Stifel CEO: Recruiting Headcount Doesn’t Tell the Real Story

Raymond Boyd / Contributor / Michael Ochs Archives

Stifel Financial Corp. added a net 43 advisors in the 12 months ending March 31—including ten in this year’s first quarter—but Chief Executive Ron Kruszewski said on Tuesday morning that new advisor hires are a deficient metric.

Net new production is a more important number, and the brokerage industry should consider reporting it, he said on a first-quarter earnings call after the St. Louis-based firm reported a 13.3% decline in net income from the year-earlier quarter despite record revenue in its wealth management division.

“We’re looking at how we can, among midsized peers, be a leader in providing that kind of information,” Kruszewski said, before proceeding to gloss the firm’s recruiting essentials.

Stifel hired brokers in the first quarter who were generating $31-$32 million combined at their former firms while losing those it would have liked to retain who were producing about $2 million, he said. Brokers who retired or left the wealth management industry during the first quarter were producing about $7 million, but most of that revenue went to other Stifel advisers who inherited them as part of the firm’s SunSet program.

Stifel ended the first quarter with 2,160 brokers—99 of whom are independent contractors—and the firm’s “pipeline of high-quality” recruits and prospects in the current quarter is strong, Kruszewski said when asked about the traditional metric.

The company’s Stifel, Nicolaus brokerage unit has hired 24 advisors in April, John Pierce, head of private client group recruiting, said in an email. Their average production is $952,000 on $161 million of customer assets.

The early spring recruiting production average compares favorably with regional competitors such as Ameriprise, whose average advisor in the first three months of 2019 generated $628,000 on an annualized basis.

They also approach the $1.3 million average produced by UBS AG’s more than 6,000 U.S. brokers last quarter and the $1.1 million generated by Morgan Stanley’s almost 16,000 brokers, according to those company’s first-quarter reports.

Stifel does not break out average production numbers for its existing advisors nor report revenue for the private client group sector of its global wealth business.

First-quarter net revenue at ts global wealth unit, which includes its bank and trust businesses, rose 0.3% from a year earlier to a record $510.6 million, driven by a 23% jump in net interest income on the company’s drive to sweep customer cash from certificates of deposit and money-market accounts into its bank accounts.

Just over one-third of Stifel Global Wealth Management’s $299.99 billion of client assets as of March 31 were in fee-based accounts. That’s below totals at wirehouse competitors of 40%-45%, based on first-quarter earnings results.

Fee-based assets in the wealth division’s private client group rose .9%, or $1.3 billion, during the quarter to $148.1 billion, but were down 7.3% from a year earlier.