Stifel Financial Corp. reported a steep drop in financial adviser additions in 2024 compared to the prior year amid what the firm’s CEO called a “very competitive” recruiting environment on an earnings call Wednesday.
The full-service brokerage and investment banking firm added 100 financial advisors in 2024 with trailing 12-month production of about $37 million. That compared to 171 financial advisors in 2023, with trailing 12-month production of about $69 million.
When asked about the declines on the call, CEO and Chairman Ron Kruszewski noted Stifel’s “long-term” approach to recruiting and said two years of strong equity markets—and commensurate compensation structures—stifled advisor movement.
“We look at almost every recruiting situation as what is our return on investment [and] how does it impact our return on invested capital, and we are very disciplined on that,” Kruszewski said on the call. “In times where people get really competitive, we may lose the marginal deal because, ultimately, we don't want to dilute our return on tangible equity at the altar of just having revenue growth.”
This year, Kruszewski forecast a “better recruiting year."
Those additions could include Stifel closing an anticipated deal with B. Riley Financial in the first half of 2025, which would add 30 to 35 advisors with $18 million to $20 million in annual production, according to Chief Financial Officer James Marischen.
Challenges in recruiting did not stifle revenue growth for the global wealth management arm, which marked its 22nd year of record net revenue, according to the earnings report. The St. Louis, Mo.-based firm reported annual revenue for the division of $3.3 billion, with total client assets hitting $501 billion. Pre-tax net income for the division fell 1% compared to the prior year to $1.2 billion.
The markets responded positively to the results, with Stifel up 2% to $117.51 at market close Wednesday.
Analysts from J.P. Morgan Securities were also bullish on the results in a note after the call, reiterating a “market outperform” rating and writing that the firm “has never been better positioned across both its Wealth Management and Institutional segments.”
While the analysts acknowledged the recruitment struggles, they argued that headcount is “not the most useful KPI for wealth management” and that Stifel can be “a bit more conservative on packages in hot markets.”
Over the past five years, Stifel has hired 450 advisors, with a cumulative trailing 12-month production of more than $350 million, according to CFO Marischen. That has driven the wealth division’s revenue growth and shifted that revenue to more recurring sources such as asset management fees and net interest income, he said.
