- Morgan Stanley expects the number of financial advisors in its ranks to stay relatively static over the next year to 18 months after picking up experienced advisor recruiting so far this year.
- That comes as the firm, which is one of the world’s largest wealth managers, will slow hiring of novice financial advisors through the end of this year, a person familiar with the matter said.
- Last week the firm reported 15,469 advisors at the end of the third quarter, the first quarter-over-quarter rise in more than a year, according to one analyst who covers the firm.
- Morgan Stanley earlier this month officially bought E-Trade and said it intended to acquire investment management firm Eaton Vance, both significant additions to the wealth management business.
- Visit Business Insider’s homepage for more stories.
Morgan Stanley plans to slow hiring into its massive financial advisor training program through the end of this year as remote work has created a less-than-ideal environment for novice advisors getting their start, according to a person familiar with the matter.
Those plans come as Morgan Stanley expects its overall financial headcount to stay relatively flat over the next year to 18 months, the person said, after recently snapping up large financial advisor teams from competitors and booking the first rise in advisors in more than a year.
“We’ve backed off in terms of the number of trainees, and that’ll probably last certainly through the end of this year, and we’ll see what the new year brings,” said the person, who was granted anonymity to discuss the firm’s plans freely.
Hiring into the rigorous, multi-year program at Morgan Stanley typically tapers off at the end of the calendar year, and other firms have made similar moves.
But the pandemic has made training particularly difficult, the person said, since advisors-in-training cannot meet with prospective clients and receive the same in-branch mentoring experience as they usually would. Morgan Stanley Wealth Management can hire as many as one thousand candidates into the program in a given year.
The remote work environment this year has impacted other firms’ training programs. During the summer, Merrill Lynch Wealth Management paused its advisor trainees’ reach-outs to potential clients after there were outreach-related violations, Business Insider previously reported.
Morgan Stanley’s overall hiring has picked up in recent months, poaching large teams of financial advisors from elite wealth management competitors like Bank of America’s Merrill Lynch and UBS, according to recent reports from AdvisorHub, which tracks individual advisors’ moves.
Last week, Morgan Stanley reported 15,469 advisors at the end of the third quarter, the first quarter-over-quarter rise since the first quarter of 2019, according to JMP Securities analyst Devin Ryan.
That increase of 7o advisors from a quarter prior was the largest net addition in nearly five years, Ryan told Business Insider. Financial advisor trainees are counted in the firm’s overall financial advisor population, a practice similar to other wealth managers with large training programs.
The business reported client assets of $2.85 trillion during the third quarter, a rise of 11% from a year ago and 7% from the quarter prior, coming as the markets have recovered losses from earlier this year and shot up to near all-time highs.
“The advisors that we are bringing in are much larger teams than we have had in the past,” the person familiar with the matter said, referring to experienced advisor recruits from rival firms.
Even as the New York-based firm plans to flatten out its advisor numbers over the next year, its recent hiring of experienced advisors has been notable among the four so-called wirehouses — Morgan Stanley, UBS, Wells Fargo, and Merrill Lynch, which has pulled back from hiring experienced recruits — that have the largest advisor forces.
Hiring in recent months has underlined Morgan Stanley’s longer-term strategy of doubling down on the business of managing money for wealthy individuals and leaning further into safer businesses known for reliable revenue streams.
When the firm first said it would buy discount brokerage E-Trade, a deal it closed on earlier this month, Morgan Stanley said its combined wealth and investment management businesses will contribute 57% of its overall pre-tax profits, up from just 26% a decade ago.
It also just announced plans to buy the investment management firm Eaton Vance.
Morgan Stanley Chief Financial Officer Jonathan Pruzan said during a virtual industry conference last month that historically, the firm has lost “a couple hundred” advisors each year on a net basis, but this year, “net recruiting is much closer to zero.”
“What that does is, it sets us up real well for future years, because the revenues and assets that we lose in the net recruiting situation has historically been negative — we would expect to be positive this year,” he said, according to a transcript on the investment research platform Sentieo.
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