Morgan Stanley- Account Sizes

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May 26, 2005 10:48 am

Yesterday we had a wholesaler from Janus take our team out to lunch and we got to talking about the industry, wires, etc.. He stated that 75% of MS's households had account values below $50,000. To all the MS reps, is that accurate?? In the ballpark?? That does not seem possible to me. If so, there are a lot of MS guys starving...

May 26, 2005 2:21 pm
blarmston:

Yesterday we had a wholesaler from Janus take our team out to lunch and we got to talking about the industry, wires, etc.. He stated that 75% of MS's households had account values below $50,000. To all the MS reps, is that accurate?? In the ballpark?? That does not seem possible to me. If so, there are a lot of MS guys starving...


Based on this, http://www.onwallstreet.com/detail.cfm?page=/pubs/ows/200403 01012.html


Morgan Stanley


Aside from a change to one penalty box, Morgan Stanley has not changed the two-part grid it introduced a year ago.


Now, clients must have at least $50,000 in household assets at the firm or brokers are penalized with a reduced payout of 30 percent on asset-based revenues, 20 percent on transaction-based business and 50 percent of residual fees. Last year, the minimum was $25,000, according to spokesperson Andrea Slattery.


I find it hard to believe....

May 26, 2005 5:36 pm

So that is highlighting the "official" stance. But is it somewhat accurate that the households levels are mainly below that amount? Toss away the MS Private Wealth teams, and is that what the typical reps book resembles?

May 26, 2005 9:39 pm

I haven’t been able to find anything online on the subject, but they guy’s story doesn’t seem to pass any basic logic tests. It's highly unlikely to me that anywhere near 75% of households would be that low, much less that a firm would place 75% of the households in their firm wide book of business into a small household penalty situation. Think about it yourself. What would happen, in terms of broker flight from the firm if 75% of their book was suddenly in a no-pay situation? Would they be able to keep anybody at their desks?<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

It seems far more likely to me that your wholesaler was either talking about some specific broker, or he was blowing smoke about the firm as a whole. Who knows, the next day at lunch with a bunch of MS guys, he was probably talking about your firm and making up some impossibly low average household size.
May 26, 2005 9:51 pm

"Think
about it yourself. What would happen, in terms of broker flight from
the firm if 75% of their book was suddenly in a no-pay situation?"

Good point. Although a new guy who came over from MS ( we are at ML)
said that the brokers books' that he had privy to were made up in that
manner. I am speculating, but maybe MS grandfather sthe 50K and below
accounts, and has slowly instituted this new policy going forward in an
attempt to have their guys 'move upstream'.

Whatever, I really dont give a $hit, it just struck me as out of place and wanted to run it by the boys on this forum.

To all, have a good holiday weekend- drink beers, get "paid", relax, and dont think about the office until Tuesday morning...

May 26, 2005 10:07 pm

"Although a new guy who came over from MS ( we are at ML) said that the brokers books' that he had privy to were made up in that manner."


MS is doing this blue/gold/platium (household size) drill, I've yet to see a book where blue households are a sizeable percentage. The rules that allow you to "household" accounts are pretty broad. I can't imagine and successful rep having a book where any reasonable amount of his accounts are in the "small household penalty box".


" I am speculating, but maybe MS grandfather sthe 50K and below accounts, and has slowly instituted this new policy going forward in an attempt to have their guys 'move upstream'."


Nope. They started with $35k as minimum account size and moved it to $50K the next year, or year after, with no grandfathering.

May 27, 2005 11:47 am

It makes sense to me.  The 75% refers to number of clients only.  That number does not reflect AUM.  I beleive that the top 25% of any brokers book can account for 75-80% of AUM.  Is this realistic thinking?