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Industry
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Morgan Stanley Is Not Planning Thousands Of Layoffs, But They've Considered The Concept |
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Monday, July 18, 2011 03:32
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Tags: Morgan Stanley Reports that Morgan Stanley is gearing up to cut "several thousand" jobs may have been a little too quick to interpret the giant firm's contingency planning as a done deal.
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Morgan is definitely trimming about 300 underperforming reps -- largely younger ones -- from its sales force this quarter.
But speculation about much deeper cuts seems to be jumping the gun a bit.
Morgan's Marie Claire Delaney debunks the idea of broad-based layoffs as simply not on the table right now.
She says the firm is always weighing its payrolls to ensure that it's "right sized," but it's a long way from evaluating scenarios to signing pink slips.
Still, the very notion that Morgan is open to the idea as part of its strategic planning might be where the speculation originally started.
The reporter who broke the story quoted an anonymous source within Morgan. Maybe the discussion got garbled along the way?
http://www.foxbusiness.com/markets/2011/07/13/morgan-stanley-could-be-next-wall-street-giant-to-cut-staff/
http://www.reuters.com/article/2011/07/13/morganstanley-layoffs-idUSN1E76C1W920110713
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Some Nibbles, But No Bites On Schwab's Franchised Advisory Program |
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Monday, July 18, 2011 01:37
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Tags: Schwab Charles Schwab has apparently gotten about 300 inquiries but no firm sign-ups yet from established RIAs curious about its controversial new franchised advisory office network.
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Part of the problem might be that while Schwab is offering established advisors the weight of its national brand -- and matching funds for local advertising and outreach -- the recruiting message is a bit confused.
Schwab nominally wants to court "experienced financial professionals" who already have their own books of business.
Great so far, but the company's new recruiting site keeps referring to the franchised branches as an advisor's "new" business stocked with existing Schwab clients to tide advisors over in what the company explicitly calls "the early years."
Which is it?
Even Chuck Schwab's exclusive video commercial on the site seems a little tone-deaf.
There's plenty of talk about how great this could be for Schwab and how eager Schwab clients are to get more face-to-face time, but not much left for the advisors he's theoretically wooing to the brand.
As they say, "We're building on our history of innovation by creating a franchise opportunity, accelerating our expansion into communities like yours."
A lot about Schwab and how fast it's expanding. But if anything, this is more of a threat: we're coming to our town, so join up.
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Separate But Equal: SIFMA Weighs In On What It Wants A "Fiduciary Broker" To Look Like |
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Friday, July 15, 2011 10:53
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If the lobbying group for big brokerage firms had its way, the "universal" fiduciary standard laid out in the Dodd-Frank Act should be applied in different ways for brokers and investment advisors.
The Securities Industry and Financial Markets Association sent Mary Schapiro a 24-page open letter yesterday detailing its thoughts on a broker fiduciary standard.
As SIFMA points out, Dodd-Frank mandates "no less stringent" rules for how brokers should manage their relationships and responsibilities to clients than those that investment advisors currently obey.
However, no less a figure than Barney Frank, co-author of the reforms, has pointed out that "no less stringent" doesn't necessarily mean applying the Investment Advisers Act of 1940 to everyone, SIFMA argues.
If that were the case, Dodd and Frank would have just eliminated the broker exemption in the IA Act.
So instead, SIFMA wants an all-new fiduciary standard for brokers.
Naturally, that will take time and effort to rough out -- the SEC will have to figure out how to define "investment advice" in a sales-driven context -- and would have to allow for clients to opt out of clearly disclosed conflicts of interest.
That last bit is interesting, since "conflict of interest" usually means that the advisor is working against the client in some way.
Perpetuating situations where such conflicts "may be consented to by the customer" seems to indicate an urge to steer accounts toward less-than-optimal products that enrich the "fiduciary" advisor and only act as a drain on the client's resources or performance.
SIFMA's lawyers also want any fiduciary relationship to apply to brokers on an account-by-account basis, as it currently does with dual-registered advisors. Once the client signs the contract, the fiduciary responsibility would begin.
In general, SIFMA is happy with its member firms' reps being regulated like investment advisors in most other spheres: advertising, supervisory requirements, licensing and registration, books and records, and so on.
But while they're now willing to consider a fiduciary rule, they still want two different playing fields.
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Morgan Stanley Reps Accelerating Shift To Fee Business Ahead Of Fiduciary Rules |
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Thursday, July 14, 2011 10:16
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Tags: fiduciaries | Morgan Stanley It looks like the wirehouse community is now taking the prospect of universal fiduciary duty seriously enough that some reps are adopting fee-based compensation models now.
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Charles Johnston, vice chairman of Morgan Stanley, says that an "interesting trend" has emerged over the course of 2011 as more of his people move their accounts to the firm's advisory platform.
He suspects the migration is motivated by a sense that "the world's going to change" when -- not if -- the SEC mandates that advisors in the commission-driven channel need to treat their clients with fiduciary levels of care.
That shift could start coming in the next few weeks, since the SEC has promised action on the issue as early as later this month.
It might be ironic that Johnston says his reps are looking for a more stable regulatory environment by moving to the RIA side of the business.
After all, it's the RIAs who are still wondering who's going to regulate them next year, much less what shape that supervisory framework will take.
Johnston made his comments at SIFMA's regulatory conference this week.
RBC Wealth Management CEO John Taft confirmed that there's a sense in the wirehouse that shifting to fees is now a regulatory "safe harbor" and "the simplest thing to do" in order to manage re-regulation risk.
SIFMA's position is that if too many brokers shift to fee-based models, middle-market investors will have to pay more money for advice.
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Merrill Lynch Reportedly Flirting With Bonus Pay For Running Fewer, Bigger Accounts -- But The Bugs Might Not Be Worked Out Yet |
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Wednesday, July 13, 2011 10:49
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Tags: high net worth | Merrill Lynch Memos have been flying around Merrill Lynch about ways to get the Thundering Herd to court higher-quality clients and stop simply gathering the assets.
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Dow Jones got its hands on one proposal that would pay Merrill advisors a bonus if they trim their books to no more than 150 families, most of which have $250,000 or more to invest -- the firm's target for "affluent" investors.
A full 35% of the money has to be in fee-based accounts and yes, cross-selling into advisory and banking products would be rewarded.
Finally to be eligible for the bonus, Merrill advisors need to get their client retention numbers up to 98% or above.
Additional incentives are available for advisors who get professional certifications or shift to a team-driven approach.
It's not clear whether Merrill hopes the smaller accounts will be shifted to Merrill Edge, which is explicitly designed to work with clients with under $250,000.
Merrill advisors currently work with about $98 million apiece on average.
That means that in order for the high-net-worth "enhanced" grid to kick in and make sense, they've got to make sure that each of their no more than 150 client households actually has at least $650,000 invested in the firm.
The typical Merrill advisor who simply followed all the rules and courted the maximum number of clients with the minimum $250,000 to invest would actually have to surrender $60 million in AUM and 2/3 of his or her production.
Surely Merrill doesn't want that.
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