Raymond James’ wealth management unit enjoys record quarter

For Raymond James, 2024 is off to a very strong start.

Profits and client assets reached record heights at Raymond James’ wealth management division, which it calls its Private Client Group, during the first three months of the year, which it calls the second quarter.

Net revenue for the group reached a new height of $2.34 billion, a 9% jump from the same quarter last year. And its assets under management soared to $1.39 trillion — also a new record, and a 19% increase from March 2023.

“Client assets grew to record levels during the quarter, driven by rising equity markets and solid advisor retention and recruiting in the Private Client Group,” Raymond James CEO Paul Reilly said during an earnings call on Wednesday.

The firm’s advisor headcount stayed roughly the same — as it did last quarter. As of March 31, the Private Client Group has 8,761 financial advisors, a 0.04% increase from the same time last year. 

But a closer look shows what may be a more meaningful change: a shift toward full-time Raymond James advisors. The headcount includes 3,747 employees, up 3% from last year, and 5,014 contractors, down 2% from last year.

“Our advisor recruiting activity remains robust and I am encouraged by a record number of large teams in the pipeline,” Reilly said. “We are focused on being a destination of choice for our current and prospective advisors, which we believe over the long term should continue to drive industry-leading growth.”

Raymond James’ recruiting efforts have scored a number of victories in recent months. At the beginning of April, RayJay lured a $1.1 billion advisory team away from RBC, and in October last year it poached a $3 billion team from Cetera.

Beyond wealth management, the firm’s company-wide numbers for the quarter were strong as well. Net income for the whole firm was $474 million, up 12% from March 2023. For shareholders, that comes out to $2.22 per diluted share, a 15% jump from one year ago.

“Once again, we delivered strong results in the quarter, highlighting our diversified platform,” Reilly said. “We continue to invest in our business, our people and technology to help drive growth across all our businesses.”

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But the news was not all positive. The firm’s non-interest expenses rose to $2.51 billion, a 8% markup from last year. The biggest contributor to this bill was compensation, commissions and benefits, which reached $2.04 billion — a 12% uptick from last year.

Paul Shoukry, Raymond James’ president and chief financial officer, said this was partly because many of the firm’s workers had gotten a raise.

“As is typical in the first calendar quarter, compensation expenses were impacted by annual salary increases and the reset of payroll taxes,” Shoukry said. “All in, an adjusted compensation ratio close to 65% is in line with our current target and is a satisfactory result, given the challenging environment for the Capital Markets segment.”

Other expenses, Shoukry said, were simply costs of doing business — which has been brisk.

“Keep in mind, many of our noncompensation expenses, such as investment sub-advisory fees, represent healthy growth that follows the corresponding revenue growth,” he said.

Apart from the numbers, the earnings call also featured a passing of the torch: Some time in 2025, Shoukry will succeed Reilly as Raymond James’ CEO. The firm made this announcement last month, but Reilly made sure to reiterate it on Wednesday.

“Paul has been an exceptional leader and a major contributor to Raymond James’ steady growth and financial stability,” Reilly said. “I am confident he will continue to guide the firm with the same conservative long-term approach and laser focus on our advisors and client first culture that has helped shape our success over the many years.”