For many broker-dealer firms, 2008 is a year to forget. But that's not the case for Raymond James.
"This will probably be the most successful recruiting year ever in terms of the momentum and pace we've seen in the candidates meeting with us in all channels," says Raymond James Financial President and COO Chet Helck. "These candidates are coming to us from lots of firms, which have had a change of ownership or some serious issues or news affecting them, like a bailout."
Helck, a West Virginia native, uses a neutral, almost humble tone when describing how the firm has been able to successfully weather the storms of 2008. "It feels good that we've been able to distinguish ourselves in a period that has been so difficult.
And we have deployed a lot of discipline, not a lot of leverage," he says. That stability is attractive to advisors with other firms, Helck points out. "Financial advisors have been affected and are looking around at their choices. We are busy and responding more than ever and are confident that some number will make the decision to come over to us."
St. Petersburg, Fla.-based Raymond James says it now has about 5,000-plus advisors and $187 billion in assets under management.
In September, ex-UBS advisors and vice presidents Nadine Wilkes and Paul Weinstein of Fort Myers, Fla., joined the independent arm of Raymond James (Raymond James Financial Services) as managing directors. They have some $400 million in assets and $2 million in yearly production.
And in October, a former Merrill Lynch team opened a new private wealth management office in Novi, Mich., as part of the Raymond James employee channel (Raymond James & Associates): Charles L. Nemes and Timothy P. Rush focus on high-net-worth clients, and while at Merrill, they had some $530 million in AUM.
Scott Curtis, senior vice president for RJA's private client group, is helping to make these moves happen. "We are having success in our discussions with advisors from all firms, as these advisors have discussions with clients regarding the financial stability of their organizations."
And this makes it a very busy time for Raymond James. "We have received more inbound inquiries from successful advisors at other broker-dealers than we've seen in a long time," explains Curtis.
He acknowledges that, of course, not all of them will switch firms. "Many, many more stay put than leave in any given year. Still, I reassure all of them that those advisors who come here, stay here. Our retention is second to none, and that says something about the organization."
Through the early fall, recruiting in the independent channel was up close to 50 percent year over year, says Bill Van Law, senior vice president and national director of business development for RJFS. "Advisors are frustrated with market issues and issues at their firms," he explains. "They are looking for permanent resolution of the issues."
At an August meeting in Washington, D.C., 56 prospective FAs attended. They had a total of $37 million in historic production, and average production of $657,000. Roughly 70 percent were with wirehouse firms, including Wachovia-A.G. Edwards.
And even with some wirehouse firms paying 120 percent up front and above in signing bonuses, Helck is confident that Raymond James can keep up in terms of attracting advisors thanks to its solid performance. "These payments are coming down in all channels and throughout the industry," he says, "as firms lose money. And we are not losing money."
Does that mean the firm is ready and able to make acquisitions?
"We're always open to good strategic opportunities for things that are a good fit," Helck explains. "But we are not principally a firm that grows through acquisitions. We historically are an organic- growth company. Still, we do make acquisitions from time to time."
Current valuations make "the likelihood of finding a good fit at a good price" greater, he adds. "And there are lots of firms looking to sell their businesses."
The broad picture, though, is more sanguine. Borrowing is tough, and issuing stock isn't attractive either. "It's a lousy time to do this," Helck concludes.
Deals are more likely to take place when the markets' liquidity issues are resolved, which could take a few quarters. "A smaller deal, in the short term, could be OK with retained earnings and other sources, like small borrowing."
The focus of such a deal would most likely be asset management. "That could be done to fill out our menu," according to Helck. "We have some good managed-money programs, but we don't have all the disciplines covered." The firm would also look at smaller broker-dealers or boutique firms in say, public finance.
Helck remains firm but cautious about the short-term prospects of M&A. "Today we and other financial companies are up [on the stock market], but who knows about tomorrow."
Janet Levaux, MBA/MA, is the managing editor of Research; reach her at firstname.lastname@example.org.