With a number of independent broker-dealers on the block, it's a buyers' market for those firms looking to expand their business through acquisition.
But don't count Raymond James Financial Services Inc. among them.
In interviews last week at the firm's annual conference for its 3,400 independent financial advisers, company officers made it clear that they are more interested in expanding the firm organically than by acquisition.
In fact, Raymond James Financial Services would need to find a perfect fit for them to do a deal.
Dick Averitt, its chairman and chief executive, declined to comment on specific companies for sale, including Ameriprise Financial Inc.-owned Securities America Inc. But he said many of the brokers and advisers working at such firms are low producers and would require extra oversight in terms of compliance. “It makes no sense [for us],” he said.
“We really believe strongly in culture and fit,” Mr. Averitt said. “We're not a company run by investment bankers looking for a deal, and we really want to make sure that anyone we talk to is almost a merger, as opposed to an acquisition.”
A deal, however, is not out of the question, he said. “It doesn't mean we won't find somebody who does fit,” he said. “There are a couple of firms out there, but I'm not going to name anybody, and if they approached us and said, "We'd like to find a way to merge firms,' I might be tempted to think about it. But there's an awful lot of stuff out there that we don't want to digest.”
That doesn't mean Raymond James Financial Inc., the holding company, has been sitting on the sidelines during what Mr. Averitt and other executives characterized as an unprecedented time to buy broker-dealers. At the end of December, it said it was going to acquire Howe Barnes Hoefer & Arnett Inc. The capital markets department at the boutique firm specializes in sales, trading, research and investment-banking services for community banks and thrifts.
Industry executives have said recently that the cost of technology, compliance and, in some cases, legal claims has driven a number of mostly small independent broker-dealers to put themselves up for sale.
Chet Helck, president and chief operating officer of Raymond James Financial, would not rule out an acquisition, but he agrees with Mr. Averitt that a potential target would have to be a good strategic fit and be compatible with Raymond James' culture.
“We're not a serial acquirer,” he said, noting that the firm has made only a few small acquisitions in the past 20 years. (One of them was a Canadian firm it bought so that it could legally expand into that country.)
“Acquisitions are expensive, risky and they change everything,” Mr. Helck said.
“My opinion is that firms become acquirers when they can no longer successfully grow organically,” he said.
LOW TURNOVER
Thanks to low turnover — less than 1% of its top-producing brokers leave in any given year — Mr. Helck and Mr. Averitt said that Raymond James has been able to replace the brokers it loses through normal attrition. Mr. Averitt said that two-thirds come from member firms and one-third from other independent broker-dealers.
Firm officials said that there were 52 brokers, including a handful from Securities America, affiliated with other firms attending last week's conference in Las Vegas. Raymond James invites potential recruits to the conference so that they can “kick the tires” and meet informally with the firm's other independent financial advisers.
E-mail Robert Hordt at [email protected] and Bruce Kelly at [email protected].
