for now, emerged as the two Wall Street survivors in a year which
has wiped out Bear Stearns and Lehman Brothers and claimed the
independence of Merrill Lynch.
But that victory has come at a price, with both firms
announcing in October they had converted into bank holding
companies in order to access the Federal Reserve’s Troubled Assets
Relief Programme (TARP), a move which subjects them to far greater
levels of regulatory oversight.
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Morgan Stanley, for one, is taking its new status to heart,
launching a retail banking business and hiring CeCe Sutton and
Jonathan Witter from Wachovia, both senior retail executives at the
US bank which is now in the middle of a takeover by Wells
Fargo.
Speaking at a Merrill Lynch conference in New York on 12
November, Morgan Stanley co-president James Gorman said the retail
initiative would “complement our global wealth management (GWM)
business”.
Morgan Stanley currently offers banking services through its
active assets accounts, which require a minimum deposit of $20,000,
though a spokesperson told PBI this threshold may change
in 2009 depending on acquisitions and the Wachovia executives’
vision for the unit.
In any case, with investment banking pickings remaining slim in
the short to mid-term, Morgan Stanley believes that a recent
restructuring of its GWM business also stands it in good stead for
expansion in 2009.
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By GlobalData“We have increased our asset flows, improved our advice and
productivity, and introduced a series of products,” said Gorman.
“We are one of the top five wealth managers in the US by revenue
and profit before tax, and we are expanding our wealth platform
internationally.”
Gorman also highlighted the significant gains in net new money
flows experienced by Morgan Stanley in the first nine months of the
year, though such outperformance is likely to have been hit hard by
the intensified speculation over the firm’s future seen in
September and October. Net inflows even prior to such events saw
total assets under management fall from $739 billion as of 31 May
to $707 billion by 31 August.
Advisers a differentiator
The bank is touting its new team of global financial
advisers as a key differentiator: not only has it added a net 550
advisers over the past two years, it has also boosted average
annualised revenue per adviser from $502,000 in 2005 to $741,000 as
of the third quarter of financial 2008. Average client assets per
adviser, meanwhile, now stand at $83 million, though both these
metrics have fallen since the second quarter, when they stood at
$810,000 and $89 million respectively.
Hiring programmes have sought to populate Morgan Stanley’s
wealth business across the globe, including in India, where the
bank launched its high net worth services this September. But
Gorman has also implied that the 75-year old firm will continue to
pursue an aggressive hiring strategy on home soil.
“Some 61,000 wealth advisers work at competitive institutions in
the US,” he said. “We believe as these markets normalise there will
be tremendous opportunities to grow the business from both
experienced recruits in the marketplace and organic growth of
trainees.”
Dan Jones
