Stifel Financial Chairman and CEO Ron Kruszewski says the firm remains open to further acquisitions and is upbeat about its recruiting momentum due to lower costs.
The firm — which has 2,282 financial advisors with over $235 billion in assets — reported Tuesday that it more than doubled net income in the fourth quarter to $24.5 million, or $0.31 per share, from $11.2 million, or $0.14 per share, a year earlier. Sales rose 14% to $661.4 million.
Speaking with equity analysts about the results for its offices in St. Louis, Kruszewski said the firm “will continue to look at acquisition opportuni[ties].”
“My message is that we will always look at good deals,” he explained, adding that Stifel is currently focused on “taking advantaging of the market conditions and improving and consolidating what we’ve done …”
When it comes to mergers and acquisitions, Stifel has been on a tear.
It wrapped up its purchase of Indianapolis-based City Financial in mid-January. City has 40 advisors with $4 billion in assets. In 2016, Stifel bought Eaton Partners, which works with institutional investors.
These deals came on the heels of M&As that included Sterne Agee and Barclays Wealth Americas. With Barclays, for instance, some 180 reps with about $56 billion came on board.
Stifel’s executive insists it is not in a hurry to strike another deal.
“We think we have scale here that’s first, and acquisitions are, will always be there,” Kruszewski explain during a conference call. First, it is focused “on getting what we’ve built to be, to generate the earnings, which I think it can… We still want to do good deals if ... they come up.
On the one hand, there is a plenty “of optimism right now in the marketplace also, which causes the valuations to be what I would say is higher than what our historical appetites for valuation [are],” the CEO said. “So it’s a good time to focus on consolidating what we built.”
The firm says that at 2,282 FAs, it is up two advisors from the prior quarter and down about 18 from a year ago. And it sees growth ahead.
“There’s a lot of things going on the recruiting front that I’m optimistic about,” Kruszewski said. The “elevated recruitment costs” of recent years may be “coming into what we would consider more reasonable numbers, which is where we are.”
If these costs do come down, Stifel is “more competitive [in] what we do, because we’ve not been at certainly the big firm levels of recruitment packages if you will.”
As for the Labor Department’s new fiduciary rule, the executive believes it will be delayed.
“But I do think it really has focused us on models and how we’re positioning our advisor business. And so we’ve been focusing ... on productivity, and you’ve seen muted increases in our advisor count,” Kruszewski explained. Thanks to its recent spate of M&As, Stifel has “scale” and plans to turn scale “into margins going forward.”
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