Raymond James Financial Inc. may be looking for acquisitions in the asset management space, but don't count on it buying any broker-dealers anytime soon.
When it comes to asset management firms, “there is a lot of room to expand in terms of more style boxes we can fill and more offerings for asset classes and approaches,” said Chet Helck, chief executive of the global private client group at Raymond James. The same cannot be said for buying broker-dealers, though.
RJ last year snapped up Morgan Keegan & Co. Inc. in a $930 million deal with Regions Financial Corp. Dennis Zank, chief operating officer at Raymond James and leader of the Morgan Keegan integration, noted that in his 35 years with the firm, this purchase was only the third “notable” acquisition for Raymond James. The other two major transactions were the firm's purchase of Roney & Co. in 1999 and of Goepel McDermid Inc. the following year.
Mr. Zank and Mr. Helck spoke to reporters at the firm's annual summer development conference in Orlando, Fla., on Thursday.
“It's hard to think about doing another Morgan Keegan acquisition,” Mr. Helck said. “How many firms are of a size that would have the impact that Morgan Keegan had on us? There aren't many like that. For now, there isn't much out there.”
The 2012 deal with Morgan Keegan brought over about 900 financial advisers and about 500,000 client accounts, representing $70 billion in client assets.
Migrating the accounts over to Raymond James turned out to be fairly easy, taking place over a weekend. More difficult was the process of integrating the policies and procedures of the two firms, Mr. Zank said. In the end, it came down to figuring which firm had the better policies and choosing to keep them.
It was a delicate matter.
“Pretend that one policy that Morgan Keegan had was preferable to what we did at Raymond James [and we decided] to adopt that policy for the totality of the firm,” said Mr. Zank. “But that would create anxiety for the Raymond James & Associates producers.”
There also was the matter of training the Morgan Keegan advisers on the company's new systems. For that, Raymond James sent out personnel to every branch for three to four weeks after the account conversion. Mr. Zank said he went to branch offices in the Houston area to show management's support of the newly added advisers.
“The focus was to do everything we could to maintain service levels and try to eliminate as much noise and confusion as we could. Our most important task was to retain as much of the talent we wanted to,” he added.
The firm managed to keep more than 90% of the Morgan Keegan advisers who were offered retention packages.