After
In an earnings call with analysts after the firm
“As people look forward and think at some point they might want to be independent, that optionality certainly helps when recruiting on the employee side,” he said,
He added that, based on the firm’s track record in building up its businesses, the expansion of the independent arm reminded him of when the St. Louis-based firm hired its first advisor in 1997. At the end of the third quarter, the firm had more than 2,300 advisors who generated record revenue and client assets. “That's what you're going to see in the independent channel,” Kruszewski said.
Recruiting: For now, the small headcount of independent advisors ticked down year-over-year by a net four representatives to 90. Overall, though, the firm recruited 46 financial advisors, including 41 experienced brokers, with combined trailing 12-month production of $35 million. In the year-ago period, Stifel added 45 advisors with combined production of $38 million. The firm’s headcount expanded by a net 31 advisors, or 2%, to 2,302 across 447 branches. Its first independent team added since the rebranding, Shoop Wealth Management, brought three advisors based in Westlake, Ohio, who had managed $193 million in client assets with their prior firm, Westminster Financial Securities. “I am excited to partner with an industry leader in investment research,” founder Ryan Shoop said in a statement. “I believe that Stifel will allow me to serve my clients more efficiently, more cost effectively and with more sophisticated technology.”
Client assets: Total client assets in the global wealth management unit jumped 25% year-over-year to $407.0 billion, while fee-based assets surged 31% to $150.5 billion. For the Private Client Group, the part of the global wealth management division with the advisors, advisory assets under management climbed 32% to $130.9 billion. Its asset management and service fee revenue soared 40% to $267.3 million based on rising equity values and an in-flow of client assets. In addition, loans through the wealth management unit rose 29% to $3.6 billion. Wealth management clients in particular drove higher volumes of residential and securities-backed loans in the quarter, Chief Financial Officer James Marischen told analysts.
Bottom line: For the quarter, the wealth management unit earned pretax income of $232.1 million on net revenue of $655.5 million, a margin of 35.4%. Growth in interest-earning assets, higher sales among clients and recruiting drove the record revenue, according to Kruszewski. Income jumped 30% year-over-year, revenue was up by 24% and the margin expanded by 140 basis points. At the same time, compensation and benefits expenses increased 23% from the year-ago period to $342.8 million due to the higher business.
Outlook: In a note after the earnings call, analyst Devin Ryan of JMP Securities maintained the rating of “market outperform” for Stifel’s stock and hiked up its earning estimates and target prices. He cited the firm’s recruiting and its pending