Ahead of his firm’s fourth-quarter earnings release on Oct. 24, Raymond James Financial (RJF) Chief Operating Officer Dennis Zank said Thursday that the firm’s year-end results should be “pretty good,” and he reiterated that the numbers should serve as an indicator of its traditionally conservative business model.
Zank (left) positioned Raymond James as the antidote to out-of-control Wall Street growth for growth’s sake before an audience of several hundred at the 2012 Raymond James Women’s Symposium in St. Pete Beach, Fla.
“We’re down here in little old St. Pete, the financial hub of the universe. We’re not smart like those big guys on Wall Street,” Zank quipped – before listing the reasons why Raymond James has outlasted much bigger firms. “If you don’t want to work for a wirehouse today, Raymond James has to be on your list.”
The reasons for his stance, Zank said, include the company’s focus on sustainable and organic growth. While many financial services firms went out of business after the 2008 crash, Zank noted, Raymond James earned $1.29 per share in 2009. As for 2012, he characterized the as-yet-to-be-released fiscal year-end results as “pretty darned good,” while acknowledging that the last five years of volatility have been tough on the financial industry.
Zank expressed frustration with stock analysts covering RJF who “get upset if we don’t generate $50 million in pre-tax profits in a single month.”
Noting that Thursday was his 34th anniversary of working at Raymond James, he put those high expectations into perspective by recalling that the company’s revenues totaled only $15 million in 1978. (Raymond James was founded in 1962 and went public in 1983.) Morningstar’s performance report on RJF shows that the firm’s market cap has grown to $5.06 billion year to date from $2.06 billion in 2008.
The integration of Morgan Keegan, which Raymond James acquired earlier this year, represents what would normally take RJF 10 years to achieve through recruiting, Zank said.
RJF’s earnings dropped in the fiscal second quarter of 2012 due to the acquisition of Morgan Keegan. However, Raymond James Financial has more cash on hand than it did before it bought Morgan Keegan, Zank said, asserting that its conservative balance sheet reflects the firm’s organic growth.
“We do not grow this firm through acquisitions,” he said. “If we have a really great year, we hire 150 advisors from competitor firms,” for example, in the employee channel, Raymond James & Associates.
Zank said Raymond James intends to maintain a pace that keeps the company’s culture in line with its mission, which is to put clients first, whether those clients are end clients or advisors themselves.
“At the end of the day, it’s not about how big Raymond James is going to be,” he said. “We are not a firm of chest thumpers, out there beating the drum about how if we can’t get to 15,000 advisors we’re not going to be happy. We want to grow at a pace where people still find it attractive to stay with us.”
As long as Raymond James continues to turn in a solid performance, he said, “there’s no pressure on us to hear the siren song of being part of a big organization.”
Pointing to top executives including Raymond James Financial Chief Executive Paul Reilly and President Scott Curtis along with Global Private Client Group CEO Chet Helck, Zank said: “Do you think any of us want to work for one of these big firms? Not a chance.”
Raymond James has more than 6,000 advisors in the United States, Canada and the United Kingdom.
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