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Raymond James Financial (NYSE: RJF) reported fiscal 2012 first quarter revenue fell four percent to $782.5 million, while earnings were down 18% to $67.3 million.

The drop was largely attributed to lower marlet valuations at the beginning of the fiscal first quarter, Oct. 1, when the firm billed its wrap fee assets. Those fees were down 6 percent from the previous quarter, affecting revenues for the private client group and asset management segment.

“We were unable to overcome that lower fee level, thus both segments trailed the previous quarter in revenues and pretax profits,” said CEO Paul Reilly on a conference call. But Reilly said he expects there to be some tailwinds in the next quarter.

Within the private client group, assets under administration of $270 billion were up 3 percent from last year’s first quarter and up 5 percent from the previous quarter. AUM grew 5 percent over the prior year and 9 percent over last quarter to $35 billion.

Sophie Schmitt, analyst with Aite Group, said the asset growth was in line, if not slightly better, with what some of the wirehouses reported, including Morgan Stanley Smith Barney and Merrill Lynch. “Clearly, it’s just a hard market right now.”

Raymond James’s U.S. advisor headcount was down by nine advisors from last quarter to 4,495, while total rep count was up six from the quarter ending Sept. 30 to 5,356. The stable headcount makes sense given the firm’s relatively conservative growth strategy. The recent announcement of the $930 million acquisition of Morgan Keegan, expected to close by the end of this quarter, is a unique opportunity, Reilly said.

The Morgan Keegan purchase dominated the conversation on today’s analyst call. Raymond James & Associates has made retaining Morgan Keegan’s over 1,000 reps a top priority. Raymond James already has commitments from Morgan Keegan’s top 13 managers, and is in the process of meeting with all 85 of its branch managers. The deal is expected to close by the end of this quarter, Reilly said.

Schmitt characterized the acquisition as a bold, aggressive move given market conditions and an environment in which b/d profits are under growing pressure.

Raymond James may benefit by picking up some of the wirehouse advisors who are likely to defect this year as retention packages expire, but it won’t be an all-out war for top talent, Schmitt said. Rather, Schmitt suspects the firm will focus less on recruitment and more on retaining advisors in the wake of an acquisition. Reilly said the firm’s focus on recruiting has not changed. Home-office visits are up, a leading indicator that people may be signing on in the next year.