Raymond James Group Closes In on LPL Asset Levels

Raymond James may not be the biggest independent broker-dealer in the country, but it's trying to close the gap -- at least on some fronts.

LPL Financial, the perennial No. 1 on Financial Planning's FP50 ranking, has more than twice the number of advisors as Raymond James’ Private Client Group. However, Raymond James had almost as many assets under administration at the end of last year, with $423 billion versus the $438 billion that LPL reported last week.

That’s according to figures released during Raymond James Financial’s annual shareholder meeting Thursday. Raymond James landed in the No. 3 spot on last year's FP50, which ranks firms based on revenue.

REVENUES RISE

A higher percentage of fee-based income -- which derives from that growing asset base -- provides an increasingly stable base of income for the firm, insulating it somewhat from market shocks, said Raymond James Financial Services president Scott Curtis.

For fiscal year 2013, Raymond James Private Client Group, which includes both Raymond James Financial Services and Raymond James & Associates as well as Canadian and U.K. units, brought in almost $2.9 billion in revenues -- up from almost $2.5 billion in fiscal year 2012 but still well below LPL's reported $4.1 billion.

The Private Client Group also broke down fee and commission revenues by source for the first quarter of fiscal year 2014: 43.7% from fee-based accounts, 25% from mutual funds, 15.1% from equities and fixed income, 12.9% from insurance and annuities and 3.3% from syndicate commissions derived from the distribution of underwritings.

'REGRETTABLE' DROP IN ADVISORS

A decline in the number of advisors -- which the company described as “regrettable” -- was one blot on the performance last year of the Private Client Group results. The group saw the total number of its advisors drop to 6,178 in the first quarter of this fiscal year from 6,210 in 2012, the year of its merger with Morgan Keegan.

The drop was due mainly to the departure of low-performing former Morgan Keegan advisors who Raymond James did not encourage to remain with the firm, RJA president Tash Elwyn said during the meeting. “We have never as a firm ... been focused solely on growing head count,” Elwyn said.

Instead, Raymond James has focused on metrics such as increasing performance per advisor, he said. The number of RJFS advisors who generate more than $1 million in revenues annually rose from 66 in 2009 to 222 in the first quarter of fiscal 2014, the company reported. (The company's fiscal year ends in September.) RJA counted 215 $1 million-producing advisors in the first quarter, up from 47 in 2009, the company said.

Overall, the Private Client Group reported a compound annualized growth rate of 10% for commission and fee revenues for 2009-2013.

Advisors and clients should expect to see aggressive innovation at the firm, especially when it comes to technology, said Tom James, executive chairman of the parent company -- but argued that it won’t come at the expense of quality.

“We stubbornly adhere to our values at this firm,” James said. “We are going to be conservative in the way we manage this company.”

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