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As Morgan Stanley Loses Another Team, Is It ‘Under Siege?’

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The Raymond James (RJF) employee-advisor channel said Tuesday that an advisor team joined it from Morgan Stanley Smith Barney (MS) with about $118 million in client assets and $800,000 in yearly fees and commissions. The financial advisors moving to Raymond James & Associates are Tom Ford and Jeff Jones, who recently formed the Ford Jones Group in Peoria, Ill.

“I am happy to welcome this accomplished team to Raymond James,” said John Kuklenski, director of the North Central Division for Raymond James & Associates, the traditional employee broker-dealer of Raymond James Financial, in a press release. “The Ford Jones Group is a tremendous addition to the Raymond James family.”

There’s been plenty of movement this summer affecting advisors at Morgan Stanley, which is led by James Gorman (left). Last week, for instance, Raymond James recruited Robert D. Powell, Walter M. Urban and Tyler Mercer, who recently formed Alpha Capital Partners in Mount Laurel, N.J., away from the Wall Street firm. The team had previously managed $187 million in client assets and had annual fees and commissions of $1.45 million.

“The teams leaving Morgan Stanley are of all sizes,” said Danny Sarch, president of Leitner Sarch Consultants, an executive-search firm, in an interview with AdvisorOne. “Morgan Stanley is under siege, and this has been a consistent problem for 2012.”

There could be a slight pause in the outflow in mid-July, as some Morgan Stanley advisors’ technology is converted to a new system in some parts of the country, adds Sarch, who recruits for some of the wirehouse’s rivals. “Some may want to go before this, or they may wait until afterwards,” he said. “But the movement could be dramatic in the second part of the year.”

Morgan Stanley, though, says this opinion is incorrect. “Advisor attrition is at normal levels and we’re seeing a nice flow of incoming recruits from across the competition,” a spokesperson said in a statement.

Sarch argues, however, that the integration of the Morgan Stanley and Smith Barney brokers, technology issues, the centralization of decision making and other factors work against it. Plus, the firm was downgraded two notches on Thursday by credit-rating agency Moody’s, though that was not as bad as forecasted.

Gorman, speaking at the conference in New York last week before the downgrade, insists that Morgan Stanley has the collateral and liquidity to “manage whatever outcome [will occur] if Moody’s [Investors Service] goes to the full extent of its guidance,” according to a Dow Jones report on June 12.

Beyond the downgrade, some MSSB advisors have other issues with the firm, Sarch says, and are carefully weighing their options. “As time goes by, the golden handcuffs [from Morgan Stanley retention deals] become less important relative to recruiting deals,” he said. “If you have the money to give back, the question becomes what price is your misery?”

One of the former MSSB advisors joining Raymond James this week seems to agree.

“The most important factor for us in selecting a new firm was finding the right cultural fit,” said Ford, in a statement. “Raymond James is exactly what we were looking for. The firm is structured to serve the advisor, and you can get assistance from a live person when you pick up the phone. That increased level of support from Raymond James helps us better serve our clients and manage our business.”

And, like some other firms, Raymond James expects to keep adding MSSB advisors. “We continue to see significant interest from advisors at Morgan Stanley, including legacy Smith Barney advisors, as they seek a firm that is still focused on the private client business,” said Tash Elwyn (right), president of Raymond James & Associates Private Client Group, in a statement.

“In addition,” he said, “the investments we continue to make in technology coupled with our vision for our newly launched Advisor Access desktop, is of great appeal given the technology challenges many wirehouse advisors, in particular those from MSSB, are enduring.”


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