Stifel Recruits Fourth Round of Merrill Lynch Brokers in a Month

4 Nov    Investing News

Stifel Financial Corp. on Friday hired a three-broker Merrill Lynch team that was overseeing $497 million of client assets to open a new Stifel Nicolaus office in Southbury, Connecticut, a company spokesman said. 

Led by 29-year industry veteran Christopher B. Metcalf, the team also includes advisors Jeffrey H. Cole, Alison V. Masopust and two sales assistants. The brokers joined Merrill ten years ago from UBS Wealth Management USA, according to their BrokerCheck records. 

Stifel, which had 2,193 brokers as of September 30, has sharpened its recruiting appetite this year, with Merrill a prime target. It hired two Merrill teams in New York and Texas last week, each of which was managing over $200 million of customer assets, Stifel said, and four weeks ago hired advisors on its St. Louis home turf who produced about $5.5 million of annual revenue at Merrill.

“[T]he lack of bureaucracy and nimble decision-making allows large teams like the Metcalf, Cole & Masopust Group to thrive,” Stifel recruiting head John Pierce said in a prepared statement, adding that the culture appeals to teams “that are increasingly given directives by bank-owned entities.”  

Collectively, Stifel this year has hired brokers who were managing $5.5 billion in client assets at Bank of America-owned Merrill, Pierce said.

A Merrill spokeswoman did not return a request for comment on the departures and Pierce’s remarks. 

Merrill initiated a freeze on recruiting experienced brokers about two years ago, and its advisor force within its core Merrill Wealth and Merrill Private Wealth franchises declined by 130 to 14,690 as of June 30 from a year earlier. The firm has instead focused on training new brokers and seeding more of its experienced teams with lower-paid advisors at the bank’s Merrill Edge discount unit who work with less affluent customers than Merrill Wealth brokers. 

Merrill did not break out its wealth management numbers for the third quarter, but reported that headcount across the “continuum of wealth management capabilities” in the bank’s discount, private banking and traditional brokerage businesses rose by 149 as of September 30 to 17,657.

Metcalf began his brokerage career in February 1990 at UBS, staying almost 20 years before  moving to Merrill in Southbury. Cole and Masopust similarly began their careers at UBS, in 2001 and 2007, respectively, before joining Merrill with Metcalf in October 2009. 

Stifel, whose almost 2,200 brokers include 96 independent contractors, said its brokerage force at the end of September was up a net 44 individuals, or 2%, from one year earlier. Most advisors who left the firm retired, and Stifel had only two “regrettable” departures in the July-September quarter, Chief Executive Ron Kruszewski said on an earnings call earlier this week. Each of them were producing about $700,000 of revenue, he said.

Stifel’s expenses rose faster than revenue in the third quarter, partly reflecting its decision to build wealth management, its biggest business. 

“We’re in recruiting mode and I don’t see any reason now to slow it down,” Kruszewski said.

Third-quarter net revenue at the company rose 11.3% from the year-earlier period to $821.6 million, 65% of which came from the wealth management business.

Expenses were up 12.2% to $670.8 million. Compensation expenses rose to 59.2% of revenue across the company, up from 57.2% a year ago.

Stifel’s third-quarter net income rose 3% from a year earlier to $104.5 million. Its pretax operating margin fell to 18.3% from 19%.

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