'Biggest Year Ever' for Depository M&A: Stifel CEO

Bloomberg

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00:00Let's talk about the rebound here. And we've seen quite a few of the financial firms see

00:04have a pretty good quarter. We've seen obviously a lot of trading activity and volatility,

00:08but also I want to start off with just kind of the pickup that we've seen

00:11in M&A deals activity, basically all that capital markets activity that seemed to be on ice

00:16earlier this year. Well, look, at the beginning of the year, everyone thought this was going to

00:20happen, yet tariffs and tax policy were uncertain. And so people were sitting on their hands. I would

00:26be in boardrooms and talking to directors and that, and even M&A policy in terms of whether

00:35it would be more accommodative. That was all uncertain. Get the big, beautiful bill, I guess,

00:40passed. You get tariffs behind us, although they seem to come up every day. But as you got that

00:45behind us, there was a lot of backlog that's now coming through. And it's not just today. It started

00:50in the summer. We had one of the busiest Augusts, in fact, the most busy August we've ever had

00:54in our history. So business is good. Business is good. I am curious, too, coming into this year,

01:00there was a lot of optimism on Wall Street about the change in Washington and the idea that

01:05if not deregulatory environment, certainly a looser regulatory environment than what we saw the

01:09previous four years. Have you seen that already? Are you, I guess, pleased? What's happening there?

01:16Does it meet your expectations so far? Yeah, I would say accommodative, okay, versus,

01:21you know, look, there's no secret that under the Biden administration, one of his first acts was

01:26to put out a memo that said, hey, I'll paraphrase, let's put sand in the gears of M&A. And the Trump

01:33administration is doing just the opposite. We see it, especially, we've been very successful in

01:38depository M&A, which happened in the biggest year ever, unbelievable market share. I could go on and

01:43on, I won't. But what some deals that used to take two years to get approved, bank mergers,

01:49think about that, two years are getting done in four months. And when you think about sitting in

01:54a boardroom and you're thinking about doing a strategic combination, whether you're on the buy

01:58side or on the sell side, and waiting two years to know, that's a major risk factor that's been taken

02:05off the table. So that's, that helps. And I do want to talk specifically about the wealth unit here,

02:11because I know that you have a long term client goal of about a trillion dollars in AUM. Would you

02:17look to a potential merger, a potential combination there to actually reach that goal? Well, that's

02:23been my DNA. You know, I've been CEO 28 years, we've done 40 transactions, I can go back and name

02:29them. We've, you know, when, when deals have presented themselves with the right financial

02:34metrics, we have participated, we've built steeple both organically and through M&A. So of course we

02:40would. What I would say today, though, is that all assets, you know, homes, financial assets, gold,

02:48everything is, is, is pretty rich in evaluation perspective. So we're, we're not rushing, we're not

02:56going to do growth just for growth's sake. We, we think about shareholder returns. Well, gold is

03:01getting less expensive by the day, but I hear your broader point there, uh, when it comes to

03:05valuation. Staying on the wealth unit, I did want to talk a little bit about advisor recruiting. You

03:10spent some time on the call talking about that. You had a strong first half of the year in terms of

03:15new additions. In the third quarter, I believe you added 33 new advisors. So give us a little bit more

03:20color on what the advisor recruiting landscape actually looks like right now and where you're actually

03:25recruiting from. Well, we're recruiting from all over. We, we can recruit from the, from the major

03:31firms and we bring in people that were in industry that want to have a second career. So we're across

03:39the board and recruiting again. Uh, it's not new for us. Uh, when I started, we had less than 200 advisors

03:46and we have, you know, um, 2,500 plus and that, that's, um, that's just what we do. The recruiting

03:53environment's been strong. I mean, as a self plug a little bit, I get to talk my own book. You know,

03:57we were voted number one by J.D. Power for advisor satisfactions, advisors that are voting

04:03independently. That's been huge because it's true. And when you see that, you mix it with our culture.

04:09We're a great destination for advisors and it's coming through in the numbers. Right. And I want

04:13to talk a little bit about who these financial advisors are advising. We were talking about the rise

04:19of the self-directed investor with Ken Benson of SIFMA yesterday. And there is this idea out there

04:25that you have more investors just going it out alone, basically being self-directed and making

04:30their trades and their investments themselves. And I wonder, you know, if that's an existential

04:35worry for you, or are you hoping that those folks will sort of graduate up into using financial

04:41advisors? Well, you know, I don't know what Ken said, but let me, let me put a little different

04:45thought on that. Okay. Since I've been in the business, younger investors or new investors

04:50will start self-directed. They just start with smaller accounts. They're younger and they'll be

04:55self-directed. And then as you start to have a family and have kids and not have time to do

05:00self-direct, you will look for advice. That has not changed. What has changed is the number of new

05:06investors. And we can thank the fintechs for bringing young investors into the game earlier.

05:12So when I look at it, the ability to have even more clients that understand investing is great.

05:19Although I did write an op-ed that talked about my worry. And that is that we're blurring for young

05:25investors. They really do not understand, in my opinion, the difference between compounding,

05:30which is investing and consumption. If you can't build wealth unless you compound gambling is

05:37consumption. And these, we are mixing and blurring the lines between investing and like prediction

05:43markets and zero day options. That's gambling. But what do you think, I mean, with regards to,

05:48I know what you think about prediction markets, but do you think that prediction markets will become

05:51a much bigger portion of our financial markets? Or is this just some sort of fleeting fad that we'll

05:58forget about in a few years?

05:59Well, I mean, I'll just say, wait a minute, wait a minute. You mean whether I can bet,

06:05whether the coin flip is head or tail?

06:07The binary, yeah.

06:09Wait, that's not investing. That's gambling. All right. And the gambling markets are expanding.

06:14There's easier, you can get them on your app. It's easy. It feels like social media.

06:17Yeah.

06:17But do not, that was my op-ed. Let's not confuse gambling with investing.

06:22Yeah.

06:23So do I think prediction markets?

06:24Yeah.

06:25Parlay bets are getting bigger. Everything's getting bigger.

06:27But do you feel the pressure, I mean, as a business, from a business perspective,

06:31do you feel the pressure to maybe include prediction markets under the steeple umbrella?

06:35Because, I mean, there were a lot of people a few years ago that said we would never entertain

06:39the idea of hosting crypto on our platforms. And of course, now most people do.

06:44But crypto is an asset class. Okay. We can argue whether or not there. But the way I differentiate,

06:50if you can invest in an asset where everyone can win, meaning the value goes up and everyone wins,

06:55then we'll have that on our platform. If it's going to be a completely binary bet, which is

07:01gambling, red or black on the roulette table, heads or tails, I get asked all the time, why

07:07don't we put that on our platform? Well, that's because that's not what we do. And I feel there's

07:12reputational risk to have clients easily go from buying a stock to wagering. And so, yeah,

07:20I feel the pressure, but in my mind, it's not what we do. And it's not what we're going to do.

07:25Just one, we only have about 30 seconds left, but I do just want to, Ron, get your just overall

07:29thoughts on the state of our economy, the state of our nation, and kind of where you see it go.

07:33Are you relatively hopeful?

07:36I am. I, you know, like every American, I feel that we're very polarized politically. And I think that

07:43I'm hoping that the younger generation will make my generation look back and realize that we didn't

07:50need to be so polarized. But as a country, we are the greatest country in the world with the greatest

07:54economy in the world with the greatest capital markets. So am I bullish on America? Yes, I am

08:00always and will be. And if I'm not, I'm not sure we'll be sitting here talking.

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