NEW YORK - Looking for better recruiting results, Raymond James Financial Services Inc. is pushing aside its head of recruiting, William D. McGovern, a vice president, and searching for a replacement.
"We're trying to bring a fresh perspective for the independent-contractor division," said Mike White, director of marketing for St. Petersburg, Fla.-based Raymond James Financial Inc., the parent company. "We want to improve results."
Industry observers, who asked not to be identified, said recruiting at Raymond James Financial Services during the quarter ended last month was well below the firm's goals, which may be why Mr. McGovern is no longer in charge.
The parent company's fiscal year ends in September.
When asked about recent recruiting, Mr. White said he couldn't comment on information for the recently ended quarter, because the firm will release results this week.
Raymond James Financial Services is the No. 2 independent-contractor broker-dealer behind Linsco/Private Ledger Corp. of Boston and San Diego as measured by gross revenue. For the fiscal year ended in September, Raymond James Financial Services saw strong recruiting, bringing in $75 million, Mr. White said.
The recruiting figure for 2004 wasn't available.
"It's good, but we think it can be better," Mr. White said, of the 2005 amount.
Mr. White said no decision has been made as to where in the company Mr. McGovern, who hasn't been fired, potentially will work. Mr. White noted that Mr. McGovern has spent the majority of his tenure with the firm in recruiting but has worn other hats, including operations.
Mr. White also said that no timeline has been set to hire a new head of recruiting.
Reached by phone this month, Mr. McGovern said he had no comment when asked about any potential changes, including his role, at the firm. As of last Wednesday, the move had filtered down to some but not all of the firm's 3,464 affiliated registered representatives and advisers.
Mr. McGovern, who has a long tenure of service with Raymond James, left the firm in 2001, only to rejoin the next year. He is particularly close to Raymond James Financial Services chief executive Richard G. Averitt, industry observers said.
Raymond James Financial Services and LPL have seen similar levels of growth over the past couple of years.
Information for 2005 gross revenue isn't yet available for comparison, but in 2004, LPL's gross revenue increased 27.6% to $1.137 billion, compared with the amount a year earlier, according to the most recent InvestmentNews survey of independent-contractor broker-dealers. During the same time, Raymond James Financial Services saw its gross revenue increase 24.7% to $763 million.
According to Raymond James Financial's annual report, revenue at the private-client group, which includes all its retail-sales channels, reached almost $1.4 billion in fiscal 2005, up 16.7% from the amount in fiscal 2004.
LPL has the largest recruiting force in the industry, with nearly 30 full-time recruiters throughout the country. Raymond James Financial Services, with just eight recruiters, has far fewer than LPL but still is among the leaders in the industry in that regard.
Raymond James Financial Services also recently said that it is targeting bigger-producing brokers. As of Jan. 1, the firm raised its minimum for a new branch to $250,000.
One consultant wonders whether enough large-producing reps who are looking to change firms meet that standard.
"Is it possible [Raymond James] has narrowed too far?" asked Charles "Chip" Roame, managing principal with Tiburon (Calif.) Strategic Advisors.
Raymond James Financial Services locked horns with the Securities and Exchange Commission in 2004 and 2005 in a case, involving a rogue broker, that potentially could have had an impact on recruiting.
In September, the SEC fined the firm $6.9 million for failing to supervise the broker, only after threatening to suspend recruiting at the firm if it didn't hire an outside consultant. That stipulation wasn't part of the final settlement.
Raymond James brokers, who asked not to be identified, said that Wall Street likes the company, pointing to the price of Raymond James Financial shares that are trading at about $40 a share - a high. Brokers added that they can own the company stock but not recommend it to clients.