Morgan Stanley Wealth Management is the No. 1 U.S. brokerage firm by most measures. So when parent company Morgan Stanley last week got the regulatory green light to purchase Citigroup’s remaining 35% in Smith Barney, it didn’t herald a seismic shift in market share.
Morgan Stanley’s May 28 ADV form shows it in first place by assets, managing $393 billion for 1.4 million clients, compared with the $385 billion in AUM and 705,000-plus clients reported in Merrill Lynch’s June 20 ADV. Merrill has more advisors — 25,000, to Morgan Stanley’s 16,000 — and the $4.7 billion deal, which could take place as soon as this week, won’t swell MSWM’s ranks.
Still, things may change for its brokers. Ever since the joint venture was sealed in 2009, a vocal minority of former Smith Barney advisors have complained bitterly about how their lives have deteriorated since Morgan Stanley came into the picture. For instance, they’ve been griping to the media for more than a year about being forced to convert to a computer system they say screws up everything from client transactions to performance reports. Now that they have only one master, the discontented advisors could essentially be told to put up or shut up — or leave.
At the time of the joint venture, Merrill Lynch launched an aggressive bid to snag unhappy brokers from MSWM. Although a true mass exodus appears to have been averted, thousands of advisors have defected from Morgan Stanley to competitors over the past two years, according to InvestmentNews. And the latest J.D. Power & Associates Financial Advisor Satisfaction Study puts the bank at the bottom of the list.In a press release, James Gorman, Morgan Stanley’s chairman and chief executive, hinted that MSWM advisors will be doing more cross-selling: “Immediately upon closing, we expect to start seeing the benefits of 100% ownership — including an expanded deposit base, unique syndication and distribution capabilities and enhanced opportunities for both our wealth management and institutional clients.” Strategically, he told CNBC shortly after the deal was announced that the additional 35% of earnings from wealth management will help stabilize Morgan Stanley’s profits from investment banking.
Speaking of television, Morgan Stanley is using the deal as a launchpad for its first U.S. TV campaign in four years, according to marketing website The Drum. Two commercials on the site show people enjoying everyday life, while a voiceover plays up advisors’ mission of helping clients grow investments and weather financial crises.