Raymond James boosted its revenue to a record $866 million last quarter, but admits that quarter-to-quarter, the business has gotten "a little noisy."
CEO Paul Reilly points to the private client unit as the main engine of the firm's growth, with AUM up 21% on an annualized basis to $35 billion and AUA up 13% at $275 billion.
Likewise, the private client group brought in 18.5% more revenue last quarter than it did a year ago, accounting for 64% of Raymond James' overall cash flow.
Reilly says he's comfortable with a widely reported slight advisor head count decline.
As he said in the call, productivity per advisor is rising and the firm is "continuing to recruit at a slower pace, but really kind of keeping head count even."
Weaker independent reps are dropping out as "the economics drives them to the edge sooner."
The investment-banking-oriented capital markets unit also reported record revenue and now accounts for 20% of the company on a top line basis. However, as Reilly notes, deal flow slowed down and costs were higher.
On a quarter-to-quarter basis, the growth was harder to see, which explains the "lumpiness" Reilly discussed in the firm's earnings call.
The private client group brought in 7% more in the March quarter than it did at the end of 2010, while AUM edged up 6%. But the investment banking business ground up 3% quarter-to-quarter.
Raymond James remains heavily commission-driven, receiving roughly $11 in brokerage fees for every $1 it brings in on the investment advisory side.
The bulk of its growth quarter-to-quarter came from securities commissions. Investment advisory fees were flat, even though that side of the company has grown a healthy 24% over the last year.
Analysts were slow to react to the quarter -- or simply not surprised. However, S&P Equity raised the company to "buy."
LPL is currently scheduled to report its first quarter results on Monday.