Private client group gains drive Raymond James to record quarterly profit

Pretax earnings jump 39% to $81.5 million; profit margins hit 10%

Jul 23, 2014 @ 6:19 pm

By Mason Braswell

Raymond James Financial Inc. continued to build on momentum as pretax profit in the private client group hit a record $81.5 million in the firm's third fiscal quarter, a 39% increase over the same period last year.

Strong growth in recurring fee revenue helped offset expenses at the private client group, which accounts for over two-thirds of the total revenue at the company. The firm's approximately 6,250 advisers across both its employee and independent brokerage channels brought in quarterly revenue of $816.9 million, netting the firm a 10% pre-tax margin, up from 7.7% in the year-ago quarter.

“Record results in the private client segment were driven by record levels of client assets and a continued focus on enhancing margins,” the firm said in its earnings news release.

(See how the private client group was also the star in Raymond James' second quarter.)

Total assets under management climbed to $454 billion, a 17% increase from the year-ago period and up 5% from the previous quarter. Approximately $168 billion of those assets were in fee-based accounts, up nearly 28% from the same quarter last year.

That increase helped boost recurring revenues, which the firm said now comprise around 70% of the segment's total income.

Part of that increase may also come from some fee changes implemented earlier this year. The firm decided to do away with fee-waivers on some smaller accounts, rather than implement minimum account sizes, the firm's chief executive, Paul Reilly, said at a conference in May.

RECRUITING, RETENTION

In addition, Raymond James said strong recruiting and retention of veteran advisers helped push assets under management higher. The firm reported a net gain of 49 advisers during the quarter, putting the total headcount at 6,251 globally, including operations in Canada and the United Kingdom.

The strongest growth was in Raymond James Financial Services, the independent adviser channel, which grew by 74 advisers over the first three quarters of the year to 3,320. The brokerage channel, Raymond James & Associates, added a net of six advisers over the year to hit 2,455.

(Find out who's joining Raymond James and where they're coming from,)

The firm added seven dual registrants to its hybrid channel, which has hovered at around 80 advisers in recent quarters. That channel was launched last spring.

Compensation continued to eat up the largest segment of income. Compensation, commissions and benefits across the company rose 7% from the year-ago quarter to $825 million.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Why Brinker is ramping up its services for RIAs

Brinker Capital introduced a new platform aimed at providing services to independent advisers. Brinker's Brendan McConnell explains how the firm will differentiate from a crowded field.

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

RIAs struggle to keep clients grounded amid stock market euphoria

With equities at record levels, financial advisers are confronted with realities of greed and fear.

Regulators showing renewed interest in cracking down on investment fees

SEC, Finra targeting high-fee share classes, 12b-1 fees and failure to give sales load discounts and waivers to investors.

Tax update: Brady says sales tax deduction in final bill

Taxpayers will be able to deduct state income taxes or state sales taxes in addition to property levies — up to a $10,000 cap.

Complexity of new indexed annuities causing concern

Insurers are using 'hybrid' indices as a way to differentiate themselves, but critics contend the products are less transparent, more confusing and don't add financial benefit.

Critics say regulation hasn't curbed overly rosy projections for indexed universal life insurance

They say rule didn't go far enough and more stringent measures may be necessary.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print