Morgan Stanley Sees Salvation At Higher End
CEO Mack Aims to Reinvigorate
Its Stock-Brokerage Business
By Capturing Wealthier Clients
NEW YORK -- Morgan Stanley has long succeeded in the investment-banking arena. But the Wall Street firm's individual-investor business has struggled to keep pace with its white-shoe cousins in the past several years.
The fate of the individual-investor business loomed as one of the biggest issues facing John Mack when he arrived at Morgan Stanley as the firm's new chief executive this summer. Dissident alumni had successfully pushed for the ouster of Mr. Mack's predecessor, Philip Purcell. Many critics also called loudly for Morgan to sell the lagging individual-investor business.
But Mr. Mack has tacked against the alumni and other critics. Instead of scuttling the business, he has hired James Gorman, formerly Merrill Lynch & Co.'s brokerage chief, in a bid to reinvigorate the individual-investor unit. Mr. Mack believes the unit can transform itself into a much more profitable business by focusing more intensely on attracting richer clients. The bet on the individual-investor brokerage business will play a big role in how Morgan Stanley and its stock fare under the Mack regime.
Mr. Gorman can't start until February due to competition restrictions, but Mr. Mack isn't biding his time: He has dismissed 1,000 underperforming brokers and says the unit will shift its focus to more high-net-worth clients. He says Morgan will draw on its "superior products, powerful franchise and leading intellectual capital."
The challenge facing Messrs. Mack and Gorman is daunting. Morgan's profit margin from advising individual investors was 8% in 2004, compared with Merrill Lynch's 19% and 22% for Citigroup Inc.'s Smith Barney unit. And while other firms have diversified aggressively into mortgages and other financial products, Morgan has been slower to move away from stocks, bonds and mutual funds. "There is a great deal that we can and must do to improve its performance," Mr. Mack says of the business.
Mr. Gorman, a former McKinsey & Co. management consultant, brings with him a track record of success. He helped transform Merrill's once-clubby brokerage operations into a more sophisticated platform. But at Merrill he began with a more affluent client base. Morgan, in contrast, has traditionally focused on less wealthy clients than its peers, a legacy of its Dean Witter years. Dean Witter, Discover & Co. and Morgan Stanley merged in 1997 to create a global securities giant.
A believer in scale, Mr. Gorman isn't inclined to shrink the 10,000-strong adviser force, people who know him say. In addition to recruiting new advisers, he is expected to train former Dean Witter "stock jocks" to sell mortgages, insurance and even hedge funds. (Merrill employs more than 14,000 advisers; Smith Barney more than 12,000.)
Mr. Gorman's strategy will look familiar to Morgan's Wall Street foes. Along with Merrill, Smith Barney and UBS AG have in recent years morphed many of their brokers into "wealth advisers" who collect fees based on account size rather than on transactions. They collaborate with outside money managers and trust-and-estate experts, among others, to give clients more choices.
These rivals also developed nontraditional offerings, such as mortgages and small-business loans much sooner, and assembled teams of advisers with multiple specialties to cross-sell. This helped compensate for lost income as commission rates dropped.
Morgan has relied for much longer on sales of in-house stocks and mutual funds instead of advice -- and has struggled to attract assets. And while it has offered mortgages for 11 years and small-business loans for five, the firm acknowledges it hasn't marketed the diversity of its offerings until recently.
Morgan says it will expand banking services this fall and emphasizes that 800, or about 8%, of its brokers have gone through its Wealth Advisors training program. U.S. client assets representing $1 million-plus households have grown to 59% from 54% a year ago, while assets in sub-$100,000 households is dropping.
For years, Dean Witter bet on small clients and sold them a lot of home-cooking. Its mutual-fund arm, the InterCapital funds, drew fire for weak performance, but Dean Witter pocketed maximum fees by selling through internal channels.
By the 1997 Morgan merger, 75% of all mutual funds that Dean Witter sold were house funds, far higher than competitors. Mr. Purcell kept costs low by spending less than rivals on technology and training, former firm executives say. Mr. Purcell declined to comment for this article.
Until 2003, Morgan gave brokers a big incentive -- 1% to 3% higher payouts -- and sponsored lavish sales contests to sell in-house funds, according to regulators. It didn't disclose this to customers and faced penalties for the practice.
Today, less than 25% of the funds Morgan sells are proprietary, though that is still 5% to 10% higher than competitors.
During the 1990s stock-market mania, Merrill was the first to acknowledge another pitfall of the old ways: The little guys drained broker time and ran up expenses. So Merrill began transferring client accounts with under $100,000 into a call center, suffering some bad publicity but ultimately keeping most clients, it says. Merrill also reduced what it paid brokers to service small accounts.
Morgan rolled out a call center late last year, mainly for households with less than $35,000 but for some with as much as $100,000. Given Morgan's average account size of about $100,000, according to Bank of America Corp. research, the move could pose risks.
Recently, Merrill, UBS and others have emphasized "open architecture," offering investments outside the company. Smith Barney, for example, part of Citigroup's Global Wealth Management division, has been creating "separately managed accounts," or SMAs, in which outside portfolio managers customize asset allocations for wealthy clients.
Morgan, many of whose best brokers still focus on stocks and bonds, only recently caught up to the SMA trend and says it has attracted several billion dollars into such funds in the past year.
Even as Morgan's individual business has fallen behind, it has had a business focused on the super-rich. As part of the merger, Morgan Stanley contributed a Private Wealth Management business for clients with $10 million or more in investable assets. But the number of advisers has declined to 200 today from about 250 in 1997.
People familiar with Mr. Purcell's thinking say he viewed Private Wealth's higher-service model as too costly. But John Straus, former manager of the group, says Purcell executives also overpaid for high-end advisers.
Private Wealth brokers also protested when other Morgan brokers sought to call on their clients, and Morgan fed tensions between the two sides by keeping them on separate broker-dealer registrations and computer platforms. This spring, tensions resurfaced when the firm sought to force Private Wealth advisers onto an aging computer platform from the old Dean Witter. The system couldn't display certain foreign currencies and exotic investments that the elite brokers said their clients demanded.
In May, the firm canceled the computer overhaul, and Mr. Mack now says the firm is rethinking a more workable integration and addressing underinvestment in technology.
摩根士丹利彷佛看到了救世主
摩根士丹利(Morgan Stanley)长期以来一直在投行领域挥洒自如。然而其个人投资者业务却举步维艰，几年来始终落于其他银行巨头之后。
麦晋桁(John Mack)今夏就任首席执行长后面临的首要问题之一就是如何处置个人投资者业务。前首席执行长裴熙亮(Philip Purcell)的反对者已经成功将其逐出公司。很多批评人士又开始大声呼吁将萎靡不振的个人投资者业务出售。
但麦晋桁对种种呼吁迎风而上。他不仅没有放弃个人投资者业务，反而聘请美林公司(Merrill Lynch & Co.)前经纪业务部负责人詹姆士?戈尔曼(James Gorman)来协助重振此项业务。麦晋桁相信，通过重点服务富有阶层，该子公司完全能够转变为一家更为盈利的部门。而他在零售经纪业务上的赌注也必将与摩根士丹利及其股票的命运息息相关。
由于受到竞争限制，戈尔曼到明年2月份方能走马上任，然而麦晋桁已经急不可待：他裁减了1,000多名表现最差的经纪人，并表示该子公司今后将重点面向更加富有的客户。他说，摩根士丹利对其出众的产品、强有力的特许权以及卓越的人力资本加以充分利用。
麦晋桁和戈尔曼面临的挑战极为严峻。摩根士丹利个人投资者业务2004年的利润率只有8%，而美林和花旗集团旗下美邦(Smith Barney)的同类业务利润率分别达到19%和22%。在其他公司大举进军抵押贷款和其他金融产品领域的同时，摩根士丹利仍在缓慢地脱离股票、债券和共同基金业务。“我们在改善业绩表现方面有很多事情可做，也必须要做，”麦晋桁在谈到个人投资者业务时称。
戈尔曼的以往业绩一直可圈可点。他帮助美林实现了从单一经纪业务向多样化平台的成功转型。但在美林，他拥有更加富有的客户基础。而摩根士丹利相对而言则一直在关注不太有钱的客户，这可能是沿袭了添惠(Dean Witter)的多年传统。添惠、Discover & Co.和摩根士丹利于1997年合为一体，组建了这家全球性证券巨头。
了解戈尔曼的人士称，作为一位信奉规模效应的经理人，戈尔曼可能并不主张缩减摩根士丹利强大的万人顾问团队，除了增加新的顾问人手，估计他还会培训添惠的原有顾问如何销售抵押贷款、保险甚至对冲基金。（美林的顾问队伍为14,000人，美邦雇用著12,000名顾问。）
戈尔曼的策略可能会与摩根士丹利的华尔街对手颇为类似。美林、美邦和瑞士银行(UBS AG)近几年一直在努力培养他们的经纪商成为“富人顾问”，因为他们通常按照投资帐户规模而不是根据交易笔数收取手续费。他们还联合外部投资经理、信托投资专家以及其他专业人士，让他们的客户有更多产品选择。
这些竞争对手在开发非传统产品方面也比摩根士丹利抢先一步，包括推出抵押贷款和小型企业贷款业务，并组织由各类专家组成的顾问团队交叉销售产品。这使得他们在佣金率屡屡下降的情况下弥补了收入的部分损失。
而摩根士丹利却长时间依赖内部股票出售和共同基金业务，忽视顾问业务，并且在吸引资产方面手足无措。虽然该公司已经提供了11年抵押贷款业务和5年小型企业贷款业务，公司承认，直到最近公司才开始认真推广其多样化产品。
摩根士丹利表示，今年秋季它将大力推广银行业务，并强调说，有800名经纪商已经通过了“富人顾问”培训计划，占其经纪商总数的8%。家庭资产超过100万美元的美国客户在公司管理资产中所占的比例从一年前的54%升至了59%。而家庭资产不到10万美元的客户正在减少。
多年来添惠一直以小型客户为重，向他们出售很多家庭产品。其对冲基金部门InterCapital基金一度因业绩不佳而遭致责骂，但添惠仍然通过内部渠道的销售赚得了大量手续费收入。据该公司前管理人士称，裴熙亮在技术和培训方面相比其竞争对手支出更少，以此保持了较低成本。裴熙亮拒绝就本文发表评论。
据监管部门文件显示，直到2003年，摩根士丹利才对经纪商提供了较大的激励机制－－将报酬比率提高1%至3%－－并发动大批销售人员销售公司内部基金。但该公司并未向客户透露这一点，为此曾受到了监管部门的惩罚。
时至今日，摩根士丹利出售的不到25%的基金是自营基金，但较其竞争对手仍然高出5至10个百分点。
九十年代股市飞涨时，美林率先认识到旧业务模式的又一大缺陷：小型客户占用了经纪人大量时间，费用由此上涨。因此美林开始把帐户金额低于10万美元的客户转到一个呼叫中心，虽然公众形象有些受损，但美林表示，此举最终留住了大部分客户。美林还削减了为小额客户提供服务的经纪人的报酬。
摩根士丹利去年年底才开办了一个呼叫中心，主要向资金不足35,000美元的家庭用户提供服务，但有些客户的资金最多也能达到10万美元。但根据美国银行(Bank of America Corp.)的调查，摩根士丹利客户平均帐户额约为10万美元，此举未免有些冒险。
最近，美林、瑞士银行和其他同行都在重点发展“开放结构”，向客户提供非本公司的投资产品。比如说，花旗集团全球财富管理部门(Global Wealth Management)旗下的美邦，就一直在创建一套“独立管理帐户”(separately managed accounts, 简称SMA)，美邦之外的投资组合经理人为拥有这些帐户的富裕客户提供定制资产分配服务。
摩根士丹利最出色的经纪人仍主要投资股票和债券，直到最近公司才投入SMA潮流，并称一年来这类基金已经吸引了数十亿美元资金。
不过，虽然摩根士丹利的个人投资者业务落后于同行，但一直拥有一项以极有钱客户为主的业务。作为合并交易的一部分，摩根士丹利贡献出了私人理财(Private Wealth Management)业务，这是一项专为帐户金额超过1,000万美元的客户服务的业务。但是，这个部门理财顾问的人数已经从1997年的250人减少到今天的200人。
了解裴熙亮的人说，在裴熙亮看来，私人理财业务的服务模式成本过于高昂。但前任经理约翰?施特劳斯(John Straus)说，裴熙亮的管理团队也一样对服务于高端客户的理财顾问支付过高报酬。
摩根士丹利其他部门的经纪人给私人理财部门的客户打电话，寻找交易机会时，私人理财部门的经纪人也抱怨纷纷。而且，摩根士丹利将这两类经纪人分置于不同的电脑平台，适用不同的经纪人－交易商守则，更加剧了双方的对立情绪。今年春天，摩根士丹利试图迫使私人理财部门的顾问们转用添惠遗留下来的一套老旧的电脑平台，导致双方冲突再度升级。一些精英经纪人说，这套系统不能显示客户需要的某些外汇和外国投资品种。
今年5月，摩根士丹利取消了电脑系统调整计划。麦晋桁表示，公司正在重新考虑一套更加可行的整合方案，同时处理技术投资不足的问题。
