Raymond James is the latest wealth management firm to stop reporting quarterly advisor headcounts.
The large St. Petersburg, Florida-based independent broker-dealer included no update Wednesday on its advisor numbers when reporting results for its fiscal year's first quarter, which runs from September to December. When Raymond James last reported
Raymond James executives made no mention of the new reporting policy in an earnings call with analysts Wednesday. CEO Paul Reilly, who
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"But if you look, the pipeline is very strong — teams up to $20 billion in assets," Reilly said. "The teams keep getting bigger and bigger. And so we're very confident in it. But it will be lumpy quarter to quarter. It's not always a straight-line business."
Still planning annual updates
A Raymond James spokesperson confirmed the firm is discontinuing its quarterly headcounts but still plans to provide an update every year. The spokesperson said the data can give a misleading impression that a decline in advisor numbers equates to fall in assets under management. But advisors who exit the business or retire often end up leaving their clients and their assets behind.
The spokesperson said Raymond James believes the more meaningful indicators are total client assets and net new assets.
"Those figures will give you the clearest view into the health and growth of the business," the spokesperson said. "That said, we appreciate that advisor count is still a notable metric and therefore will continue to disclose that figure on an annual basis."
In maintaining annual updates, Raymond James hasn't gone as far as other wealth managers that have
The loss of SageSpring Wealth Partners
Without the departure of one sizable wealth management group last quarter, Reilly said Raymond James' attrition rate — the percentage of total advisors who leave in any year — would have hovered around 1%. Neither Reilly nor other executives named the practice that departed.
But it has been widely reported that
Raymond James reported Wednesday that its wealth division — called its Private Client Group — brought in roughly $14 billion from September to December. If that pace were kept up over the next three quarters, the firm's assets under management would be up by 4% by the end of its fiscal year.
Reilly said that rate of annualized growth would be even higher, 5.4%, were it not for the loss of the large wealth management group. He said the departing firm removed about $5 billion in assets in Raymond James' first quarter.
"The large one is essentially almost totally gone," Reilly said. "This was the big quarter."
Setting a record for revenues
Even with its net new assets weighed down, Raymond James logged $2.55 billion in revenue from September to December. That was up 14% year over year and set a record.
That revenue came on just over $1.49 trillion in client assets under administration, a figure also up 14% year over year. Of those assets, $876.6 billion were in fee-generating accounts, showing a 17% annual increase and setting another record for the firm.
Raymond James reported the fees it collected from asset management and related administrative functions rose by a whopping 24% year over year to nearly $1.5 billion. Its revenue from brokerage accounts increased by 13% to $433 million.
Rising expenses
Offsetting the revenue gains were increases in compensation and other expenses. Raymond James reported its pay and benefits to advisors rose by 19% year over year to $1.4 billion in its first quarter. And its noncompensation costs rose by 17% to $255 million.
All told, Raymond James logged just over $2 billion in noninterest expenses for its Private Client Group in its first quarter. Subtracted from revenue, that left it with $462 million in pre-tax income, a figure up 5% year over year.
On the lookout for acquisition prospects
Raymond James President Paul Shoukry, who's scheduled to step into the CEO role on Feb. 20, said he and his colleagues are considering putting some of the firm's capital toward acquisitions.
"We can't say much about that topic, other than there has been a lot of activity there," Shoukry said on the earnings call.
Shoukry later added that it's been "very difficult from an acquisition-perspective space, to find a good strategic fit, cultural fit, and also a value that makes sense for shareholders, especially with private equity firms being so aggressive in the space right now."
Even without quarterly headcount updates, recruiting will remain a priority. Shoukry said a lot of Raymond James' recent growth has been in the Northeast.
"But we certainly have a lot of room for gaining market share behind a lot of our other markets, and the West Coast is really still wide open," he said. "We were growing at a fast percentage pace, but it's our smallest market share, and so we believe we have a lot of opportunity to continue to grow in that business organically, through recruiting, and also in Canada and the U.K."
