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Morgan Stanley alters advisor training amid coronavirus upheaval

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As Morgan Stanley strives to keep its talent pipeline flowing, it is changing some performance metrics and training for candidates in its advisor training program.

It’s a sign of how the firm is not only adjusting for the current coronavirus upheaval, but how it is preparing for the day when the risks presented by the virus subside.

“We won’t hold them to the same development metrics that we otherwise would because they won’t get the same level of mentoring and coaching and things like that,” said a person familiar with the matter who asked not to be named in order to discuss the changes.

It’s one piece of Morgan Stanley’s growth strategy which includes big investments in digital technologies, its acquisition of Solium and its pending deal to buy E-Trade — a move that would boost its reach in the stock plan business. The company said it added over 100 new clients during the quarter to its platform for stock plan and financial wellness services, bringing the total new clients since the Solium acquisition to more than 455.

The wirehouse is transiting training for new advisors into digital formats. Instead of hearing from company leaders and experts in a classroom-type setting, trainees may meet with them via video conference, according to people familiar with the matter. If the coronavirus situation becomes worse, the company will make more adjustments.

It isn’t just trainees who have seen expectations shift at the company. Morgan Stanley is delaying planned changes to its compensation plan for advisors in recognition of the dramatically different operating environment.

The company’s roughly 15,400 financial advisors have been at record levels of client engagement, according to the company.

“Clients are also looking for engagement at a pace they would not otherwise do,” says a person familiar with the matter.

The firm had intended on increasing some grid thresholds by about 10%.
March 27

That engagement is partially reflected in fee-based asset flows, which were up 24% year-over-year, climbing to $18.4 billion for the first quarter from $14.8 billion, according to the company’s recent earnings report, which also detailed how Morgan’s performance was affected by the pandemic and associated market volatility.

The firm’s wealth management revenues slumped 8% to approximately $4 billion largely due to a $400 plunge in transactional revenue. However, asset management revenue for the unit, at $2.6 billion, was up 14% or approximately $300 million, cushioning the blow.

Overall, client assets slid 3% to land at $2.4 trillion. Other firms experienced more pronounced declines. Wells Fargo said client assets for its wealth management business dropped to $1.6 trillion from $1.9 trillion, a 12% drop from the year-ago period.

Morgan Stanley executives caution that despite some bright spots in the earnings results, they are anticipating more headwinds this year.

“I don’t know how deep this recession is going to be,” CEO James Gorman told analysts during a April 16 conference call.

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