Raymond James Financial remains on the lookout for potential acquisitions as it focuses on deploying its cash reserves, according to CFO Paul Shoukry. Despite the company's active approach, any deal announcements may not be imminent.

Seeking Strategic Fits

During the UBS Financial Services Conference in Key Biscayne, Fla., Shoukry revealed that Raymond James had appointed a new head of corporate development and was engaged in discussions with investment bankers. The company is prioritizing conversations with firms that align culturally, emphasizing the importance of finding good fits.

Long-Term Strategy

Shoukry highlighted Raymond James's acquisition of U.K.-based Charles Stanley Group as an example of its patient approach. Despite finalizing the acquisition in 2022, the initial discussion with Charles Stanley took place eight years prior, demonstrating the company's long-term outlook.

Strong Financial Position

Raymond James is well-positioned financially, with a leverage ratio of 12.1% at the end of the fourth quarter, exceeding its target of 10%. Shoukry emphasized that the company's debt levels are comfortably above regulatory requirements for being well-capitalized.

Capital Deployment Priorities

While considering share buybacks as a potential option for excess capital, Raymond James currently prioritizes dividends and acquisitions. Shoukry indicated that buybacks would be a fallback option if other avenues were not viable within a reasonable timeframe.

Company Overview

With over 8,700 advisors and more than $1.3 trillion in client assets under administration as of December 31, Raymond James is a significant player in the wealth management industry. Based in St. Petersburg, Fla., the company operates various financial services units catering to different client needs.

Focus on Strategic Growth

In a sector marked by numerous acquisitions in recent years, Raymond James has been strategically acquiring capabilities, such as its 2021 purchase of TriState Capital Holdings, to enhance its overall offerings. The company remains optimistic about the role of M&A in its growth strategy moving forward.

Raymond James Prioritizes Quality Over Quantity

Raymond James, a key player in the wealth management sector, emphasizes the importance of quality when it comes to partnerships with financial institutions. According to Shoukry, the firm targets advisors with substantial assets and productivity, rather than simply aiming for quantity.

Strategic Partnerships in the Financial Sector

There has been a notable trend in the banking and credit union industry towards forming strategic partnerships to outsource back-office functions. LPL Financial recently announced a new collaboration with Wintrust Financial, bringing 85 financial advisors and $16 billion in assets to LPL's platform. Additionally, LPL has solidified a brokerage and wealth management partnership with Prudential Financial, encompassing 2,600 financial advisors overseeing approximately $50 billion in assets.

Raymond James Stays Ahead of the Curve

When asked about potential missed opportunities in securing deals within the sector, Raymond James highlighted its longstanding presence of over 20 years in supporting banks and credit unions. While exact figures for assets under its financial institutions business are not disclosed, Raymond James confirms that this segment remains a significant part of its operations.

A Different Approach to Wealth Management

Raymond James focuses on serving financial institutions with advisors who manage substantial assets, akin to those found in the company's independent and employee broker-dealers. This approach sets them apart from recent transactions that prioritize a high volume of advisors with lower asset ratios.

Quality Advisors for a Successful Strategy

While acknowledging the effectiveness of a scale-focused strategy, Raymond James remains committed to its unique approach centered on high-quality financial planners with significant assets under management. By prioritizing advisors with a proven track record, Raymond James ensures a tailored and successful strategy for both the firm and its partners.