Market turmoil delaying advisor moves, RF Capital CEO says

Recruited financial advisors are delaying the timing of planned moves to Richardson Wealth due to volatility in the equity market and geopolitical uncertainty, said Kish Kapoor, president and CEO of parent firm RF Capital Group Inc. He made the remarks during a conference call to announce the firm’s fourth quarter results on Friday.

“Events in the market and certainly [the war] in the Ukraine cause people to pause as to the timing as to when they might leave [their firm],” said Kapoor, in an answer to an analyst question. Some advisors are deciding to wait several months before making a planned switch, Kapoor said.

Despite the delay, “the level of engagement that we continue to experience in telling our story to recruits and people who are interested in our story – not only our story but the story of all the independents – remains very strong.”

Kapoor said that RF Capital’s current pipeline of recruits represents a potential $18.8 billion of new assets, up from $16 billion at the end of the fourth quarter. The firm’s pipeline consists of those advisors who are “actively engaged in discussions” with the firm.

“Our expectation, every year, is that we’re going to continue to build that pipeline and then convert 15%-20% into real candidates that will join us,” Kapoor said.

Kapoor said advisors planning to join Richardson Wealth in 2022 are also delaying their moves to allow the firm to fully implement technology upgrades. The brokerage is launching its new unified management account with Envestnet in May and its new back-office technology platform with Fidelity Clearing Canada this fall.

“People want to know we fully implement those plans, [because] it makes their transition much easier,” Kapoor said.

RF Capital reported that nine new advisors joined Richardson Wealth  in 2021. At the end of the fourth quarter, the firm had 162 advisor teams, up by three from the previous year.

Assets under administration at Richardson Wealth were $36.8 billion at the end of the fourth quarter, up 19% from the previous year. Average AUA stood at $227 million per team and average client household AUA was more than $1.1 million, the firm reported.

RF Capital announced consolidated adjusted EBITDA of $50.8 million and a net loss of $20.2 million for 2021, due primarily to $34.4 million of pre-tax expense-related adjustments associated with the firm’s organizational transformation last year.

Total revenue grew for 2021 to $329 million, driven largely by recurring fee revenue.

For the fourth quarter, RF Capital reported consolidated adjusted EBITDA was $12.3 million and net loss was $2.4 million. Revenue for the quarter was $86.1 million, up 42% from the same period last year and 8% from the previous quarter.

The firm today also announced a share buyback program and that it was proceeding with a 1 for 10 share consolidation, a move approved by shareholders last year.

Rudy Mezzetta

Rudy is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on tax, estate planning, industry news and more since 2005. Reach him at rudy@newcom.ca.