Smaller firms offering big bucks and promises of more personal control have been wooing away veteran Roney & Co. brokers and investment bankers since the Detroit company's acquisition by Raymond James & Associates.
Departed brokers say 60 to 80 have left in the last nine months and about 100 total since the sale in May 1999. Raymond James executives say the total is no more than 80 since the sale.
"You're always going to have some people who don't go along. We've lost more people than we expected we would," Tom Franke, president of Raymond James, says from the company's headquarters in St. Petersburg, Fla. "Somewhere between 60 and 80 is pretty accurate, but that's not only people who went to other firms but [also] people who left the business."
William Roney III, Raymond James' executive vice president in the Detroit office, says the company would have preferred to keep everyone, but that it's kept up with the turnover.
A former Roney partner, Greg Miller, says those who left Raymond James had expected the transition to be relatively smooth because both companies were regional brokers. But a year after the merger, significant operational and cultural differences emerged, and employees started to leave.
Mr. Miller left in September to become a senior vice president with McDonald Investments Inc. of Cleveland and manager of its Grosse Pointe, Mich., office.
The Raymond James executives, Mr. Miller and another former Roney broker all agree there were three main factors that contributed to the personnel losses: operational and cultural differences related to Raymond James' being larger; offers of big money from competing firms hoping to gain Midwestern market share and changes in the management structure.
Whenever a company is sold, there is change, and employees decide whether to adapt or leave, says Timothy White, senior vice president of the Plymouth, Mich., office of Ferris Baker Watts Inc., a Washington investment banking firm. Mr. White left Raymond James in January.
Many of the changes at the former Roney were functions of size, Mr. White says, adding that he prefers to work for a small partnership.
"You feel like you can make a difference because it's more flexible," Mr. White says. "A large firm has to be inflexible to some extent."
Mr. Miller says the change to the larger firm made him feel like his decisions weren't trusted anymore. He says policies and chains of command switched after the merger, which made him feel as if he had responsibility without authority, a big change for a former partner.
Several former Roney brokers and investment bankers say they can't comment because of pending arbitration over Raymond James' personnel losses. Raymond James is seeking damages from competitors who hired away its brokers. An industry panel is handling the disputes.
Mr. Franke agrees that some of Raymond James' policies are stricter than Roney's were.
Partners had been able to make exceptions to Roney policies at their own discretion, such as waiving a fee for a customer, Mr. Franke says. Now, fewer exceptions are allowed.
Says Mr. Roney: "I can tell you as the former chairman and CEO of Roney that we had way too many exceptions."
He adds, "Some of our competitors who have taken shots at us, the pitch has been that they're trying to recreate Roney & Co. The fact of the matter is that Roney & Co. as a business model is one that had outlived its usefulness and had to be set aside to be able to compete effectively."
Raymond James replaced many branch managers, Mr. Franke says. Employees that Roney & Co. called branch managers, he says, really were top producers, not administrators. After new branch managers were named, he says, many of those who had held that title left or had to be removed. Then, employees who worked with them also left, Mr. Franke says.
Money was a big factor, too.
Many of the firms that hired former Roney brokers and investment bankers offered signing bonuses of as much as a year's salary, temporary higher commissions and bonuses for recruiting other employees.
Mr. Franke says he believes the majority of the transition-related turnover is finished.