• Title: President, Morgan Stanley Wealth Management
  • President, Morgan Stanley Investment Management
  • Time in Current Position: 3 years
  • Time with Firm: 3.5 years
  • Previous Employer/Title: President, Merrill Lynch
  • Years in the Industry: 21
  • First Job in Industry: Investment Banker
  • Alma Mater: BA, Colgate University; Yale University School of Law

What is the state of wealth management today?
GREG FLEMING: Let me answer that by putting some things in context. I traced the beginning of the seeds of the financial crisis all the way back to 1984. At that time, savings rates in the United States were still in the 8% to 10% range for individuals. Governments were much more in balance from a fiscal standpoint. From that period until 2007, $40 trillion in debt—household, corporation, financial institution and government—was added across the American economy. And even though it is a very large economy, that is a lot of money. If you're adding that much debt, the deleveraging process takes a while. The American economy is now starting to pull out of the effects of this deleveraging process. The underlying business cycle is starting to take hold, and I think the U.S. economy could be entering a much better time. When you're looking at the competitive position of the U.S. economy relative to other economies around the world, it's a pretty strong one. Against that backdrop, the wealth management industry in this country, I think, is also going to experience a very good period. I do think if you're running a full-service wealth management business, as we are at Morgan Stanley, this business could thrive over the next five or 10 years. We at Morgan Stanley feel very good about wealth management, where we are, what the future is going to bring. We're working quite a bit on connectivity between wealth management and other areas of the firm. So when we look at it now over the next five or 10 years, we're very upbeat.

What will the industry look like in 10 years?
GF: My view is that the changes will be more at the margins. We don't see major changes in the wealth management landscape over a five- to 10-year period. As somebody who has now been around for a few decades, I know that the predictions of major structural change in industries like wealth management, that have been around for a long time, are overstated when you're heading into a supposedly new period.

So for Morgan Stanley, it's "stay the course?"
GF: Very much stay the course.

The technology changes in the wake of the Smith Barney acquisition and the move to a new platform recently were very frustrating for advisors and resulted in advisor defections. What has Morgan Stanley learned from this experience?
GF: That project was one of the largest technology integrations that's ever been done. Those are challenging under any circumstances. When we were doing a lot of the conversion of the financial advisors onto this new platform that we built last summer, there were clearly challenges. Everybody came onto the new platform. In particular, for many Smith Barney legacy advisors, there were things on their old platform that didn't exist on the new platform out of the gate. I did spend a lot of time in branches last summer visiting financial advisors, telling them I understood some of the challenges. We told them there would be significant progress over a 12-month, and then 24- and 36-month period. There has been progress, so morale is in a much better spot. Attrition is down significantly.

What is the biggest revenue opportunity you see for Morgan Stanley right now?
GF: We think we have the best consulting advisory platform in the industry. We had $629 billion in assets in that business at the end of the second quarter. Typically, the advisor charges one fee. It's managed accounts. We think it's the crown jewel of Morgan Stanley's business. It's a business that actually has a 40-year history at our firm. We are the largest in the business; we think we're the best. We added $25 billion in net new flows in that business in the first six months of the year. So we're growing nicely. We think that business could be $1 trillion in assets under management for us over the next three, four, five years. It's a business that's good for clients, it's good for financial advisors, it's a good business for us as a firm. Regulators like the business. So, it's a good business for everybody.

As investment banking and proprietary trading come under increased scrutiny, a lot of wirehouses are leaning on their wealth management divisions to generate revenue gains, largely by using advisors to refer business throughout the organization. How is that playing out at Morgan Stanley?
GF: There has been a migration of assets from Citi as part of the [completion of the acquisition of Smith Barney]. There are $100 billion in deposits at Morgan Stanley, and by 2014 it will be close to $140 billion. They are the cash balances of our clients across the millions of client accounts we have—you become a bank by being a major player in wealth management. From our vantage point, the best thing we can do with that cash is to lend it back to our clients. Shelly O'Connor, one of our top three executives, is running a group of a couple hundred private bankers who are working out in the whole branch network, working with FAs to help them with client lending needs. We've been doing it for the past couple of years. The credit losses on the lending portfolio are low because we know our clients so well, and it's part of the overall client relationship. That will continue to grow going forward. We also have multiple initiatives between the institutional securities business and wealth management. So, for example, if we take a company public, it's appropriate for the executives of that company, the people for whom we're helping to create wealth, to be introduced to our top financial advisors. Those introductions get made on a much more consistent basis. Our financial advisors often know the executives of private companies across the country. We take those referrals and we get them into our investment bank. So the feeling across the firm is one of enhanced morale, momentum and having started to turn the corner and move forward from what was, here and everywhere else, a challenging few years.



  • Number of Employee Channel Advisors:16,321
  • Total AUM in Employee Channel:e $1.8trillion
  • Average Employee Advisor 12-Month Trailing Production: $866,000
  • Average Employee Advisor AUM: $109 million
  • % Women Advisors (Not including registered associates): Not provided
  • % Minority Advisors: Not provided

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