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Retirement Planning > Retirement Investing

Morgan Stanley Grabs Merrill Reps; Faces Legal Claims from Female FAs

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Under the watch of former Merrill Lynch exec James Gorman, Morgan Stanley’s retail brokerage continues to pull in top producers from its main rival. The latest to make the jump to Gorman’s current employer from Merrill reportedly include Michael Kaufman, a $3 million producer, and David Bieber, a $2.4 million producer. These advisors work in the greater New York area, while others have switched in Connecticut.

Is there any end in sight for this migration? Not for a long time, experts say. With his four years of experience as Merrill’s retail chief, Gorman knows who the top producers are and which ones are most likely to work with him at Morgan. “He can pick and choose,” says Mark Bradley of J.R. Scott, a division of Esquire Staffing, in Chicago. And he’s got a large base of advisors to sift through — to the tune of 15,350 individuals.

“Some of the Merrill Lynch advisors may not like him,” says Bradley. “But those who do like him really do, and they believe in him and assume he’ll be successful at Morgan Stanley. This means everything for the Merrill broker, since it represents less risk. Thus, Morgan Stanley should be eminently successful in recruiting top-tier players.”

The Merrill brokers should command top dollar, Bradley shares, since Gorman generally knows the integrity of their book of business. Plus, for brokers 50 and up, switching firms based on their current production could bring in a special retirement plan. “They’ll be getting paid upfront for their production, ” says Bradley. “ They can invest this and do well with it in their pre-retirement timeframe.”

Though it successfully fought off a temporary restraining order from Merrill in April related to its recruiting efforts, Morgan Stanley is still settling gender-discrimination claims brought by female advisors employed from August 2003 to the present. A deal is expected soon, says a mediator.

Merrill Lynch recently settled a claim of its own and agreed to pay nearly $30 million over its role in Enron’s ’01 bankruptcy. A class-action suit related to fraud for the underwriting of Enron securities continues. Analysts estimate this could cost Merrill from $200 million to $1 billion.

JANET LEVAUX is managing editor of Research.


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