(Dow Jones) Raymond James Financial Inc.'s (RJF) private client group, which provides securities transactions and financial-planning services, has less than a 3% share of registered investment advisor assets, and sees tremendous opportunity for growth there, Paul Reilly, the financial-services firm's new chief executive, said.
The St. Petersburg, Fla., company's goal for its private client group is to continue with 15% growth per year-half through recruiting and half through production, Reilly, who's been in place for just 30 days, said Thursday at the Sandler O'Neill Global Exchange and Brokerage Conference here.
"If you can believe industry statistics, we have less than a 3% share of registered investment advisor assets," he said. "We have a ton of opportunities for growth."
Raymond James also sees huge potential growth for its asset-management group, and is tripling its wholesaling sales force, Reilly said. But Jeff Julien, Raymond James' chief financial officer, said that the company's asset-management business has not yet replaced the loss of revenue from its money-market fund business. Its Eagle Asset Management subsidiary plans to liquidate two money-market funds in August, pending shareholder approval.
As for the private client group, it's "still the driver" of the firm and normally produces about two-thirds of its revenue, and about half of its profit, Julien said. If the group's revenue for the first six months of this fiscal year, through March 31, was annualized, he said, it would have had its third-best year ever. "That's with a much more productive sales force in place, but still not producing at full capacity," Julien said. "There's still a lot of room for productivity gains."
The asset-management business, meanwhile, is receiving mandates from Europe from sales efforts begun there two years ago, Reilly said, and the company plans to beef up that effort.
Julien noted that the loss of the money-management business, which was significant, has meant "a big loss in revenue" for the asset-management business. Raymond James is "trying to recapture some of that spread by outsourcing money-market funds and using alternative sweep vehicles," he said, but it still hasn't totally replaced the revenue stream.
Asked about the impact of pending financial overhaul, Reilly said that reform, in general, "isn't great" for the industry. "Most of the reforms get not at a lot of the causes of what happened last year, but trying to wall off businesses," he said. "We're supporters of walling off the bank and insured deposits and other things that they're talking about, but some of them are very restrictive."
Nevertheless, Reilly doesn't expect the overhaul to have a great impact on Raymond James, he said. "We're not a big proprietary trader; we don't put operations in the bank except pure banking; we've always kind of held ourselves to a fiduciary standard in retail," he said. Any of the proposals, depending upon interpretation, could affect the company, Reilly said, "but actually impacts us less than, certainly, large financial institutions."
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