Earnings Season: Morgan Stanley Squeezes More Revenue Out Of Its Client Assets While Raymond James Settles For Added AUM

Thursday, July 21, 2011 23:36
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Earnings Season: Morgan Stanley Squeezes More Revenue Out Of Its Client Assets While Raymond James Settles For Added AUM

Tags: Morgan Stanley | profitability | Raymond James

Raymond James and Morgan Stanley both managed to expand their businesses in an otherwise tough second quarter, but the internal numbers show two very different strategies at work.

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Raymond James boosted its AUM 2.8% over the quarter as it brought in a net 20 new U.S. advisors, but revenue for the firm's private client group was essentially flat, up under $400,000 to an aggregate $557 million.

 

With 5,093 advisors worldwide, that revenue stream translates into an annualized $437,000 in production -- down a bit from last quarter, when a brighter trading environment helped Raymond James' commission-driven reps book more income.

 

By comparison, Morgan Stanley dumped a net 162 advisors over the quarter as part of an ongoing campaign to, as the firm puts it, "prune underperformers."

 

But even with 1% fewer feet on the ground, the firm only lost a net $9 billion on the wealth management side, indicating that remaining reps are covering slightly bigger books: $96.8 million apiece, compared to $96.5 million last quarter.

 

They are also getting more efficient. As more Morgan clients shift into fee-based accounts, the typical rep now produces $785,000 a year versus $767,000 three months ago -- much less the $679,000 they were bringing own last year.

 

 

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