From the May 2012 issue of Research Magazine • Subscribe!

RJ-MK Merger: It’s a Wrap

Raymond James Financial said April 2 that it had completed the acquisition of Morgan Keegan from Regions Financial, paying $1.2 billion in cash. In an interview, Raymond James COO Dennis Zank reiterated what was previously reported — that he expected most of Morgan Keegan’s 1,000 advisors to join Raymond James, that 98% of the 600 Morgan Keegan reps presented with retention offers had signed a letter of intent to join the firm and that (of the 98%) 96% had already submitted their paperwork to do so.

In addition, 12 of Morgan Keegan’s top managers had signed employment contracts with Raymond James. Of that number, six were from Morgan Keegan’s private client unit, including its top two executives and its four regional directors, according to Zank. “For the most part,” said Zank, Morgan Keegan advisors “will continue to work with their management teams.” With the anticipated addition of the 1,000 Morgan Keegan FAs to the Raymond James & Associates employee broker-dealer, Raymond James will have about 6,500 representatives across its employee and independent and bank BD channels in the U.S., Canada and the U.K.

The company statement on the closing said that Morgan Keegan Private Client Group offices will be known as Raymond James|Morgan Keegan. Zank said Raymond James Financial Services, the firm’s independent broker-dealer, “will continue as is,” though he “wouldn’t want to say it’s a non-event, since as you add horsepower and increase the revenue stream, you can finance additional products and services.”

The 1,300-rep Raymond James and Associates locations will continue their current branding, while Morgan Keegan locations, said Zank, will be cobranded at first but will change to Raymond James signage over the next few months.

Zank further said that “we anticipate as we look at our map, that we might make some tweaks to the regional structure of the firm,” but he said “there’s not as much overlap as you might think geographically” despite the two firms’ shared southeastern U.S. focus.

About one week after the wrapping up of the deal, Tash Elwyn, president of Raymond James & Associates Private Client Group, announced a hiring and a geographic reorganization within RJA, the employee broker-dealer subsidiary of Raymond James Financial.

In an interview, Elwyn said the realignment “reflects a balanced integration of the talented leadership” at RJA and Morgan Keegan that will help “support our growth plans” while also “maintaining a level of intimacy and responsiveness” to advisors.

He mentioned specifically two former Morgan Keegan executives who will be co-division directors of the southern division of RJA, Dick Ferguson and Bill Geary. They had done “a great job supporting and retaining their financial advisors, especially within the past six months” since Morgan Keegan was put up for sale, Elwyn explained

Raymond James veteran Erik Fruland was named chief operating officer and senior vice president of RJA Private Client Group, replacing Scott Curtis, who was previously named president of RJFS. “Erik is a phenomenal addition to RJ Private Client,” said Elwyn, noting Fruland spent 10 years in RJ’s asset management services group, where he worked closely with advisors and has a “great depth of relationships” with Raymond James’ management team.

Elwyn said Morgan Keegan advisors would continue to use their existing platform — including back-office and other technology applications—until the official integration of the two firms occurs in early 2013. However, he stressed that the former Morgan Keegan advisors and their clients will gain access immediately to Raymond James resources, such as its equity research, while Raymond James advisors will gain access to Morgan Keegan resources, such as expertise in fixed income.

Earlier, Raymond James set up the leadership team for Raymond James Morgan Keegan’s fixed-income and capital markets group. The group will be led by John Carson Jr., former CEO of Morgan Keegan.

Kevin Giddis, previously president of fixed-income capital markets for Morgan Keegan, will lead the fixed-income unit for the new entity. Another former Morgan Keegan executive, Robert A. Baird, is set to serve as head of public finance.

The two firms eliminated 218 jobs, said Steve Hollister, Raymond James’ public relations manager. About two-thirds of the cuts came from the Morgan Keegan side. Hollister said in a statement that the firm would “continue to work through a deliberate process to ensure we maintain the highest client service levels.”

—James J. Green contributed to this report.

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