Morgan Stanley plans to significantly reduce its broker recruiting efforts, following rivals' moves and boosting resources for its existing advisers and hiring more associates for its branches.
Wealth management co-heads Shelley O'Connor and Andy Saperstein announced the changes Tuesday to Morgan Stanley managers in a memo. UBS and Merrill Lynch have also cut back on broker recruiting.
O'Connor and Andy Saperstein highlighted ongoing digital initiatives at Morgan Stanley. The firm has previously announced plans to develop new tools and capabilities, from robo advisers to artificial intelligence. Last year, Morgan Stanley lured away top talent from rivals, including Naureen Hassan who oversaw the development of Charles Schwab's robo adviser.
The firm will honor existing agreements with potential recruits who have a start date before September 1, according to the memo. Morgan's executives are also working on a new recruiting policy for select situations.
"I think you will find that they and others that are pulling back will save their paychecks for those [advisers] who are clearly growing," recruiter Bill Willis says. "I think they don't want to buy just assets and trailing-12; I think they want to buy books that are clearly growing."
Indeed, it seems that a long bull market in transition deals may be coming to an end. Moves between wirehouses have become less common, says Danny Sarch, a recruiter in White Plains, New York. Advisers have been increasingly opting to join regional brokerages such as Raymond James and RBC or go independent. "The fact is that there is attrition no matter what you do," he says, noting that even if firms don't lose brokers to rivals, they will lose a certain number through retirement, death or other means.
Sarch, noting that the average age for brokers has been creeping up, questions whether the wirehouses can continue to grow primarily through training programs and organic growth, which present their own challenges. Training programs have historically suffered low success rates.
UBS announced its decision to slash recruiting in June 2016, raising questions as to whether rival wirehouses would follow suite. But executives say they saw this as an opportunity to rebalance the firm's resources as hiring new adviser talent had become increasingly expensive.
The firm's bottom line has also benefited even as headcount fell; UBS's brokerage force shrank 2% year-over-year to 6,969 for the first quarter, but pretax profits rose 42% to $302 million.
Earlier this month, Merrill Lynch followed suite leaving Wells Fargo Advisors as the sole wirehouse fully in the competition for adviser talent.
A Wells Fargo spokeswoman declined to comment on the firm's approach to recruiting.
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