Stifel CEO: Recruiting Boom ‘Disconnected’ From Forecasts AI Will Replace Advisors

Stifel Financial Chief Executive Ron Kruszewski is unruffled by the buzz that artificial intelligence could replace financial advisors and argued on Wednesday that the industry’s fierce recruiting battles show firms are betting on people, not technology. “Market reactions have suggested that advances in AI will at least diminish the value of financial advice and at worst eliminate the need for financial advisors altogether,” Kruszewski said on a conference call Wednesday morning after Stifel reported second quarter earnings. “This, however, is completely disconnected from what we are seeing in the market for financial advisors.” Transition packages are “elevated,” and recruiting of experienced advisors remains “as competitive as I’ve seen it,” said Kruszewski, who has been CEO at Stifel for almost three decades. Kruszewski did not mention other firms by name, but at least one wirehouse, UBS Wealth Management USA, earlier this year unveiled a deal that could pay advisors as much as 550% of their trailing-12 month revenue provided they remain at the firm for a term of 16 years. Similarly, RIA investors and consolidators of independent broker-dealers have been snapping up firms at a record pace and at peak valuations, according to industry consultants. That has come even as fears of industry automation sunk stocks of large wealth managers, including Stifel, in February. Stifel’s stock, which was up almost 2% following its earnings announcement, remains down around 9% from its price before the AI concerns shook investors. “Either the largest wealth management firms in the world are increasing investments into a business that apparently is going away…or the industry will continue to evolve with more capable and efficient advisors using AI to benefit their productivity and their clients’ service,” Kruszewski said. If anything, Stifel, which has historically shied away from raising its recruiting offers, is still in a “wait and see” mode as it waits for firms to potentially turn more cautious, but it has not stopped hiring, he added. “We need more talented people to take advantage of what I see as our ability to compete and gain greater market share,” Kruszewski said. For several years, recruiting has been up and down for the St. Louis-based firm, which added advisors with annual revenue of $30 million over the past year, according to its second quarter earnings report. That was down from $50 million on a 12-month basis that Stifel reported in the first quarter, which included 36 advisors added through a purchase of B. Riley Financial’s employee unit. Stifel, like many wealth firms, no longer reports its overall advisor headcount. It last reported it had around 2,300 brokers, including around 100 independent brokers in a unit that it sold to Equitable Advisors. Kruszewski said he felt that artificial intelligence would make his firm and advisors more efficient. AI software could also help with streamlining compliance, including ensuring that client communications conformed with the layers of regulation around marketing. The CEO did not put a specific figure in terms of net cost savings but said that the improved efficiency would outweigh expenditures on AI, including purchasing tokens. Meanwhile, Stifel’s wealth division’s income grew year-over-year 18% to $361.8 million, and revenue increased 13% to $956.5 million. Its total client assets rose 12% to $580.1 billion, according to the company’s reporting. Fee-based client assets of $239.8 billion grew 16% from the year-ago quarter.