Morgan Stanley Smith Barney is laying off between 200-300 lower-level advisors, a company source who requested anonymity confirmed late Wednesday. It is also considering changing the name of the group and dropping “Smith Barney,” according to Dow Jones and Reuters.
The job cuts generally affect lower-producing advisor trainees with three years or less of experience and $25,000 yearly fees and commissions, and those with five years or less of experience and $75,000 a year in production.
As of Dec. 31, 2010, MSSB included 18,043 financial advisors, down 1% from 18,135 a year earlier, and off slightly from 18,119 in the third quarter of 2010. Morgan Stanley, now led by Merrill Lynch-veteran James Gorman, who joined the company in February 2006, reportedly hired some 2,000 trainees last year.
Average revenue (or gross production) per advisor stood at $742,000 as of the fourth quarter, an increase of 7% from $692,000 a year before and 6% from $686,000 in the third quarter.
By contrast, MSSB rival Merrill Lynch had 15,498 registered reps at year-end, an increase of 327 advisors over the fourth quarter of 2009 and 22 more than in the third quarter of 2010. Average annualized production per FA was $854,000 for 2010 and $916,000 for the fourth quarter.
“This is a high overhead business, and major wirehouses want to cut their losses early,” said Mark Elzweig (right), an executive search consultant in New York, in an interview with AdvisorOne. “If a trainee can't make it happen pretty soon, they'd rather take a shot with someone else.”