From the March 2012 issue of Research Magazine • Subscribe!

February 24, 2012

Raymond James Courts Morgan Keegan FAs

Executives at Raymond James and Morgan Keegan say they expect the majority of Morgan Keegan’s roughly 1,000 employee advisors to stay with the firm after the merger is complete, despite some recruiters’ claims that the transition package being offered FAs isn’t enticing enough.

Tash Elwyn, president of Raymond James & Associates, the company’s employee-advisor channel, said in an interview: “Within 30 days of the timing of the [Jan. 12] announcement of the acquisition, we can say that we will have hosted visits with close to 50% of the Morgan Keegan advisors at our home office in an effort to immediately acquaint them with the fit and match of our two firms.”

The scope of the meetings and the number of executives involved in the discussions is unique, according to Elwyn. “Many firms do a dog-and-pony show in some major cities and share a steak dinner. Our effort is about the compatibility of the combined culture and the story we can share.”

Still, recruiters are not convinced that the retention package being offered will encourage all Morgan Keegan advisors to move over to St. Petersburg, Fla.-based Raymond James and think that some higher producers could depart. Last week, Raymond James said it would give seven-year award offers of 40-70% of production to those reps with $300,000 or more in yearly fees and commissions; the deals begin vesting at the end of year two.

“Morgan Keegan says that its advisors will stay in their seats, at least temporarily, for a percent of what everyone on the Street is offering,” said recruiter Rick Peterson of Houston. “Raymond James will have to make an extremely compelling case … and the retention deal is not even close to what the full-service competition is offering.”

But Raymond James executives, as well as Morgan Keegan branch managers, say the 40-70% offer is adequate and note that about three-quarters or more of the Morgan Keegan advisors should qualify for it.

“It is fairly typical in acquisitions,” said Elwyn. “Retention bonuses at different levels vs. front-end [recruiting] type deals are really more of an apples-to-oranges comparison.”

“Raymond James understands our business and reminds me of Morgan Keegan, in that many of its advisors came from elsewhere … and they have seen the other [broker-dealer] cultures,” said Rob Brewer, a Morgan Keegan branch manager in Lexington, Ky., overseeing 11 advisors, in an interview. “I joined in ’98 and have stayed since then. Very few advisors leave, which makes me very optimistic.”

Also, Brewer says, most Morgan Keegan branch managers are also producing advisors, which is similar to Raymond James. “This is huge. You need to be in the trenches with people, walking the walk and be willing to do yourself what you are asking others to do,” he added.

“Morgan Keegan has a unique culture, and since its inception, those leaving the wirehouses to join it have wanted a smaller, more entrepreneurial environment,” said Rolfe Miller of Baton Rouge, La., who oversees 20 advisors. “This is all good fodder for recruiters, but I’d be surprised at any mass defections to the wirehouses. The move to Raymond James is a move to a very similar firm.”

Raymond James adds that the Regions Financial’ sale of Morgan Keegan is one of “the most publicized and advertised sales of a broker-dealer,” according to Elwyn, and yet most advisors have stayed with the firm. “Although I’m sure the Morgan Keegan advisors have been making a Plan B, C and D over the past six months and have had plenty of opportunity to execute such plans, I’m confident that these advisors will continue to be just as loyal,” he said.-

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