Unlocking Real Value Blog

The Sad Story of Morgan Keegan

I spent almost eight years at Morgan Keegan and still have many friends who work there. So it saddens me to see what’s happening to the firm. Many will say that the sale to Regions Bank was the beginning of the end. While to some extent this may be true, what has led the firm to where it is today is greed – turning the other way and ignoring the unsustainable returns of the mutual funds that have now caused the firm so much trouble. If something seem to be good to be true…..

Now what happens? Probably one of two outcomes. Either the firm will be sold to a private equity firm or to another broker/dealer; insiders speculate that talks have been under way for awhile, and now that the “for sale” announcement has been made by Regions, it better happen fast or the advisors will start running for the doors.

The two inevitable losers from any sale – the home office staff and the City of Memphis. If a private equity firm buys the firm, you can bet that belts will be tightened and staff levels reduced. The same goes if the firm is bought by another broker/dealer – the odds of the home being in Memphis are pretty slim, and no one at Regions has the same loyalty to Memphis as Allen Morgan and his mostly long-retired gang.

For advisors, a sale to a private equity firm would be better; a sale to a wirehouse would result in a mass exodus, retention bonuses not withstanding. But even if Morgan Keegan remains quasi-independent, and is not melded into another broker/dealer, you have to wonder how far the firm is behind the competition now – certainly from a technology point of view – given the amount of money and time it has had to dedicate to the many lawsuits it has faced.

Yes, unfortunately, there are many losers. The dedicated home office that appears to be a loser under any scenario. The many advisors who didn’t sell a lot of the funds in question, have not been sued by clients, yet nonetheless have suffered from the reputational damage that has been done to the firm.

It saddens me that this is happening to this once great firm. Hopefully I will be proved wrong, and the end-result will not be a negative one for my friends at the firm.

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