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Raymond James nears finish line on wooing 'record' number of big advisor teams

By Victoria Zhuang
October 26, 2023 5:20 PM
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Independent broker-dealer heavyweight Raymond James is teasing the prospect of a big bump in its advisor headcount next quarter, as it moves on from another flat quarter on that front. 

"Our advisor recruiting activity has picked up significantly over the last two months, with record numbers of large teams in the pipeline," Paul Reilly, the CEO and chairman of Raymond James, said in an earnings call Wednesday. 

Reilly said the backlog had built up especially over the past two months, and beyond headcount considerations, the assets involved were significant. "The number of teams that are generating $10 million to $20 million of revenue, we've never had so many come through at once."  

READ MORE: How a $2.6B team moved its entire AUM to Raymond James in 45 days

While not all the moves had been confirmed yet, Reilly said, the firm was nearing commitment with several teams of that size. "We've never had this many at one time, where we're down to the final kind of negotiating line … as well as people that have committed, we haven't announced." One such recent example was a bank-based team of 27 advisors with $3 billion in AUM, he said — apparently referring to the recent addition of Columbia Wealth Advisors, which joined the firm in October from rival IBD Cetera.

The St. Petersburg, Florida-based regional firm had plenty of other things to celebrate in its third-quarter earnings. It boasted both record profits and record quarterly revenue, which were largely buoyed by a record quarter in its wealth management unit Private Client Group. 

Firmwide revenue was $3.05 billion for the quarter and net income available to common shareholders was $432 million, according to an earnings press release Wednesday. 

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Despite the strong results, Raymond James missed expectations with earnings per diluted share of $2.02, which was 11% below the analyst consensus of $2.28. But the company's stock rose 5% in trading on Thursday, suggesting investors bought into its narrative of growth. 

"Overall, we were pleased with the result, and believe the company continues to perform well in a complicated operating environment, which speaks to the strength of the platform, and also the numerous natural hedges that exist," JMP Securities analysts wrote in a note on Thursday commenting on the results. 

To see the main takeaways from Raymond James' third-quarter earnings, scroll down the slideshow. For coverage of the firm's second-quarter earnings, click here. For a look at the results from the first quarter, click here. 

Financials

Within the Private Client Group, the firm's wealth management unit, profits of $477 million rose 29% year over year, according to an earnings supplement.

Revenue in PCG of $2.29 billion grew 13% over the past year. In particular, revenue from total account and service fees in the unit grew a whopping 24% during that same time.  

Financial advisors

Advisor headcount remained virtually flat over the past quarter and past year, at 8,712 — slightly up from 8,704 last quarter and 8,681 a year ago. 

Of these, 3,693 were employee advisors, whose ranks grew 2% over the past year's 3,638, and 1% over the past quarter's 3,654. 

The majority of the firm's advisors, 5,019, were independent contractors. The firm lost a net 31 of these advisors in the third quarter, bringing it slightly down from 5,050.

Reilly attributed recent attrition largely to the departure of a big group of advisors, which he didn't name. "From the platform, we kept 60% of advisors, 40% left. And it cost us $4.6 billion in assets and 60 advisors," he said. 

Client assets

Total client assets at the firm of $1.3 trillion rose 15% year over year. The domestic PCG unit brought in $14.2 billion of net new assets in the quarter.

The firm reported total financial assets under management of $196.4 billion, which was up 13% over the past year. 

Expenses

Firmwide noninterest expenses totaled $2.5 billion, up 11% over the past year. The bulk of it was compensation, commissions and benefits, totaling $1.9 billion, which rose 8% over the past year. 

Within PCG, financial advisor compensation and benefits totaled $1.2 billion for the quarter, a growth of 9% year over year. Administrative compensation and benefits — including salaries of support staff to advisors — rose 8% over the past year to $348 million. 

"We are very generous in passing on the financial success with associates in the form of higher raises last year," said Paul Shoukry, the chief financial officer at Raymond James, on the call.

Remark

Asked about whether the firm was interested in further acquisitions, Reilly said it was open to opportunities, but not for buying banks. "We have no plans to acquire another bank. In fact, it took us five years of looking to acquire TriState, which was the perfect fit to joining the family." 
Victoria Zhuang
Reporter, Financial Planning
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