Morgan Stanley is wirehouse hiring winner in 2021

Morgan Stanley is wirehouse hiring winner in 2021
It was the only wirehouse to show a net increase in financial advisers last year, according to InvestmentNews data.
MAR 22, 2022

As financial advisers flocked to registered investment advisers last year, a look at the net numbers for advisers last year at the Big Four wirehouses — Merrill Lynch, Morgan Stanley, Wells Fargo Advisors and UBS — show the difficulties that sleeve of the investment advice industry is having in hiring advisers.

Only one of the four firms, Morgan Stanley, showed a net increase in financial advisers in 2021, as determined by the number of advisers joining a firm minus the number of advisers leaving, according to InvestmentNews data.

Morgan Stanley had a net positive of 113 financial advisers hired by the firm last year, while Merrill Lynch had a net loss of 1,070, according to InvestmentNews data. Wells Fargo Advisors and UBS had net decreases of 999 advisers and 109, respectively.

An indication of Morgan Stanley's appetite for hiring was the 15% increase in loans it made to financial advisers in 2021, according to the firm's annual report. Such loans, which are used to compensate new hires and are deemed "employee loans" at Morgan Stanley, totaled $3.74 billion at the end of last year, compared to $3.24 billion a year earlier.

The wirehouse channel of the financial advice industry is the most concentrated and highly experienced group, with roughly 53,000 financial advisers among the four firms. Wirehouses have the wealthiest clients and their advisers generate the most revenue.

The slack pace of hiring at the wirehouses is to be expected. The big firms, for the most part, have recently said they are either shying away from recruiting, which is expensive, and instead focusing on training and technology to have advisers generate more revenues.

In 2017, Morgan Stanley and UBS said they were leaving an industry agreement known as the Protocol for Broker Recruiting, which makes it easier for competitors to hire financial advisers.

Merrill Lynch has focused on trainees and hiring brokers with limited experience, although the firm recently indicated that it wants to boost hiring of select experienced advisers in 2022. Wells Fargo Advisors recently ramped up efforts to hire advisers but continues to see advisers leave and move to other firms almost six years after its banking scandals.

It's too early to determine which of the four wirehouses will have the most successful year in hiring advisers in 2022, but Morgan Stanley will undoubtedly attempt to capitalize on its success last year.

A spokesperson for Morgan Stanley declined to comment about hiring for this article. A Merrill Lynch spokesperson also declined to comment, but the firm has indicated recently that competitive attrition in the second half of 2021 declined back to historic norms of 4% of its adviser workforce.

A spokesperson for Wells Fargo Advisors said that the firm had, as of March 18, recruited and hired advisers with more than $46 million in production and a combined assets under management of more than $5.4 billion.

But competitors and industry recruiters said that the firm is offering a total recruiting package of three times an adviser's annual fees and commissions, known in industry shorthand as production, for select recruits. And that could be higher in some cases.

"Morgan Stanley last year backed away from the not hiring message and is currently hiring advisers more selectively," said one industry recruiter, who asked to speak anonymously. "The firm is looking for advisers in that sweet spot, doing $1 million or more in annual production and ... probably part of a team. They're realizing with all the changes that they have a special moment and are trying to lean in and make it rain a little bit."

According to InvestmentNews data, Morgan Stanley last year hired 177 financial advisers from Merrill Lynch, 151 from Wells Fargo Advisors and 72 from UBS. Meanwhile, those three firms hired a total of 85 advisers from Morgan Stanley in 2021.

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