Announcing the St. Petersburg, Florida-based firm's annual and fourth-quarter earnings on Thursday, Raymond James Financial executives said the essentially flat headcount figure obscures an important consideration. Many of the advisors who left last year were lost to retirement. And succession planning helped to ensure at least some of the assets they were managing stayed around.
What's more, Raymond James has seen success in
Paul Reilly, the chairman and CEO of Raymond James, said in an earnings call on Thursday that he's heard it predicted often in his 15 years on the job that industry recruiting was dying. Instead, he said, "it's just picked up."
Retirements were also supposed to eat into headcount until "there would be no advisors left," Reilly said. Rather than that, Reilly said, "we see teams in their 40s that have bigger books than we've ever seen before."
"During the quarter, we recruited to our domestic independent contractor and employee channels, financial advisors with approximately $60 million of trailing 12 (month) production and $13 billion of client assets at their previous firms," Reilly said.
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The additions helped the firm bring in nearly $21.5 billion in net new assets for the fourth quarter in its Domestic Private Client Group, its wealth management unit. That in turn contributed to $1.37 trillion in assets under administration Raymond James could claim for the entire year, a record for the firm.
Reilly said on the earnings call that Raymond James' biggest competitors in the recruiting game now are so-called RIA rollups — aggregator firms that buy up registered investment advisors to achieve economies of scale.
Those types of firms, Reilly said, are now offering wealth management teams "prices that we can't quite figure out."
For more highlights from Raymond James' earnings call, scroll down. To read about its third quarter,
Financials
The firm's Private Client Group reported $439 million in pretax income in the fourth quarter, a figure essentially unchanged year over year. That came on $2.2 billion in revenue, a figure up 8% from the fourth quarter of 2022.
Reilly said the results were driven by increased returns from asset management fees. Assets under management in Raymond James' fee-based accounts were up 18% year over year to $746.6 billion.
Financial advisors
Raymond James' gain of 11 advisors brought its total headcount to 8,710 at the year's end. Of those, 3,718 were direct employees of the firm and 4,992 were independent contractors.
Client assets
The $1.37 trillion in assets Raymond James had under administration consisted mostly of $1.31 trillion in its Private Client Group. The figure for that wealth management unit was up 18% year over year.
Besides the $746.6 billion in its fee-based accounts, the firm had $215 billion in financial assets under management, a figure also up 18% year over year.
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Expenses
Raymond James' noninterest expenses came to $2.4 billion, up 12% year over year. Much of the increase came from the firm's $1.9 billion in expenses related to compensation, commissions and benefits, a figure up from $1.7 billion in the fourth quarter of 2022.
Advisors in Raymond James' Private Client Group received nearly $1.2 billion compensation and benefits, up 11% year over year. The firm's administrative compensation and benefits also rose 11% to $379 million.
Remark
Asked about the use of transition assistance and recruiting loans to bring advisory teams to Raymond James, Reilly said the firm has purposely stayed away from trying to outprice its competitors.
"We've always said it's part of self-selection, that we want people to come because they believe it's the right place, not for the highest check," he said. "Now, having said that, in the last few years, transition assistance has gone up. So, we've had to make adjustments. But I mean, we're rarely ever the highest offer. I mean, we rarely match the highest offer, and we still have a very good batting average."
