Stifel’s FA Hiring Recovers in Q3, Helps Boost Securities Lending

By Mrinalini Krishna October 29, 2020

Stifel Financial just had one of its strongest recruiting quarters in recent history, according to Ron Kruszewski, the firm’s chairman and CEO.

The firm’s “virtual recruiting strategies continue to produce significant growth in our advisor headcount,” Kruszewski said yesterday during an analysts’ briefing after the release of third quarter earnings results.

“To put numbers to this, we recruited 45 financial advisors with total trailing 12-month production of $38 million,” he said.

The newly-added advisors in the third quarter were primarily responsible for Stifel’s securities loans, which increased by $120 million to $1.84 billion in the July-to-September period, said James Marischen, the firm’s chief financial officer. Demand for residential loans and refinancing from wealth management clients also increased, according to the CFO.

Ronald Kruszewski
In April, Kruszewski said pausing in-person home office visits had hurt the firm’s first quarter recruitment. The firm added 26 advisors in the first quarter with a trailing 12-month production of $20 million. Stifel added 28 advisors in the second quarter with a trailing 12-month production of $23 million.

Stifel reported ending the third quarter with 2,177 financial advisors, a 1.8% increase from the previous quarter and 3.8% increase year-over-year. Including independent contractors, the firm had a total financial advisor count of 2,271 at the end of the September.

Commenting on the accelerating competition in the wealth management industry, Kruszewski said he welcomes it and is confident of Stifel’s capabilities. He noted that Stifel is a wealth management firm with a bank and not a bank that owns a wealth management business.

Earlier this month, Morgan Stanley announced plans to purchase asset manager Eaton Vance. The deal, which is expected to close in 2021, hopes to tap Morgan Stanley advisors to recommend proprietary Eaton Vance products to clients, among other things. But that’s not necessarily something that Stifel would like to do as well, Kruszewski said, adding the firm has seen an acquisition opportunity in the alternative investment space.

When asked by analysts if he expects any regulatory changes if a new administration takes over after the November 3 election, Kruszewski replied in relation to the SEC’s Regulation Best Interest. The Congressional Review Act has the ability to overturn regulatory actions enacted within 180 days, but Reg BI falls outside that time window, he said.

“I think if there’s going to be any changes, depending on who sits at the SEC, [they] will be the enforcement of Reg BI. There are some interpretive things that could just change the way you enforce it,” he said, without elaborating.

He also said there could potentially be some changes to the Department of Labor advice rule but noted there would be pressure to harmonize that with Reg BI. A pending DOL proposal, entitled "Improving Investment Advice for Workers & Retirees," is intended to replace the Obama-era regulation fiduciary rule defeated in the courts. The proposal offers a new prohibited transaction class exemption for investment advice fiduciaries.

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