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Raymond James unlikely to boost recruiting deals to match competitors: CEO

Raymond James’ hiring efforts have pushed headcount to a new record, topping 7,900 advisors. Even so, the company isn’t aiming to ditch its conservative approach to recruiting deals.

During an earnings call Wednesday morning, an analyst asked CEO Paul Reilly if the firm would try to match competitor’s hiring bonuses.

“I’d say we’d have some slight increases to close the gap but we’ve otherwise stayed very, very disciplined. A number of competitors are offering substantially more. We lose some people that we would like, but the people who are joining us are doing so for the right reasons, not because we offer the biggest checks,” he said.

Though Raymond James isn’t “the high bidder,” as Reilly put it, the firm’s strategy has paid off in recent years. Its brokerage ranks — up 185 year-over-year — now eclipses that of UBS, which recently reported having 6,689 advisors for the second quarter.

To entice talent from rivals, Raymond James has relied on appeals to its culture and multiple affiliation options. The aggressive recruiter hosts hundreds of advisors annually at its headquarters in St. Petersburg, Florida, where it shows off its platform, resources and corporate environment during special VIP tours.

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The firm operates an independent broker-dealer, regional broker-dealer and boutique unit for wealthy clients, Alex. Brown, which it acquired three years ago from Deutsche Bank. Raymond James also provides custodial and clearing services to independent and hybrid RIAs.

But it’s not alone. Other firms are adopting similar strategies. Ameriprise also operates independent and employee channels. Wells Fargo added an RIA channel earlier this year. And regional BDs and independent firms have become aggressive recruiters of wirehouse talent in recent years.

At Raymond James, the quality of recruited talent has gone up, according to Reilly.

These firms scored big with advisors managing $1 billion or more.
July 9

“If you look at ‘09, we had a lot of individuals [join], but it wasn’t even close to last year based on trailing 12,” Reilly said during the conference call.

The firm’s expansion efforts have helped boost AUM. The private client group reported assets rose 9% year-over-year to $787 billion, according to the company.

Chief Financial Officer Jeff Julien cautioned that assets don’t always immediately follow an advisor the day they join a new firm.

“It’s safe to assume a six-month lag from being recruited to the assets coming in,” he told analysts.

Wealth management pretax income rose 6% to $140 million, the firm reported. Net revenues increased 6% to $1.35 billion.

Companywide, net income grew 12% to $259 million, Raymond James reported. Quarterly net revenue of $1.9 billion and non-interest expenses $1.6 billion were both up 4% year-over-year.

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