Raymond James boosted its adviser ranks to a record high this past quarter, though the firm's wealth management profits dropped due to higher legal and regulatory costs.

Employee and independent adviser ranks grew to 6,834, up 69 from the previous quarter and by 327 from the year-ago period.

The firm has been aggressively recruiting for some time, picking up wirehouse teams across the country, but particularly in the Northeast and on the West Coast where Raymond James has been aiming to grow its footprint.

The firm's employee channel grew by 34 advisers from the prior quarter to reach 2,821, and the independent channel increased by 35 advisers to reach 4,013.

Slideshow
Biggest breakaways: Where advisers are moving now
The largest teams to go indie this year managed more than $5 billion in client assets.

Recruiting success has boosted client assets under administration at Raymond James to a record high of $534.5 billion, up 7% year-over-year.

Yet even with record asset growth, pretax profits for the firm's Private Client Group dipped 5% year-over-year, falling to $81.9 million. Revenues were also down, sliding 1% to reach $900.5 million.

The St. Petersburg, Fla.-based firm said the lower profits were due in part to higher regulatory and legal costs. Raymond James has faced several actions from regulators, and recently reached a nearly $6 million agreement with Vermont securities regulators in order to settle charges that investments related to a ski resort violated state laws.

In May, FINRA fined Raymond James $17 million for failures in the firm's anti-money laundering compliance program, which the regulator said had failed to keep pace with the firm's rapid growth.

MORE GROWTH EXPECTED
Raymond James is likely to surpass its record for adviser headcount again when it closes on its acquisition of Deutsche Bank's U.S. Private Client Services unit in September. The Deutsche unit has about 180 elite advisers. Raymond James says it will operate the business as a new division under the name Alex. Brown, which was the U.S. brokerage company that Deutsche Bank originally acquired over a decade ago.

Raymond James is also set to close on an acquisition of a Canadian wealth management firm, 3Macs. CEO Paul Reilly said both of these acquisitions are on track to be completed.

Image: Raymond James
Image: Raymond James

Companywide, Raymond James reported that net income fell to $125 million from $133 million for the same period a year ago, representing a 6% decline. Earnings per share fell four cents to $0.87 per diluted share.

Revenue rose 3% year-over-year to $1.35 billion. But costs grew at a faster pace. Total noninterest expenses rose 4% to $1.16 billion.

"Looking forward, our growth should continue to be aided by the new records we achieved for client assets under administration, financial assets under management, the number of Private Client Group financial advisors, and net loans outstanding at Raymond James Bank," Reilly said in a statement.