Despite a tough market in August, Raymond James (RJF) executives said Thursday that its two broker-dealers are set for a strong fiscal-year performance for the period ending Sept. 30. The executives discussed these and other developments, like a potential bid for Morgan Keegan, during the firm’s annual Women’s Symposium being held this week in St. Petersburg, Fla.
Revenue at RJFS is up an estimated 12% year over year, according to Dick Averitt, head of the independent channel, and could be roughly $1.17 billion for the year. Average yearly production per advisor in this part of the private-client group has risen roughly 15% to $360,000, Averitt said.
In the employee channel, assets have at a compound annual growth rate of about 16% in the past 10 years and stand at about $90 billion, according to Dennis Zank (left), who heads the division. Average fees and commissions per advisor are $538,000 with overall revenue for the year totaling an estimated $715 million.
“As a company, we have a target of hitting a 15% growth target,” said COO Chet Helck speaking at the conference. “One way we do this is by adding productive capacity and another way retention, which is a problem for our industry as you see some firms hemorrhaging people.” An alternative means for growth, he adds, is acquisitions.
In an interview with AdvisorOne, Helck said the firm's operations overlap with those of Morgan Keegan, in the fixed-income arena. "And we have to account for that," he said, implying that Raymond James wouldn't likely move to acquire the broker-dealer, which is now for sale.
Attrition rates at some other broker-dealers, Helck (left) says, can be as high as 15% to 20%. “Replacement is not happening, and they are shrinking.” This should help the firm continue to recruit advisors, he adds.
Overall, the firm's recruiting momentum is looking good, after a brief slowdown, due to attractive retention bonuses, the Raymond James executives say. At the peak of the crisis, they stress, recruiting was “off the charts.”
The strength of the firm’s recruiting efforts over the past few years, Zank says, is translating into higher production, assets and overall results today.
In the coming year, he anticipates recruiting 120 advisors with $60 million in production for the employee channel. During the heyday of the crisis, “We peaked at north of 200,” he explained.
For this fiscal year ending Sept. 30, RJA expected to attract advisors with $51 million in yearly fees and commissions and actually hired some 110 wirehouse and other reps with about $54 million in production.
On Wednesday, the company shared its results for August. Fees and commissions ticked up 6% from July and 20% year over year for the month as clients tinkered with the portfolios. Overall private-client assets under administration rose 14% year over year but fell 2% from July to roughly $270 billion.
“The market in August can be summarized by high volatility and uncertainty,” said CEO Paul Reilly in a press release. “Despite the S&P 500 recording a decline of 5.7%, operating results were steadfast overall.”
“August and the beginning of September have proven to be difficult months for the market due to the slowing of the U.S. economy and concerns over European Bank solvency issues,” Reilly said. “Despite the turmoil, the Raymond James model continues to demonstrate its ability to perform. We continue to recruit in all of our business lines and take advantage of opportunities while other institutions cut their workforces.”