MSSB Can’t Cut Costs by Lowering Broker Pay

Posted by adaniels in Blog on May 27, 2011

According to Investment News, MSSB can’t cut costs by lowering broker pay because McCann and Krawcheck are on the prowl for MSSB talent.

According to the article, Brad Hintz, an analyst at Sanford C. Bernstein & Co. said in an interview with Tom Keene on Bloomberg Radio’s Bloomberg Surveillance, that, “Morgan Stanley Chief Executive Officer James Gorman can’t cut expenses at the joint venture with Citigroup Inc.’s Smith Barney as fast as he would like because “he’s being checkmated by Sallie Krawcheck and Bob McCann.””

Hintz also stated, “Investors and analysts have been disappointed by the speed of the Morgan Stanley Smith Barney integration.  The unit posted a pretax margin of 9 percent in 2010, less than half of Gorman’s goal of more than 20 percent.  “Bank of America’s wealth and investment management division, which includes Merrill Lynch brokerage and U.S. Trust, had a margin of about 15 percent.

All of the wirehouses are still competing fiercely with one another to attract top talent.

It’s a good time to be a financial advisor, if you’re considering a transition.


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