The ax will fall at year's end for some 700 of 13,500 Morgan Stanley brokers. Some branches will be closed entirely.
Earlier this year, the firm cut off hiring at 100 brokers, but resumed recruiting top producers. It's following in the steps of others, including Merrill Lynch, Prudential Securities and Salomon Smith Barney, all of which have lopped off lower-tier producers.
During an investor meeting hosted by Merrill in November, Morgan Stanley CFO Stephen Crawford confirmed that current conditions were grim and that management would be forced to further cut costs.
After the meeting Merrill analysts said the company was heading into 2003 “with no illusions that revenues will recover quickly.” Analyst estimates for Morgan Stanley's brokerage force reduction in the fourth quarter range from 2 percent to 3 percent. By early 2003, they expect the broker force to be cut by 16 percent from its high. (By comparison, Merrill has reduced its force of financial advisors by 25 percent in the last two years, from about 20,000 in 2000 to about 14,500 now.)
Morgan Stanley didn't return calls seeking to confirm the planned layoffs.
Cerulli: Merrill Bests SSB in Managed Accounts
There is a new separate account champ: Merrill Lynch has eclipsed long-time leader Salomon Smith Barney as the country's largest separate account consultant program sponsor, according to a Cerulli Associates study.
Merrill's Consults business edged out Smith Barney with a 24.8 percent market share vs. Smith Barney's 24.3 percent. In the last year, ending with the third quarter, Merrill's market share grew 2.2 percent, while Smith Barney's stayed flat.
“It shows how focused Merrill has been on getting their brokers on a fee-based model,” says Jack Rabun of Boston's Cerulli. Smith Barney has dominated the industry since its 1993 acquisition of E.F. Hutton, which created the SMA model in 1975. Wachovia Securities jumped to the sixth spot from eighth with a 2.7 percent share of the market. Schwab went from ninth to seventh place.