October 21, 2010

Raymond James Tops Forecasts as Advisor Growth Slows

Total advisor force falls to 5,334 in the quarter, down 41 from last year

Raymond James' quarterly profit rose 61% as its advisor force shrank. Raymond James' quarterly profit rose 61% as its advisor force shrank.

Raymond James Financial said late Wednesday that its net income rose 61% in the fiscal fourth quarter to $69 million, or $0.55 a share vs. about $43 million, or $0.35 a share in the same year-ago period. Net sales were $747.9 million, 12% than 2009’s fiscal fourth quarter.

For the full fiscal year, net income $228.3 million, or $1.83 per share, a jump of 49% over fiscal 2009, as sales reached $2.92 billion. These results topped analysts’ expectations for both quarterly and annual earnings and sales.

“This year’s results are especially gratifying because they reflect our investment in people in anticipation of a recovery, combined with a strict cost control mandate during the tsunami in our financial system,” stated CEO Paul Reilly in a statement.

“We successfully recruited financial advisors, investment bankers, public finance professionals, institutional sales people and traders, while much of the financial services industry was in shock. Consequently, during the quarter we generated record net revenues of $748 million and outstanding net earnings of $69 million,” Reilly explained.

While Raymond James’ advisor force remains above 5,300 worldwide, it did slip by 51 advisors to 5,334 as of September 30, 2010, vs. 5,375 last year. On a quarterly basis, though, the company was down only 3 advisors from June 30.

The company’s recruiting pace is about a third of last year's, Chairman Tom James said during a conference call. This is due partly to retention plans that prevent many Wall Street advisors from leaving their firms, as well as Raymond James’ objective not to “break the bank” to lure recruits.

"[W]e have continued to recruit good broker, but the rate of recruitment is probably in the 35% ratio to last year’s activity levels because of all these high retention payments that were made during early this year and late last year that have really slow down the pace somewhat," said James. 

Private Client Group

Average financial advisor productivity drove a 17.5% jump in PCG commission and fee income, as client assets attained a new record level of $249 billion, of which $30 billion are managed by the firm’s asset management subsidiaries. 

PCG sales, which represent about two-thirds of the company’s total revenues, were up 17% for the most-recent quarter to $493 million. They increased 22% for the full fiscal year to $1.9 billion.

Recently, company executives said they would like to see advisors meet or beat a 15% annual growth target for the next few years. 

PCG pre-tax income rose 113% for the quarter to $47.2 million. For the 12 months, it increased 89% to $160.5 million.

On average, and across the employee, independent and other channels, Raymond James advisors each have about $46.7 million in assets under management and yearly fees and commissions of $356,205.

Throughout the company, securities fees and commissions grew 19% in the current fiscal year to $1.95 billion , as investment advisory fees grew 18% to $174 million and financial-services fees ticked up 25% to $158 million.

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