Welcome to Financial Advisor IQ

Raymond James Boss Deflects Slow Advisor Growth Concerns While Promising to Heat Up the Competition in Key Market

By Mrinalini Krishna April 26, 2019

Even though Raymond James saw tepid advisor addition figures last quarter, the company’s CEO insists it’s still recruiting strongly – and he’s expecting a solid push in markets where Raymond James currently lacks numbers.

The company ranks rose by 47 advisors in the first three months of 2019. The firm follows an October-September fiscal calendar and said in its Q2 2019 earnings report that its advisor strength stood at 7,862 at the end of March 2019, up 0.6% over the previous quarter and 3.39% more than the same quarter the prior year.

Raymond James is trying to expand into markets on the West Coast, a proposition on which chairman and CEO Paul Reilly says it continues to focus.

“We continue to recruit. The pace is higher. But we’ve got a long way to go, because we’re just starting really in that market, being aggressively recruiting,” said Reilly. “We’ve got a lot of territory and opportunity there. So, we continue to be very focused on it.”

But after a slowdown in net additions in the previous quarter on account of advisor retirements, Reilly said the company’s pace of adding advisors is slower than the record year last year.

“We started off with a slower quarter at the first quarter, [and] part of that was … we had a lot of retirement. We had some retirements this quarter, but we’re slower than last year in our pace of recruiting so far on average, but the pipeline’s very good, very strong,” said Reilly on an earnings call with analysts on Thursday.

“Given that we’re behind on the first six months, I would expect us to be under last year’s all-time record, but it’s still a very strong recruiting phase,” Reilly said.

The company may also look at acquisition opportunities to fuel its growth, but Reilly says while they’re in touch with “a handful of companies we think are strategically and culturally good fits, they’re just not for sale.”

He also remarked that in terms of M&A opportunities, the wealth management space where the company’s Private Client Group operates has become more consolidated and may not offer as many opportunities as some of the company’s other areas of business.

Raymond James’ Private Client Group reported net revenues of $1.27 billion, flat compared to the same quarter in the previous year and down 6% from the previous quarter. Pre-tax income for the group stood at $132 million for the period, down 16% compared to Q2 2018 and 20% less than the prior quarter.

The results were “negatively impacted by lower brokerage revenues and the market-driven decline of Private Client Group assets in fee-based accounts during the preceding quarter, as these accounts are predominantly billed based on balances at the beginning of the quarter,” said the firm in the release.

The group, however, reached a record of $378.4 billion of assets in fee-based accounts, a double-digit growth when compared to the same quarter in the previous year as well as the December 2018 quarter.

“The increase in Private Client Group assets in fee-based accounts during the quarter will positively impact asset management fees in the fiscal third quarter,” said the release.