Raymond James saw its assets under administration swell to a new high of nearly $1.6 trillion in its latest quarter, pushed by billions in net asset inflows.
The St. Petersburg, Florida-based independent broker-dealer reported Wednesday that it finished September — the end of what it calls its fourth quarter — with a record $1.57 trillion in assets under administration. That was a 25% increase from the year-ago period.
Of those assets, $857.2 billion were in fee-generating accounts in its wealth management unit, which it calls its Private Client Group. That figure was up 28% year over year and also set a record high.
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Departing OSJs
Driving those asset figures ever higher were $60.7 billion in net new assets for the firm’s entire 2024 fiscal year, a figure down 20%. Raymond James CEO Paul Reilly said in an earnings call Wednesday that the net new asset figure would have been higher had it not been for the departure of two large advisory groups technically called offices of supervisory jurisdiction, or OSJs. OSJs are branch offices providing supervision and other services that would otherwise have to come from an independent broker-dealer’s central office.
Steward Partners, a New York-based firm, officially severed its brokerage relationship with Raymond James in May 2022, removing $25 billion in client assets. That was followed in September of that year with Tampa-Florida based Concurrent Advisors’ decision to take $12.7 billion in client assets and 145 financial advisors from Raymond James’ broker-dealer and custodial channels.
Reilly said the two OSJs that left are still in the midst of moving their client assets.
“It takes time to effect these movements, but a portion of those assets left the firm in the fiscal fourth quarter, totaling roughly $3 billion of (assets under administration),” Reilly said, according to a transcript of his remarks from Seeking Alpha. “We anticipate approximately $5 billion of assets associated with these firms to complete their transfers off the platform in early fiscal 2025.”
Recruiting fewer advisors, bigger books
Offsetting those losses were Raymond James’ strong recruiting results, Reilly said.
“To our domestic independent contractor and employee channels, we recruited financial advisors with approximately $100 million of trailing 12-month production and $17.5 billion of client assets at their previous firms,” he said.
Raymond James reported ending its fourth quarter with 8,787 advisors, a number basically unchanged from the previous year. It had 3,826 direct-employee advisors (up 4%) and 4,961 independent contractors (also unchanged.)
Reilly said on the call that even if Raymond James is recruiting fewer advisors than in previous years, the teams it is bringing on tend to be managing large amounts of client assets.
“The biggest change probably over the last few years is there are fewer advisors in total but much, much bigger books,” Reilly said. “So not only was this year an onboarding of probably the largest books we ever have had, but we also have the same in the pipeline. So we’ve become a destination for very large teams.”
Compensation expenses and revenues
Raymond James reported nearly $1.36 billion in compensation and benefit-related expenses for financial advisors in the fourth quarter. That figure was up 14% year over year.
Offsetting those expenses was a 9% year-over-year increase in the Private Client Group’s net revenue, which rose to a record of nearly $2.5 billion. The bulk of that came from $1.4 billion in asset management and related administration fees, which showed a 15% year-over-year increase. The Private Client Group also reported $433 million in brokerage revenues, a figure likewise up 15% year over year.
Minus expenses, those revenues left the Private Client Group with $461 million in pretax income for the fourth quarter. That was a 3% dip from the same period a year ago.
But that was a blip in an otherwise strong year. For its fiscal 2024 as a whole, Raymond James’ Private Client Group reported nearly $1.8 billion in pre-tax income, another record for the division.
Outlook for 2025
Raymond James President Paul Shoukry, recently named as Reilly’s successor as CEO after serving for years as chief financial officer, said he expects the Private Client Group to continue benefiting from strong inflows into fee-generating accounts in 2025.
“Our advisor recruiting activity remains robust, and we’re encouraged by the number of large teams joining us and remaining in the pipeline,” Shoukry said on the earnings call. “We are focused on being a destination of choice for current and prospective advisors, which we believe over the long-term should continue to drive industry-leading growth.”
Firmwide results
For all its lines of business, Raymond James reported a 13% increase in its net revenue in the fourth quarter to a record of $3.46 billion. That generated $601 million in net income available to shareholders, a number up 39% year over year and also a record for the firm.
Raymond James said the results were driven by “higher asset management and related administrative fees and investment banking revenues,” as well as “lower provisions for legal and regulatory matters.”
