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Raymond James Touts Success of Its Beefed-Up Recruiting Packages

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What You Need to Know

  • Raymond James ended the second quarter with a total of 8,327 advisors.
  • Advisor headcount grew 2% from a year ago and 1% from the end of the first quarter.
  • Recruitment has picked up since the firm enhanced its recruitment packages to better compete with rivals.

Raymond James saw its overall advisor headcount increase by 94 advisors, or 1%, in the second quarter to 8,327 from the prior quarter after the firm improved its recruitment packages to be more competitive against rivals, according to Chairman and CEO Paul Reilly.

The record number of advisors at the end of Q2 was up by 179 over Q2 last year, representing a 2% increase, the company said.

“This represents a solid improvement over the prior quarter and reflects our strong retention and the continued strength of our recruiting pipelines across all of our affiliation options,” Reilly told analysts on an earnings call on Thursday.

“Our recruiting momentum in the independent side of the business continues to be strong,” he said. Meanwhile, “on the employee side, as we mentioned last quarter, in response to the increased recruiting packages by competitors, we enhanced our recruiting packages to be more competitive while also ensuring attractive returns to our shareholders,” he said.

The enhancements that Raymond James made to its recruiting packages on the employee side of the business have been “very well received by prospective advisors and that pipeline has recovered nicely,” he told analysts.

However, “while recruiting momentum in this business has increased greatly, employee advisor count is down slightly from the prior quarter, as improved recruiting was offset by a higher number of retirements where assets are typically retained at the firm, as well as the smaller training class,” he explained.

The number of advisors scheduled to join Raymond James, however, is “up significantly, not only in our employee channel, but across all of our affiliation options,” he told analysts.

Raymond James did not break out the number of advisors in its separate affiliation options.

More Details

Raymond James ended the quarter with record total client assets under administration of $1.09 trillion, up 40% from a year ago and up 6% from Q1.

“We also achieved records” for Private Client Group assets and fee-based accounts of $568 billion, a 48% year-over-year and 7% sequential improvement, which Reilly said will “benefit the third quarter,” and financial assets under management of $178.2 billion, up 39% from a year ago and up 5% from Q1.

Raymond James generated domestic PCG net new assets of almost $54 billion over the four quarters ended March 31, representing more than 7.5% of domestic PCG assets at the start of the period, Reilly noted, adding: “This trend has accelerated during the first half of the fiscal year, closer to a 9% annualized rate. We are very pleased with our consistent organic growth especially, given disruption associated with the COVID-19 pandemic during the year.”

The firm is “well positioned entering the third fiscal quarter with records for all of our key business metrics, strong financial advisor recruiting activity and robust pipelines for investment banking,” he told analysts.

In PCG, “while the recruiting environment is competitive and we face some challenges in a largely virtual environment, our financial advisor recruiting pipeline is strong across all of our affiliation options and the segment is going to benefit by starting the fiscal third quarter with a 7% sequential increase in assets and fee-based accounts,” he said.

Tech as a Differentiator From Rivals

Meanwhile, “prospective advisors across all of our affiliation options have continued to be attracted by our leading technology solutions,” he said. “We have been known for our industry-leading position in mobile advisor tools and continue to make our technology platform more robust.”

Raymond James has also “created easy-to-use systems that put all the information advisors need right at their fingertips, so they can easily get the information they need to service their clients and have more time taking care of their clients in growing their business,” he explained.

“As we continue to invest in our technology, we’re extremely excited about the new enhancements which will be coming out shortly,” he told analysts.

During the Q&A, he told analysts it has been “many years now since we’ve been completely mobile where advisors could do almost everything from their iPhones that they could do from their desktop, and making sure that our advisors had all the latest planning tools,” and the company was “completely mobile very, very early on.”

The company’s tech offerings have “been one of the impetuses of our strong recruiting, and one of the trade-offs people have made for the packages” offered when opting to join Raymond James, he said. “It’s the culture and the tools and the support from our marketing department and all the other things we do to help advisors build their businesses.”

Raymond James also continues to “actively pursue acquisitions, but we will still be deliberate, and only pursue transactions that are a great cultural and strategic fit and at prices that we can deliver attractive returns to our shareholders,” he went on to say. “We have been even more proactive in sourcing and evaluating opportunities.”