CHARLOTTE, North Carolina (Reuters) - Mid-sized brokerage firm Janney Montgomery Scott LLC expects to increase its total advisers by 5 to 10 percent annually, as it attracts brokers disillusioned with larger rivals, Chief Executive Officer Timothy Scheve said in an interview this week.
Philadelphia-based Janney, which had 711 advisers in its private client group at the end of March, has been hiring from larger firms such as Bank of America’s Merrill Lynch unit and Morgan Stanley Smith Barney, a joint venture of Morgan Stanley and Citigroup, he said.
The firm’s adviser count is up about 1 percent from the end of 2011, but down about 4 percent from a year ago.
“There is so much unhappiness at the large firms,” said Scheve, who was in North Carolina this week to meet with advisers and clients. “If you’re at a firm and you’re always looking over your shoulder and wondering what is going on at headquarters, it’s very distracting. You’re going to take your eye off the ball.”
Merrill advisers have been reluctant to defect in the past, but are showing more interest after Bank of America acquired the firm in 2009, he said. Pressure to cross-sell bank products is one of the biggest concerns for Merrill brokers, he said.
“They don’t want to sell checking accounts,” Scheve said. “They don’t want to sell credit cards. They want to focus on building a relationship with their client and not just selling them a product.”
In total, Janney has recruited 14 new advisers from other firms in 2012, including Merrill and Morgan Stanley hires.
Janney, which is owned by The Penn Mutual Life Insurance Co, is building up a brokerage force that is down from about 840 in 2007, when Scheve became CEO and president. The firm has intentionally moved to bring on more productive brokers, Scheve said.
As it expands, Janney is focused on building its presence in the Southeast, Scheve said. The firm has wealth management offices from Massachusetts to Florida along the East Coast.
The firm’s strategy is paying off lately. Janney posted record revenue of $485 million in 2011, up from $466 million in 2010. The privately held firm doesn’t disclose profits.
Janney makes about 75 percent of its revenue from its wealth management business, with the rest coming from its capital markets businesses. It has about $53.5 billion in client assets under management, compared to more than $2 trillion at Merrill Lynch.
The firm’s target market is affluent clients with $250,000 or more in investable assets.
Scheve, who came to Janney from Legg Mason, is cautious about expanding the firm through acquisitions, but would look at buying smaller firms, he said.
“In any acquisition you get a lot of stuff you don’t want as well as some stuff you want,” he said. “It’s getting rid of stuff you don’t want that is time-consuming and really distracts management’s eye from running the business.”
Reporting By Rick Rothacker in Charlotte, North Carolina; Additional reporting by Ashley Lau in New York; Editing by Walden Siew and Phil Berlowitz