Raymond James Financial Inc. will continue aggressively recruiting financial advisers to keep its assets above water, an executive said.
The St. Petersburg, Fla., company increased its worldwide adviser count to 5,333 at June 30, up 8.1% from a year earlier. In the first three quarters of its fiscal year — from October through June — Raymond James had a 43% increase in recruited adviser production over a year earlier.
Chet Helck, the chief operating officer of its private client group, said assets under management at Raymond James have declined at "less than half" of the global rate in the past year because the assets brought by the new advisers have helped offset losses. "We have had our most successful year in terms of attracting and retaining financial advisers," he said. "The market has taken away some of our assets under management in the past year, but things have started to come back in the past month. We are slowly regaining confidence."
At June 30, Raymond James' assets under management had declined 15.5% from a year earlier, to $30 billion, and total customer assets under administration had declined 1.4%, to $207.1 billion.
As a result, the private client group's monthly commissions and fees were down 12% in July from a year earlier. Despite this decline, the company plans to continue to add advisers over the next three to five years as it implements its strategy to increase revenue and profits by 15% to 20% a year.
"We are a growth company and we have been one for many years," Helck said. "Our business is heavily correlated to market conditions, so in tougher times we won't do as well as in better times, but we are confident we can be in that 15%-20% range. Half of that growth is going to come from bringing in new advisers and half is going to come from increased productivity."
Raymond James has attracted the majority of its new advisers from larger competitors — specifically wire houses — that are dealing with changes in ownership or credit issues, he said.
"Think about the number of companies that went out of business or were bought or changed names or were absorbed by a larger competitor in the past year," he said. "All of these changes causes financial advisers to be concerned about their viability. From Merrill Lynch to Wachovia to UBS, you have a lot of financial advisers who are worried. They are looking for choices and solutions. Frankly, we have been a real beneficiary."
Analysts said that conservatively managed companies, like Raymond James, have had their choice of financial advisers in the past year. These advisers tend to give an immediate boost to a firm's assets under management as they bring a roster of clients and their assets with them.
But the real test, according to analysts, will be how these financial advisers and their new wealth management employers mesh over the next three to five years.
Helck said he realizes that some competitors are taking more of a wait-and-see approach rather than actively hiring advisers, but he said he is confident in Raymond James' strategy. He argued that there is less risk in hiring advisers than if the company were to make an acquisition to increase its assets under management.
"I don't think that people want to be sitting on their hands, but I think a lot of investment companies have no choice right now," he said. "I think most companies would love to be attracting top talent, but they can't because right now customers and advisers don't want to do business with them. It is going to take time for everyone to get back to growth and expansion."
Raymond James plans to continue adding advisers to its bank and independent channels, and internationally.
"This is a long-term, well-tested, disciplined growth strategy," Helck said. "We believe in and remain committed to this model."