Best & Worst Broker-Dealers: Q2 Earnings, 2024

The majority of large broker-dealers posted positive year-over-year profit growth in the second quarter of 2024, with just one reporting declining earnings. "We generated another strong quarter of results with record revenues, record client assets, record bank loans and strong domestic Private Client Group net new asset annualized growth of 5.2%," said Raymond James Chair and CEO Paul Reilly, who is stepping down from this role next year. Still, Raymond James, Ameriprise, LPL Financial and 23 other financial firms have been facing some challenges. Last week, for instance, they agreed to pay nearly $393 million to settle Securities and Exchange Commission charges over "widespread and long standing failures" to maintain records related to off-channel communications. Plus, over the past few months, wirehouse firms including Morgan Stanley and Wells Fargo have been sued by clients who say the firms used customers' cash balances to enrich themselves at the clients' expense. In its latest earnings report, Raymond James said total domestic cash sweep and related balances fell 3% from the year-ago period to $56.4 billion. As a result, these balances represented about 4.3% of total U.S. private client assets versus 5.2% a year ago. Total client cash balances for LPL Financial fell $6 billion to $44 billion in Q2'24 from $50 billion in Q2'23, and cash balances as a percentage of total assets were 2.9%, down from 4.0% a year ago. Regulatory filings suggest the SEC is now looking into the interest rates that brokerages pay clients on uninvested cash swept into bank accounts. Financial firms kick off the third-quarter earnings season of 2024 on Oct. 11, when Citigroup, JPMorgan and Wells Fargo plan to report their latest results. -- Dinah Wisenberg Brin and John Manganaro contributed to this report. (Image: Chris Nicholls/ALM)