Morgan Stanley Tough on Brokers
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James Gorman, president of Morgan Stanley’s global wealth management group, advised his securities industry colleagues to be “brutal” in weeding out low-producing brokers from their ranks because they hurt profits and reputation.
“We are defined by the bottom half,” he said in a keynote address at the Securities Industry Association’s sales and marketing conference Thursday. “You’ve got to be brutal in defining the bottom half of your organization.”
A disproportionate amount of regulatory issues in retail brokerage originate with the lowest-producing brokers, he told reporters after his talk.
Within months of joining Morgan Stanley last February, Mr. Gorman fired 500 of the firm’s more than 9,000 brokers. The company now has about 8,000 brokers, compared with more than 15,000 at Merrill Lynch & Co., and profit margins in Mr. Gorman’s unit have risen to 12% from single digits when he arrived.
Mr. Gorman urged his colleagues to take advantage of today’s strong equities markets, when profits are rising, to make tough management decisions and to diversify into new product areas.
