Morgan Stanley-Citi combo doesn’t float brokers’ boats
Just 27.1% of registered representatives at wirehouses and regional brokerage firms said that they would be willing to leave their firms to work for the firm created by the joint venture between Morgan Stanley and Smith Barney, according to an InvestmentNews survey.
Just 27.1% of registered representatives at wirehouses and regional brokerage firms said that they would be willing to leave their firms to work for the firm created by the joint venture between Morgan Stanley and Smith Barney, according to an InvestmentNews survey.
That isn’t a ringing endorsement for what will soon be the world’s largest brokerage operation.
Several brokerage industry recruiters expressed surprise about the results of the survey, in which 264 reps participated.
“Make no mistake about it — these are two fabulous firms,” Rick Peterson, founder of Rick Peterson & Associates, a Houston-based search firm that specializes in the brokerage industry. “There may be some questions, however, about their ability to keep growing the business once they’re combined.”
Such uncertainty — namely, how Morgan Stanley and Smith Barney reps will avoid competing against one another — may make the joint venture an unappealing landing spot right now.
But over the long run, the reps made clear that they think the linkup between the two New York wirehouses will likely create a more formidable brokerage force than those created by the absorption of Merrill Lynch & Co. Inc. by Bank of America Corp. and the marriage of Wells Fargo & Co. and Wachovia Corp.
Nearly half (46%) the wirehouse reps said that the Morgan Stanley-Smith Barney merger would produce the most powerful fleet of brokers, while just 33.8% said that about the combination of BofA of Charlotte, N.C., and Merrill of New York. Meanwhile, 20.3% of wirehouse reps said that that combination of Wells of San Francisco and Wachovia of Charlotte would emerge as the force with which to be reckoned.
“The two previous deals were bigger bank mergers first and foremost, and the combined brokerages were a byproduct,” said Jodie Papike, vice president of Cross-Search, a Jamul, Calif.-based recruiting firm for the brokerage industry. “This deal between Smith Barney and Morgan Stanley strictly involves the brokerage businesses and puts the advisers front and center.”
Reps also said, however, that there is a good chance this latest deal will prompt more brokers to jump ship from wirehouses altogether. About 77% of respondents said that the Morgan Stanley-Smith Barney deal would further fuel the movement by brokers to independent platforms.
E-mail Mark Bruno at [email protected].
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