Raymond James reported a 19% year-over-year jump in adjusted profits of $614 million, or $2.94 per share, and a 17% uptick in revenues to $3.5 billion for the quarter ending Dec. 31. Both figures, released late Wednesday, topped equity analysts’ estimates.
Total assets under administration for the Private Client Group rose 14% from a year ago to $1.49 trillion, but net new assets for U.S. advisors in the past quarter declined 35% to $14 billion. The firm also chose not to release its latest advisor headcount, which was 8,787 as of Sept. 30.
“We believe the more meaningful metrics for investors to monitor are total client assets and domestic PCG net new assets," said a spokesperson, who added that the firm will disclose its advisor headcount when reporting its fiscal year results in the fall. "Those figures will give you the clearest view into the health and growth of the business.”
CEO Paul Reilly, who will step down as the firm’s leader Feb. 20, said that Raymond James' net new assets are growing at “an annualized growth rate of 4.0%, a solid result despite the impact of the previously announced departure of one large independent branch on the end-of-period asset levels.”
(Reilly is set to stay on as executive chair next month, when President Paul Shoukry becomes CEO.)
The firm said its Private Client Group's revenue grew 14% from last year to $2.55 billion in the latest quarter, and its pretax profit was $462 million, up 5% from a year ago.
Does Headcount Data Matter?
Industry watchers who spoke to ThinkAdvisor explained that they don’t see a downside to Raymond James' new approach to reporting headcount.
“If there’s a competitive advantage to using it and leveraging it, then it’s a good idea. Otherwise, it’s not needed,” said Andy Tasnady, head of the compensation consultancy Tasnady Associates.
In contrast to Raymond James, LPL Financial “does need to bang the drum and say [we're] where everyone is going,” Tasnady explained. “If this is not your strategy or you're not delivering similar growth numbers, why would you want to do it?”
(LPL Financial reported Thursday that its headcount was 28,888 as of Dec. 31, up 6,228 from a year ago — with about 2,200 advisors being added via the firm's purchase of Atria Wealth Solutions and some 2,800 advisors through its deal with Prudential Advisors.)
Bank of America-Merrill, Morgan Stanley and Wells Fargo do not release quarterly or annual advisor headcount figures, while UBS, Ameriprise Financial and Stifel Financial do.
“Firms are no longer fixated on advisor headcount per se,” said Mark Elzweig, head of the Mark Elzweig Co., an executive recruiting firm. “They’re focused on growing their assets and revenues through quality advisor hires and retention. Those broader measures are a more accurate reflection of the strength of their business.”
In fact, many advisory firms “prefer fewer but higher-performing advisors who can successfully utilize their resources to grow,” Elzweig added. “Headcount figures alone just aren't as relevant these days.”
According to Tasnady, it may make more sense for some firms to emphasize that the growth in the number and size of client accounts drives profit gains.
"If you can deliver revenue and asset growth without net recruiting, you can argue that this approach is more profitable," he said. "Recruiting is expensive.”
Pictured: Paul Reilly
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