Though rivals continue to poach its advisors, Morgan Stanley (MS) appears able to keep up. And, even though it faces the chance of a credit downgrade, its appeal as a top broker-dealer should hold up, experts say.
Morgan Stanley, Bank of America (BAC) and Citigroup (C) are all facing possible downgrades to their credit ratings by Moody's Corp., which announced the news in late February. Analysts say that this could complicate reported plans at Morgan Stanley to purchase more of Citi's interest in the Morgan Stanley Smith Barney joint venture; Morgan now owns 51% of the business.
Could a downgrade also hurt Morgan Stanley's pull as a recruiter? "The rating agencies blew out their street cred quite a while back with their investment-grade ratings of Enron in 2001 up until four days before the firm collapsed," said executive-search consultant Mark Elzweig (left), in an interview with AdvisorOne. "Unless the new rating of one firm is dramatically lower than another, most advisors will yawn and shrug it off."
Advisors tend to focus on a firm's stock price and the pricing of credit-default swaps, adds Elzweig. "Unless the rating downgrades influence these numbers, I don't think that it will matter much," he said.
Moody's consideration on MS specifically (a three level cut) would be newsworthy, and would look poor vis-a-vis competitors like JPMC, but again, I not sure that after a few weeks it would have any impact on broker recruiting
This week, Morgan Stanley recruited a four-member team with about $6 million in yearly fees and commissions, as well as some $800 million assets under management, from UBS. Meanwhile, the wirehouse firm, led by James Gorman, lost four reps to Bank of America-Merrill Lynch, Raymond James (RJF) and RBC Wealth Management (RY) with a total of about $3 million in production and some $500 million in assets.
Rick Hughes, Harry Greenberg, Shawn Senior and Daniel Silverberg, who previously did business as the Hughes Senior Group of UBS, joined Morgan Stanley Smith Barney's Mt. Laurel, N.J. office on Monday. They now report to John Caven, complex manager.
On Thursday, RBC Wealth Management said it lured Scott Karkenny away from MSSB to its Conshohocken, Penn., office. Karkenny has been in the business for more than 20 years; he has about $1.3 million in yearly fees and commissions and some $165 million in assets under management.
"We're very excited to welcome a veteran of Scott's accomplishment and stature to RBC Wealth Management," said Joe Mooney, director of the firm's Conshohocken branch, in a statement.
"His dedication to best serving the needs of his clients, as well as his industry knowledge and experience, make him a great cultural fit for the firm and the Conshohocken office."
"It's an honor to welcome John and Eric to Raymond James," said Tash Elwyn (right), Private Client Group president of RJ&A the traditional employee broker-dealer of Raymond James Financial, in a press release. "Their talent and experience will be an asset to our firm. They share our firm's values of independence and conservative management and will enhance our ability to deliver excellent service and professional advice to our clients."
