Record revenue growth for Raymond James Financial’s private client group helped boost the financial service company’s 2nd quarter net income by 33% from a year ago.

The Tampa Bay-based company reported that revenues for the private client group were up 12% year-over-year, rising to $814 million from $727 million.

“The private client group was the star performer this quarter,” announced Raymond James CFO Jeffrey Julien during a conference call with investors.

Assets under management rose 12% to a record $434 billion from $388 billion a year-ago. Significantly, the amount of those assets in fee-based accounts, where clients pay advisors flat fees in lieu of trade-based commissions, grew at nearly twice the rate to $158.2 billion from $129 billion.

In the race for AUM, Raymond James gained on LPL Financial, its chief competitor in the IBD space. LPL reported assets under management of $447 billion for the quarter, narrowing its lead over Raymond James to $13 billion, down from $15 billion in the first quarter of 2014. LPL is affiliated with more than twice the number of advisors as Raymond James.

The number of financial advisors in the private client group rose to 6,202 from 6,165 from the year-ago period, but the bulk of the growth took place within the company’s independent channel, which grew by 71 advisors to 3,288. The number of advisors in the employee channel fell 26 advisors from a year ago.

Raymond James has been making a strong recruiting push for both its employee and independent channels. Since the year began, the wealth management company has lured away about a dozen wirehouse advisor teams who managed more than $2 billion in assets at their previous firms.

In an interview with OWS in March, Tash Elwyn, president of Raymond James & Associates, attributed the firm’s recent recruiting successes to disaffection among wirehouse advisors along with concerted efforts on the part of Raymond James’ branch managers to promote the company’s dual channel model.

“What we are seeing is the result of months and months of consistent recruiting,” Elwyn declared.

During the call with analysts, Julien said that the firm’s recruiting efforts promised to bring in much needed new talent.

“If you look at the recruiting pipeline, it’s very good and looks better than last year,” Julien said. “We believe that our hybrid model is very attractive to advisors.”

Analysts, however, are taking a wait-and-see approach.  Alois Pirker, research director for Aite Group, says the firm hasn’t increased headcount as quickly as that of its rivals, such as LPL which grew its headcount by 349 advisors year-over-year.

“I don’t think that they were putting as much emphasize on raising headcount. It’s been up and down, quarter to quarter, for the past year,” says Pirker. “I think they have been more cautious.  It takes a lot of money for signing bonuses.”

But, says Pirker, there is room to grow and add more advisors.

Companywide, net income grew to $104 million from $79 million for the same period a year ago, a 33% increase.  Earnings per common share rose to $0.72 per diluted share, up from $0.56 per share.

Return on equity increased to 10.9% from 9.3% same period a year ago.


This story was updated at 11:00 a.m. Thursday.

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