Despite recruiting half as many experienced advisors as a year ago, Stifel Financial’s wealth manager reached record levels of client assets and quarterly revenue.
The St. Louis-based firm known as one of the largest wealth managers in the regional employee channel is ramping up its
August 2, 2021 12:57 PM
- Revenue and profit: The wealth manager earned pretax income of $227.3 million on record net revenue of $637.6 million, for a margin of 36%. Compared to the year-ago period, Stifel’s net revenue climbed 26%, pretax income surged 45% and its margin jumped by 480 basis points. The higher revenue stemmed from increasing equity values, an inflow of advisory assets, larger banking lending and rising client transactions during the quarter, according to Stifel.
- Headcount and recruiting: Stifel’s wealth unit added a net 50 advisors year-over-year in the second quarter to reach 2,282, including 92 independent contractors. The uptick of 2.2% from the same time in 2020 offset the net loss of two independent reps. Just as in the case of the lower recruiting disclosed for the second quarter
by rival firm Ameriprise , Kruszewski attributed the smaller incoming group to the process of reopening from the coronavirus. He mentioned another factor as well. “The gross number of recruits is down compared to last year as the return of advisors to their offices has slowed recruiting,” he said in his prepared remarks,according to a transcript by Seeking Alpha. “In addition, there is increased competition from larger firms offering what is, in our opinion, very high transition packages. That said, as our inflation experts in Washington like to say, we view this situation as transitory as our pipeline remains robust. Additionally, we definitely are seeing activity within Stifel Independent Advisors and look forward to recruiting picking up in this channel.” - Client assets: Client assets rose 31% year-over-year to a record $402.4 billion in the quarter, and fee-based assets among the Private Client Group advisors grew by 42% to $129.6 billion. Asset management and service fee revenue for the Private Client Group expanded by 52% from the year-ago period to $249.3 million. Bank loans, net interest income and brokerage revenue increased as well, reflecting the higher numbers of client transactions in the recently completed quarter.
- Independent push: In March, the firm
changed its IBD’s name from Century Securities and hired former Wells Fargo Advisors Financial Network executive Alex David to be CEO of the independent arm. In addition to noting that recruiting is often cyclical and pointing out that fewer employee branches are adding advisors amid the reopening and the larger offers by competitors, Kruszewski cited the independent channel as being promising for the firm’s outreach. “We're starting from, frankly, a dead stop. We weren't recruiting in that area,” Kruszewski said. “We've had this business for almost three decades, and we have all the tools and the foundation to build this business. And I would say that we expect to show increased recruiting as this channel picks up and my initial feedback is very positive on this, not only the platform, but our competitive positioning.” - Analyst note: Following the earnings, JMP Securities boosted its estimate for the parent firm’s earnings per share in 2021 by 10% to $6.37 “to reflect the stronger 2Q21 results and management’s bullish outlook for 2H21,” analyst Devin Ryan wrote in a note. Stifel remains confident in its recruiting, Ryan wrote. “While management conveyed a desire to remain prudent in a somewhat expensive market, we believe it is highly confident in the value proposition of the platform in the employee market, which, coupled with a renewed focus on independent FAs (we view positively), will lead to robust recruitment activity overall.”
