Jan 24 Raymond James Financial Inc Chief Executive Officer Paul Reilly expects more advisers to join the firm once it finishes the integration of its Morgan Keegan brokerage unit next month.
And come February, Morgan Keegan advisers will also say goodbye to their four-decade-old firm's name.
"To me, that's a testament to how well the integration is going. They're comfortable giving up a great name, and a proud name, and going to one brand," Reilly said in an interview on Thursday.
A year after Raymond James agreed to buy the Memphis-based brokerage from Regions Financial Corp for $1.2 billion, the company is in the final stretch of integrating the roughly 869 brokers who stayed on.
"We'll actually see a significant increase in recruiting to the legacy Morgan Keegan branches after the conversion," Reilly said.
Joining a firm right before a conversion would require advisers to transfer client accounts twice - once for the move to the new firm and another for the conversion to the new brokerage platform. But by next month, all remaining Morgan Keegan brokers will have their client accounts fully transferred over to Raymond James and operate under the company brand.
Reilly said many potential recruits are waiting until the conversion is complete, which could result in an uptick of advisers joining later this year.
"On the recruiting side, it's probably going to be helpful for them, given that they're a bigger firm now," said Boston-based Aite Group senior researcher Alois Pirker.
Raymond James will be "a notch more attractive to break-aways because of the additional scale that they have," Pirker said, referring to the movement of advisers to Raymond James from other large brokerage firms.
Raymond James said late on Wednesday in its fiscal first quarter report that its U.S. ranks shrank by 25 advisers during the quarter to a total of 5,427 at the end of December, attributing the departures primarily to the attrition of lower-producing Morgan Keegan advisers.
Retention remained "extremely high" for Morgan Keegan advisers offered compensation to stay. These advisers are high producers who generate more annual revenue, the company said.
Including the UK, Canada and custody businesses, the firm had 6,289 advisers and representatives at the end of December.
KEEPING BROKERS ON BOARD
The melding of advisers from Raymond James and Morgan Keegan brings together two cultures, each with a distinct regional flair. It was a gamble for St. Petersburg, Florida-based Raymond James, given the possibility of adviser defections during the complex integration.
But Raymond James has been largely successful in retaining top producers, industry recruiters and analysts say. The company says roughly 95 percent of advisers with retention packages have chosen to stay on.
The final check will be the post-integration period after all Morgan Keegan advisers are moved onto the new platform.
"The proof is still in the migration," said Pirker, who expects the bulk of Morgan Keegan advisers to view the conversion to the Raymond James platform as positive.
Raymond James originally committed to letting advisers keep the name for two years after the acquisition, but Reilly said Morgan Keegan management asked that the change be made by next month's migration.
"We were actually pleasantly surprised," Reilly added.