Brainwashed?

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Oct 30, 2006 10:59 pm

I'm with Smith Barney, but Morgan Stanley has me on the hook.  I haven't signed yet, but I'm thinking about it.  The problem is that Smith Barney has me convinced that they have the best technology, best platform, and most entrepreneurial culture in the industry.  Am I brainwashed? Is there anyone who has recently switched from SB to MS that can comment?

Oct 30, 2006 11:08 pm

If you have to come here to figure out what to do, you probably won't thrive in an entrepreneurial culture.

Oct 30, 2006 11:08 pm

I don't know much about Smith Barney, but here's a few of things about Morgan Stanley that you might want to know.....


#1)  The technology is getting better and better.  It used to be pretty bad, but they are investing a lot in it lately.


#2)  I'm under the impression that the Personal Portfolio program is the best on the street.  Extremely flexible and clients love it.


#3)  Comp changes are coming out Thursday and I've been told that we are going to love it.  I hear that management was told to set appointments next week with anyone who may be interested in jumping over.

Oct 31, 2006 1:57 am

With the new upgrades, MS has better technology than SB. Arguably, the platform (lending, insurance, banking) is stronger at SB. As far as the "culture" is concerned - I would say that it is less entrepreneurial at MS, but this has more to do with "out of the box" thinking and the fact that MS's Global Wealth Management is the "mass affluent" channel of Morgan Stanley.


The main drawback to MS vs. SB is that the BIG producers at SB are considerably more professional, educated and accomplished than their Dean Witter counterparts. While there are very few of these at any firm, at SB there are considerably more UHNW, HNW and institutionally-oriented brokers than MS.


This has to do with the history of institutional activity at SB dating back from the Hutton and Shearson days. Also, SB was huge in the tech boom as a provider of stock options and other types of executive comp; the firm was way ahead of the others (and thus further up the trough for the business generated by the equity comp of the 1990s.) This produced several HUGE brokers during the tech boom who have, by and large, stayed - because that's what big producers tend to do.


There never really was much of any of that institutional or high net worth business at Dean Witter and the two tiered platform at MS (Global Wealth vs. Private Wealth) that developed after the pseudo-merger of the two firms prevented the MS side from really penetrating the DW brokerage arn. As a consequence, the best and the brightest brokers are cloistered away from the general population, where they would have had greater impact.


It has also prevented the firm (the Dean Witter side anyway) from recruiting the elite brokers that left the boutique banks when they got acquired or went belly up after the tech bubble burst - they didn't want to go work for the "downmarket" division and the PWM side wasn't really recruiting (or offering competitive packages) during that time because Purcell's plan seemed to be to eventually merge the PWM with the then "Individual Investor" division. Most of the top talent that moves (and so little of the TOP talent does), tends to shy away from MS for these reasons.


Existing in PWM's shadow has really (and probably will continue to) prevented the Dean Witter side from blossoming. When you're told that you're not good enough for the best clients; it tends not to produce the best brokers. PWM is SO much better treated than GWM; All of the syndicate from non-led deals that is allocated to retail is exclusively preserved for PWM, as are the best support personnel (estate and trust, etc). Witter side brokers who come across a $10 million + prospect are supposed to check and see if they have already been "reserved" by someone in PWM. Considering how many Americans fit that description, its not hard to imagine that MOST of them would have already been "reserved". All corporate investment bank leads go to the PWM - EVEN if it was originated on the Dean Witter side.


The absolutely obnoxious attitude of the PWM brokers (particularly in the challenging times following the tech bubble's bursting) doesn't help either. I've heard some crazy stories. Essentially it's ok for a PWM broker to poach a GWM broker's client; I would imagine that its very effective to say that you're from the "high net worth channel of Morgan Stanley, where we take care of the firm's best clients. Our capabilities and personnel are quite different from your experience at Morgan Stanley thus far. Really, the retail brokers are supposed to confine themselves to clients of a different background than someone like yourself." 

Oct 31, 2006 2:40 pm

As always, I appreciate your insights San Fran...you're top notch.

Oct 31, 2006 2:50 pm

The industry is full of trade-offs.  Everyone will tout their firm saying they have the best technology, platform, people, etc.


It all comes down to your comfort level within the organization and, more importantly, the office you will be surrounding yourself with daily. 


I'm sure you have done this already, but if not, take a demo of their technology.  Compare it side-by-side with what you have at SB and see how it fits your style and needs. 


Additionally, break down your book and see how the types of clients and products you work with will relate to what is offered at MS.  Each firm will have their own additions to the platform as well as those products that they are lacking.  If your book is largely concentrated within an area that is not covered well at MS or needs a complete overhaul, then this would be a major consideration.


As far as culture is concerned, each firm and, more specifically, office, will have their own quirks that make them different.  Evaluate these and get to know your potential BM personally and professionally.  Keep in mind that the larger the producer, the less micro-managed they are (largely, of course).


I'm probably stating the obvious, but those are some things to consider.


I think that MS is doing some great things, but understand that there are some pieces that still need to be proven.  I think that, in the end, they will be an exceptional shop.


Oct 31, 2006 3:37 pm

I agree with a  great deal of what you’ve said here. Just a couple of niggles;


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san fran broker:

…..MS's Global Wealth Management is the "mass affluent" channel of Morgan Stanley.


GWM can and will handle accounts of all sizes and isn’t limited to “mass affluent” (1M to 1MM investable assets). If you land an opportunity above 10MM and feel it would be beneficial, you can call in PWM.


 


 


Things might be different is you happen to be in the same town as one of the handful of PMW offices across the country.


 


san fran broker:

The main drawback to MS vs. SB is that the BIG producers at SB are considerably more professional, educated and accomplished than their Dean Witter counterparts.



That would have been very, very true in the DW days. Today, comparing most offices? Nah…



san fran broker:

While there are very few of these at any firm, at SB there are considerably more UHNW, HNW and institutionally-oriented brokers than MS.



Not that this would matter to 99.9% of the people at either firm, but a look at the usual “top brokers” and “biggest book” type articles in the trade press would make it clear there’s good representation in both firms.


 

san fran broker:

Existing in PWM's shadow has really (and probably will continue to) prevented the Dean Witter side from blossoming.


There are few PWM offices across the country and with the coming of the single B/D and the joining/commingling of the platforms this is becoming less and less of an issue. Most MS brokers will never see a PWM broker.


Having aid that, I’d like to see them vanish, but the fact is most brokers will never even know they exist.


 


san fran broker:

Witter side brokers who come across a $10 million + prospect are supposed to check and see if they have already been "reserved" by someone in PWM.



Either this is dated info or only applied to MS brokers located closely with PWM offices.



san fran broker:

Essentially it's ok for a PWM broker to poach a GWM broker's client;…


Hmmmm, that would result in gun play, and it’s not OK. Again, must be dated info.


Oct 31, 2006 5:20 pm

I recall some of the issues that San Fran pointed out... but that was almost 3 years ago.  Things might be different now of course.

Oct 31, 2006 9:16 pm

Its possible that there have been MAJOR changes in the last few years, but my recent discussions with friends on both sides of MS indicate that they haven't. However, I think that Mike is right - the real issue being whether you are in a city with a PWM presence or not.


Fundamentally, I think that the separation of the two platforms has a poisonous effect on any brokerage firm - creating a sense of entitlement among the elite and frustration among the 'working class'.


Ultimately, the big question is whether MS will decide to keep the DW side. Considering the cultural differences between retail and I banking at MS, my suspicion is that Mack plans to fix the DW side (Gorman) and then try to sell it or spin it off, so that Morgan can return to what it was before Purcell and look more like Goldman Sachs (their perennial rival).

Oct 31, 2006 10:22 pm

You are top notch San Fran! Very cogent thoughts on MS dumping the DW side eventually.  It scares me a little.

Nov 1, 2006 9:23 am

I also recall the statements to the contrary by Andrew Duff, of Piper Jaffray, maybe a year before the UBS sale.


The statement that "we'd have to separate it again" seems disingenuous, because if they sold GWM - it would simply sell the brokers and their branch network, which would be hooked up to the B/D of the acquiring firm. If they spun it out, it still wouldn't be a problem to buy an existing B/D (Oppenheimer, for example) and just "reverse merge it in".


The main advantage to the consolidation was that it integrated the institutional infrastructure of Witter with MS.


I had not read this article and, that all having been said, it would appear that Mr. Gorman is very confident that MS will remain one firm, I'm just not so sure about Mr. Mack (or his eventual successors).

Nov 3, 2006 7:25 am

What kind of money is MS offering?

Just my 2 cents, SB has a better reputation. However, with MS new head guy maybe things are coming back around for them.

Nov 3, 2006 8:23 am
san fran broker:

The statement that "we'd have to separate it again" seems disingenuous, because if they sold GWM - it would simply sell the brokers and their branch network, which would be hooked up to the B/D of the acquiring firm.


I think the point is you wouldn't go through the trouble and expense of going to one B/D and mergering GWM with much, if not all of PMW if your real plan was to spin off GWM. That's not to say that a decision can't be made down to road to the contrary, just that I doubt there's a real plan that runs counter to what's being done publically.