Key to the success of Morgan Stanley Global Wealth Management will be the firm’s ability to borrow ideas from the institutional side of the ...

Key to the success of Morgan Stanley Global Wealth Management will be the firm’s ability to borrow ideas from the institutional side of the business and apply it to the assets of individual clients – James Gorman, president and chief executive officer of Global Wealth Management Group, told a recent investment conference. Last year, Mr Gorman set up a new business unit called the Tactical Advisory Group within Morgan Stanley to take the best ideas from the institutional business and use them to generate ideas purely for the private client. “To my knowledge, no management [at Morgan Staley] had ever crossed from the institutional side to the retail side since the merger [with investment firm Dean Witter] in 1997,” Mr Gorman said. Mr Gorman also spoke about increasing the productivity of the wealth management group. Mid-way though last year Morgan Stanley announced it had fired around 500 financial advisors and established a new compensation structure to reward higher producers. “We went though a programme to focus on the higher end producers last year,” said Mr Gorman. Morgan Stanley currently has around 8,000 financial advisors. He noted, before the cull, the bottom 1 per cent of financial advisors, from a revenue standpoint, accounted for 22 per cent of legal fees for the group. “They will be failing at some point anyway, all you are doing by paying them until they eventually fall out of the business is incurring a cost that doesn’t need to be incurred.” As an indication that Morgan Stanley is attracting higher producing financial advisors to the fold, Mr Gorman pointed out that the average revenue for an advisor in the wealth management group in 2002 at the business’s “low-point” was $315,000 per year, compared to the end of 2006 when the average yearly revenue was $720,000.