WealthManagement Magazine

Morgan Stanley: Tomorrow Is Another Day

The past year has not been a pleasant one for Morgan Stanley employees. The very public proxy battle between shareholders and then-CEO Philip Purcell kept the firm in the news nearly every day for months and not in a favorable way. Most advisors couldn't care less about boardroom dramas, but the row did catch their attention when former Morgan execs, known as the Group of Eight, questioned Purcell's

The past year has not been a pleasant one for Morgan Stanley employees. The very public proxy battle between shareholders and then-CEO Philip Purcell kept the firm in the news nearly every day for months — and not in a favorable way. Most advisors couldn't care less about boardroom dramas, but the row did catch their attention when former Morgan execs, known as the Group of Eight, questioned Purcell's very business model: They wanted Morgan to jettison its retail financial advisor network. What advisor needs that debate played out on the business pages for clients to see?

New CEO John Mack returned and announced that the Morgan retail advisor force was a jewel. That was nice, but then he proceeded to up the bogey for FAs to stay on. The result: Some 1,000 brokers were fired for low production, while dozens of other brokers voluntarily decamped for other, calmer environments.

So, yes, Mack has stated unequivocally that he's committed to the retail unit and plans to turn it around. But branch managers and brokers are stuck in limbo as they await the arrival of the guy who will head up that turnaround effort: James Gorman, the former head of retail at Merrill Lynch, who arrives in February.

Not surprisingly, the management upheaval and culling of broker ranks shows in the grades Morgan brokers give their firm. Brokers say Mack is on the right track, and note some improvements versus last year, but the firm's overall rating slipped this year to 6.1 from 6.3, leaving it dead last for the second year in a row. Once again, the firm significantly lagged the average for every single category measured by the survey.

Morgan brokers gave the lowest scores to “hiring and recruiting practices” and “ongoing training” — 4.7 and 4.8, respectively. “Recruiting is weak because when you see a tarnished firm, that's probably not the first place you want to go,” says one east coast-based broker. Meanwhile, ongoing training is too focused on the numbers and not enough on ideas, says another broker. Morgan has been training an elite group of brokers as wealth managers for the past year, but those who don't meet the revenue cutoff line say they're not getting any help. “They've created this caste system. Being a wealth manager should have nothing to do with reaching a certain BS number,” says one broker.

Brokers also gave dismal marks to “payout,” “quality of operations,” “strategic focus” and “public image.” Morgan's strategic focus is “one of the reasons we are where we are,” says another broker. “In the past there wasn't that leadership that we have now.”

That said, there is some positive feedback: Scores inched up in the “support” and “products” areas this year, including “quality and quantity of sales assistants,” “quality of sales ideas” and “quality of the products offered.” Morgan broadened its range of banking-related products, mortgages, structured products, derivatives and alternative investments. The firm also created an internal call center for advisors who have support-related questions. “Quality of research” also scored better. Morgan says research improved because it's doing a better job of getting Morgan's institutional research teams to communicate their ideas to the brokerage force.

A number of reps say things are bound to get better with Mack on top. “With Mack coming back we have a really good public image,” says one rep. “If your company has high-profile leadership, people feel good and it stands out.”

Morgan Stanley
Score Average, All Firms
Overall Average 6.1 7.8
Work Environment 6.4 7.9
Freedom from pressure to sell certain products 7.8 9.0
Realistic sales quotas 7.3 8.4
Hiring and recruiting practices 4.7 7.8
Payout 5.3 7.3
Benefits 7.1 7.8
Support 5.9 7.5
Sales support 6.0 7.4
Quality of sales assistants 6.7 7.9
Quantity of sales assistants 5.7 7.0
Quality of sales ideas 5.8 7.4
Ongoing training 4.8 7.5
Quote and information system 6.8 8.1
Quality of operations 5.3 7.4
Account statements 5.7 7.4
Product 6.6 7.9
Quality of research 7.2 7.9
Fixed-income pricing 5.6 7.5
Quality of the products offered 7.0 8.3
Management 5.9 7.9
Your branch manager 6.7 8.0
Strategic focus 5.4 7.5
Overall ethics 6.2 8.2
Public image 5.3 7.9
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