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Raymond James Tops Estimates as Private Client Sales Rise 8%

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Raymond James (RJF) beat estimates with an 8% jump in net income in the quarter ending Dec. 31, as private client results improved year over year at a similar pace.

The company had earnings of $126.3 million, or $0.87 per share, up from $116.6 million, or $0.81 per share, a year earlier. Net revenue was $1.25 billion, an increase of 6% over the year-ago period.

“Despite a challenging market environment for our Capital Markets segment, we generated satisfactory financial results this quarter,” said CEO Paul Reilly, in a statement. “More importantly, we continued to deliver on our long-term growth objectives, adding 71 financial advisors during the quarter while also achieving new quarterly records for client assets under administration, financial assets under management and net loans.”

Net sales for the Private Client Group were $845.2 million, a jump of 8% from last year, but a 2% drop from the prior quarter. Pre-tax net income for the unit totaled $92.7 million, a 30% improvement for a year ago and a 7% decline from the earlier period.

Financial advisors’ securities commissions and fees were $706.7 million, up 7% from last year and down 3% for the quarter ending Sept. 30. The decline was “mostly attributable to a onetime mutual fund commission adjustment,” according to the firm.

Private client assets under administration grew to $459.1 billion from $450.6 billion in the prior period and $422.9 billion last year, “driven by market appreciation and very strong financial advisor retention and recruiting results,” the company notes.

Assets in fee-based accounts grew 4% from the earlier quarter to $173.9 billion; they now represent 38% of total client assets.

“Asset growth in fee-based accounts should provide a tailwind for the segment’s revenues in the March quarter, as most of these accounts are billed based on asset balances at the beginning of each quarter,” Raymond James explained in a press release.

Advisor Headcount

The number of financial advisors in different channels now stands at 6,336, a jump from 6,265 from Sept. 30 and 6,178 a year ago. (These figures include reps in Canada and the United Kingdom.)

The independent channel, Raymond James Financial Services, includes 3,369 affiliated reps, up 50 from the prior quarter. In the employee channel, Raymond James & Associates, there are 2,491 FAs, a jump of 29 from Sept. 30.

“We are very pleased with the net addition of financial advisors during the quarter, which is a testament to our firm’s ability to attract and retain advisors in all of our affiliation platforms,” explained Reilly. “Additionally, average advisor productivity continues to improve as we remain focused on our culture while investing in technology and solutions to help them strengthen and expand their client relationships.”

Based on the client asset figures and advisor numbers reported Wednesday, the average level of assets per advisor is $72.5 million, and the average level of securities fees and commissions is $111,500 per rep for the quarter (not annualized). 

— Check out Morgan Stanley Misses Earnings Target; Gorman Highlights Wealth Results on ThinkAdvisor.