While Raymond James Financial’s revenue and earnings were up year-over-year, they fell sequentially, due in part to volatility and uncertainty in the capital markets segment as well as a $10.5 million adjustment related to mutual fund commissions. Despite the results, the firm reported a solid recruiting quarter, bringing on 71 net new advisors from last quarter and 158 net new advisors since the fiscal first quarter 2014.
Net revenues, which missed analysts’ expectations by $10 million, were $1.25 billion for the quarter, up 6 percent from the prior year and down 3 percent sequentially. Net income was $126.3 million, or $0.87 a share, up 8 percent from the prior year and down 7 percent from the fiscal fourth quarter. Earnings beat analysts’ estimates by $0.01.
Within the firm’s private client group, net revenues of $845.2 million grew 8 percent from a year ago and declined 2 percent from the preceding quarter. Pre-tax income increased 30 percent from the prior year period to $92.7 million, but this was down 7 percent from the previous quarter.
Securities commissions and fees in the private client group were up 7 percent from year ago, but were down 3 percent, or about $19 million, sequentially, which the firm attributed to a one-time mutual fund commission adjustment. About $10.5 million of the $19 million went to that adjustment, which covers the last five years. Chief Financial Officer Jeff Julien would not give the details of the adjustment, except that it’s related to share classes used in retirement accounts.
Total advisor headcount reached 6,336 during the quarter, up from 6,178 a year ago and 6,265 in the fiscal fourth quarter. Most of the growth is coming from the wirehouses, said CEO Paul Reilly. The firm has also been focusing its recruiting efforts on the West and Northeast over the last couple years, and that’s starting to pay off. Those regions now account for one-third of total recruiting growth.
“They happen to be amongst the biggest markets where we have low penetration, so we see huge opportunity there,” Reilly said.
The firm is also recruiting larger advisors, which is bringing up average productivity. Last quarter, three teams producing over $5 million joined within a six-week time span, Reilly added.
Private client group assets under administration grew about 2 percent sequentially to $459.1 billion, driven by market appreciation and strong advisor retention and recruitment. Assets in fee-based accounts were $173.9 billion, up 4 percent from last quarter.