Morgan Stanley: Cruisin' Baby

Dec 1, 2007 12:00 PM, Halah Touryalai

Tweet

Article tools
sponsored by:

Morgan Stanley at a Glance:

Total client assets: $734 billion

Number of advisors: 8,341

Average annualized revenue per advisor: $817,000

Pretax profit margin: 17%

Mascot: Blue right triangle

Best management move: Investments in work station

Most controversial move: Offering enormous sign-on bonuses

Where are we? Ed Jones? Nope, it's Morgan Stanley. And yes, they have happy reps too! Okay, so maybe Morgan's overall score of 7.6 doesn't hold up next to Jones' near 10, but things are looking up for the firm. The biggest indicator of Morgan's upward mobility: For the second year in a row, the firm showed the most dramatic increase of any of the firms in its overall score, which is up from 7.2 last year.

While the other firms have either increased their scores by a couple of tenths of a point, or in some cases, dropped by that much, Morgan continues its turnaround from loser to winner. The best part: Advisors are feeling much better about working there, and are blessing the place with high praise. Topping their list is management — which they say is focused, strong and helping to bring prestige back to the Morgan Stanley name. Indeed, one of the biggest overall scoring jumps for Morgan came in the management category, which rose to 8.0 from 7.5 last year. “We're getting back to where we were 10 years ago. Anyone with money is saying ‘I want access to Morgan Stanley's IPOs, brain capital and platform’,” says one Morgan rep.

And all that, he says, is the result of the firm's leadership transformation. Yep, reps say James Gorman, who became the head of the Global Wealth Management division nearly two years ago, is still going strong. “I believe deeply in our leaders, John Mack and James Gorman,” says one rep that answered the survey. “The speed of change at this firm has been remarkable and clearly visible, and all the changes are heading in the right direction.” Earlier this year, Gorman told Registered Rep. that the best thing his management team did was make a lot of tough decisions, including letting go about 1,500 advisors that were lagging in production. That activity gave bigger reps the sense that the firm was headed in a strong strategic direction.

But these days, Morgan reps are more confident in their firm all around. The payout score increased to 6.9 from 6.5, and the benefits score rose to 8.2 from 7.8. Advisors are also happier with the firm's product offering, giving the category an 8.5, up from 8.1 last year. The firm has also made some major improvements in compliance, with that score jumping to 7.0 from 6.1 last year. “The company has a momentum going for it right now. It hasn't had that for many years,” says one advisor.

Of course, there's still room for improvement, particularly in the area of support, where Morgan lags far behind its rivals. Morgan advisors gave their firm a score of 6.8 in this category, compared with an average of 7.8 for all firms. The biggest hit there came from quality of operations and account statements.

In the meantime, though, Gorman is still kicking. After nearly a year of sorting the best and worst of Morgan Stanley, he says he's just at the beginning of a long-term expansion of the business. And it looks like the company has got plenty of faith in him. In October, in an internal memo from CEO John Mack, it was announced that Gorman would serve as co-head of strategic planning for all of Morgan Stanley where he (and Colm Kelleher, chief financial officer at the firm) will help map out the company's long-term goals. Advisors are optimistic about the future: “The improvements will definitely continue. Next year, you'll see another jump in the score. I would bet on it,” says one advisor.