a very large team this morning that will be announced, so our recruiting is robust.”

Kruszewski said that offers to new hires industry-wide are “elevated today” compared to a historical average but did not indicate any plans to raise Stifel’s own transition offers.

“I’m not going to say that’s negatively impacting our recruiting,” he said. “It sometimes impacts our expected returns over 10 years, but there are a whole lot of factors going into that.”

Recruiting propelled Stifel’s client assets up 8.5% to $357 billion at the end of the year, as fee-based assets hit a record $112 billion due to rising markets and competitive recruiting, the company said.

Addressing the recent retail trading boom, Kruszewski reaffirmed Stifel has no plans to build out discount online trading capabilities for self-directed customers and said that the introduction of a new generation of investors to the market could create future prospective clients for advisors.

“One area of technology we are not focused on is free online trading,” Kruszewski said. “The advice-centered model and culture combined with leading edge technology will drive recruiting and net asset growth.”

WIthout naming any companies, Kruszewski said some online brokerages may face questions about whether “gamification” of stock trading using artificial intelligence could prompt scrutiny from regulators over client ‘best interest’ concerns.

“Ultimately, there are going to be some questions over time about the gamification of trading and whether or not using AI to encourage behavior triggers some best interest role,” he said.