Wealth management industry veteran Shelley O’Connor is co-head of wealth management for Morgan Stanley Wealth Management in Purchase, New York. Prior to her promotion in early January, O’Connor was managing director and head of field management, overseeing 15,800 advisors with $2 trillion in client assets.
Please tell us about one or more of the following: (a) the beginning of your career in wealth management; (b) your first client/first boss; (c) what you learned at a broker-dealer (BD) or firm early in your career.
I joined Morgan Stanley in 1984 right out of college. I started in the San Francisco Private Wealth Management branch, which was focused on serving ultra-high-net-worth clients. My plan was to work for a year before going to graduate school in psychology, so I didn’t really know much about the firm. After two weeks on the job, I wanted to learn more, so I started attending a weekly research meeting for financial advisors that was broadcast from the New York office. I became hooked on the business and never left.
When I started, there were almost no women in senior roles at Morgan Stanley, which was the situation at many of the firms on Wall Street at the time. Because there were so few female role models, I realized I would need to create my own career opportunities. Over the years I raised my hand repeatedly for new roles and assignments. I found mentors and sponsors who helped me rise through the organization until I became the Southwest regional manager for Private Wealth Management, based in Los Angeles.
When did you move to your current firm, and why did you do so?
I have spent my entire career at Morgan Stanley. The reason I’ve never left is I believe the firm is a true meritocracy. I have found that there are countless career opportunities within the organization for people who stay focused and work very hard.
While I’ve never changed firms, after 20 years in California branches I moved to our New York headquarters to become the chief operating officer for the entire branch organization. By 2004, the business had grown from several hundred advisors to over 8,500, and the firm had expanded into broad-scale wealth management. Although my experience had been focused on serving the ultra-high-net-worth investor, I believed this new role would be a chance to really stretch myself and open the door to many more business opportunities — and it did.
Since coming to New York, I’ve had exciting opportunities to help shape the growth of our Wealth Management business. I served as the CAO (chief administrative officer) for Wealth Management in the early years of the joint venture with Smith Barney, and then as CEO (chief executive officer) of Morgan Stanley’s Private Bank as we relaunched our vision to build out a suite of lending and cash management products and services to help our advisors serve both sides of their clients’ balance sheets. Then two years ago, I was asked to take on my [recent] role as head of field management.
What is/are the most significant changes you have seen at your firm, and why did they occur?
When I started at Morgan Stanley, it was a private company with maybe 4,000 employees. Although the firm was a leader in investment banking and other institutional businesses, the Private Wealth Management business was still very new, having been established just seven years before I joined the firm. Although this wealth management business continued to expand over the next two decades, we had only a few hundred private wealth advisors when the firm merged with Dean Witter in 1997. Overnight Morgan Stanley became a major presence in the broader wealth management business; our leadership position in wealth management was further strengthened when we joined forces with Smith Barney in 2009.
We are now one of the largest wealth management businesses in the world and responsible for a significant portion of the firm’s revenue. Having a strong wealth management business is not only a terrific complement to our institutional businesses; it also helps create a steady revenue foundation for the firm.
What is the biggest challenge facing your broker-dealer/firm today, and how is it tackling the matter? How are you involved in that change/project?
The firm is focused on making the right investments in the business to drive growth across the entire organization and [keeping] us well-positioned to effectively respond to an ever-changing industry environment.
On the field management front, we are focused on several important drivers of growth. The first is helping our advisors create strategic partnerships across the full firm to deliver the best of Morgan Stanley to their clients. This includes leveraging our suite of lending and cash management solutions to serve the full range of clients’ financial needs across both sides of their balance sheets.
Next is investing in technology, including digital capabilities, to enhance our platforms and create greater efficiencies for advisors and make it easy for clients to do business with us. And last, we are continually investing in our people. This includes training advisors who are new to the business through our financial advisor associate program, and by providing advanced training to our seasoned advisors along with the teams that support them in our branches.
What is the biggest issue confronting the wealth management field today, and how should the industry overall — or financial advisors overall — address it?
One of the big challenges facing the field is increasing the diversity of our advisor and branch management ranks and attracting and training the next generation of advisors and field leaders. Our long term success will depend on our ability to look like the clients and communities we serve.
Women and millennials are two growing client segments we want to be well positioned to serve. Today women control investment decisions for almost 40% of U.S. investable assets, and in the coming decades, almost $60 trillion in intergenerational wealth will flow from baby boomers to their successors. Both of these segments have shown a strong desire to align their investments with their values. Having a diverse advisor base with the skills, gender-smarts, and resources necessary to connect with these client segments will be critical.
Although women clients don’t necessarily prefer women advisors, we still want to see more women advisors come into the business. Being an advisor can be a great career for women, especially the inherent flexibility and entrepreneurial aspects of the job. Our senior, successful female advisors play an important role in helping us recruit new women to the firm and in supporting the women already here through women’s networking and business development groups.
What challenges face you and your career today, and how do you see yourself overcoming these hurdles?
There is no question that managing the wealth management business has become increasing complex since I started. Today’s vast array of products and services, rapidly changing markets and technologies, and the need for strong oversight and client protections create a multitude of new opportunities. The challenge is maintaining the balance between what needs attention today and driving the vision for where we want to be in five or 10 years.
One of the best ways I’ve found to handle this is to build a strong team that embraces a culture of excellence, delegating responsibilities to them and allowing them to grow. We have an extraordinary culture at Morgan Stanley that goes back to the vision of our founders: doing only first-class business in a first-class way. By leveraging a team that is dedicated to putting clients first, doing the right thing and giving back, we can find that important balance between growing and safeguarding our business today and laying the foundation for our future.
What is the future of the wirehouse/full-service employee-advisor model? Why?
We remain absolutely committed to the full-service advisor model. We believe we can best serve clients through experienced and highly trained advisors who provide advice and solutions on both sides of the balance sheet. At the end of the day, what differentiates Morgan Stanley is the advice and intellectual capital we bring to our clients through our advisors. They will always remain at the center of our client relationships.
To complement our advisor-client relationships, we are making significant investments in digital capabilities. We want to have a very efficient and client-friendly model — one that allows clients to connect with us anytime, from anywhere, on their terms. As we engage with millennial clients in particular, and the generations that come after them, we know they will expect less paper and more digital connections from the day they open their first account with us, throughout their entire relationship with Morgan Stanley.
What else would you like to share about the industry and your role in it?
I have been given extraordinary opportunities throughout my career at Morgan Stanley to help build a world-class financial services firm. But in the end, it’s all about our clients and the value we bring to these relationships. I have always believed that the wealth management business is a truly honorable profession. What we do can make such an important difference in our clients’ lifestyles and legacies.
By the Numbers
Morgan Stanley’s Wealth Management operations had total revenues of $15.1 billion in 2015, while the group’s net income was $2.1 billion. Other notable results for the group are as follows:
Client assets total close to $2 trillion as of Dec. 31, 2015 — 40% of which ($795 billion) are fee-based assets.
The number of advisors stands at 15,899, which is up from 15,807 in September 2015 but down from 16,076 a year earlier.
Financial-advisor productivity, which measures advisors’ total yearly fees and commissions, was about $947,000 for 2015. It stood at $944,000 in 2014.