Raymond James Financial reported $2.5 billion in net revenues and $307 million in net income in the second quarter of 2021. The company credited record-level asset management fees and investment banking revenues for the numbers.
“With strength across our complementary and diverse businesses, we achieved record results for the first nine months of the fiscal year, including record net revenues and pre-tax income in our Private Client Group, Capital Markets and Asset Management segments,” says chair and CEO Paul Reilly in a statement. “We are well positioned heading into the fiscal fourth quarter with records for client assets, the number of financial advisors, financial assets under management and net loans at Raymond James Bank. Furthermore, financial advisor recruiting and investment banking pipelines remain strong.”
Raymond James ended the quarter with a record 8,430 financial advisors, a net increase of 258 over the prior year's period and 86 more than the preceding quarter, Reilly said on Thursday’s earnings call.
“Advisor recruiting has been robust even in this very competitive market,” he said. “With the strong recruiting pipeline, we're on track for a record fiscal year recruiting as prospective advisors across all of the affiliation options have continued to be attracted to our platform, including the leading technology solution, our advisor- and client-centric culture. These recruiting results are primarily strong given the very competitive market for experienced advisors.”
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CEO Jim Cracchiolo acknowledged that the firm attracted fewer experienced reps in the second quarter, even as its headcount ticked up by 2%.
July 27 -
A new high in loan volume and a notable influx of advisory AUM drove the wirehouse’s business to more than half a billion dollars in second-quarter net income.
July 20 -
CEO James Gorman says the company has created something new by adding Solium and E-Trade to its existing force of financial advisors.
July 16
Raymond James’ private client group generated record quarterly net revenues of $1.7 billion, reflecting significant operating leverage over the past year, Reilly said. The asset management segment generated record net revenues of $225 million and record pre-tax income of $105 million.
“These results are primarily due to the growth of financial assets under management driven by equity market appreciation and net inflows into fee-based accounts in the private client group, partially offset by the modest quarterly net outflows [of] Carillon Towers associates, following a solid quarter of net inflows in the fiscal second quarter,” Reilly said.
Financial assets under management ended at a record $191 billion, and bank asset balances ended at a record $29 billion, says Devin Ryan, a research analyst from JMP, in a statement.
“The credit environment also continues to improve with a loan loss benefit of $19 million, versus our estimate for a benefit of $9 million. The NIM (net interest margin) did compress a bit to 192 bps (basis points) as anticipated, though we expect higher balances to more than offset,” Ryan says. “Bottom line, we are overall encouraged by core trends and would characterize the revenue implications as modestly better than previously modeled.”
Raymond James on Thursday also announced it intends to make a $387 million offer for the U.K.-based Charles Stanley Group PLC. The transaction is expected to close in the calendar fourth quarter of 2021.
“Charles Stanley is a firm we've admired for a long time and has a tremendous reputation, a 200-year heritage and a talented pool of wealth managers and professionals. The two firms share a common and increasingly rare client-centric approach where the primary client relationship is held by the individual wealth managers,” Reilly said on the earnings call. “This combination with Charles Stanley would provide the opportunity for further accelerated growth in the UK, the second largest English-speaking wealth management market.”
Nearly 200 Charles Stanley wealth managers will join Raymond James U.K.’s new employee affiliation model, according to the statement.
“Raymond James does not expect the acquisition to create a significant restructuring or result in the need for staff reductions at either firm,” the firm writes in the statement.
“Raymond James has operated in the UK for over 20 years, but the contribution has historically represented a small fraction of the overall private client business,” Ryan says. “That said, Raymond James has been focused on expanding its ‘undersized’ UK business. Charles Stanley represents a great cultural fit, and the deal should also accelerate growth relative to both firms on a standalone basis, particularly given Raymond James’ newly launched employee affiliation model in the region.”
