Stifel Headcount Slips Amid Recruiting Slowdown
Stifel Financial’s wealth management unit posted gains in client assets and profits despite its advisor headcount falling slightly amid recruiting headwinds in the first three months of 2021.
Stifel Chief Executive Ron Kruszewski, who labels recruiting a key driver for the wealth business, acknowledged a hiring slowdown coinciding with an increasingly competitive hiring market and the Covid-19-triggered shutdown’s lingering challenges as an initial surge of post-pandemic moves has waned.
“In the last couple months, I would say that people not being able to go to the office and not being able to maybe properly prepare, has slowed it down,” Kruszewski said on the company’s earnings call. “We’re talking to a lot of people, but the pace at which people are moving I do think is being impacted by the fact that many people have not been able to go to the office.”
His comments came after regional rival Raymond James Financial’s Chief Executive Paul Reilly said earlier this year that Raymond James was raising its recruiting deals as the landscape had become more competitive.
Stifel hired 15 financial advisors with a combined T-12 production of $13 million during the first quarter, Kruszewski said. That was fewer than half of the 32 it hired in 2020’s fourth quarter, but Kruszewski said he expects “no change” in the long-term upward trajectory of Stifel’s hiring efforts once pandemic restrictions have subsided.
Kruszewski had predicted in a January earnings call that recruiting would accelerate this year as the firm added digital capabilities to appeal to advisors in a work-from-home environment.
Stifel has also been widening its recruiting net and is now “actively recruiting” for the independent channel, he said. The business has gone through periods of dormancy since its establishment in 1990 but received renewed attention last month with the firm’s announcement it had hired a veteran Wells Financial Network executive to help it expand.
“We’d often just tell them to go to competitors; we’re not going to do that anymore,” Kruszewski said of independent prospects. He declined to specify any goals or targets for the channel.
Despite the slight dip in advisor ranks, Stifel’s wealth management unit ended the first quarter of 2021 with a record $378.6 billion in total client assets, marking a 5.9% increase over the previous quarter and a 37% increase year-over-year, according to the earnings report.
Net income in the wealth management unit, which comprised 55.6% of Stifel’s total net revenue in the first quarter of 2021, rose 8.3% from $583 million in the year-ago quarter. The company overall posted record net revenues for the quarter of about $1.1 billion.
Stifel’s pre-tax wealth earnings climbed to $223.2 million in the first quarter, marking a 13.6% increase from the prior quarter and a 15% increase year-over-year.
Kruszewski, whose 2020 compensation package was bumped up 15% over the prior year to $11.5 million due to “strong” company performance through the pandemic, attributed much of the first-quarter gains in wealth to “past recruiting success,” growth in fee-based assets and increased client activity.