Tag Archive for: Morgan Stanley

Merrill Loses $4 Billion to Celebrate President’s Weekend 

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In a move similar to June 2021 when Merrill Lynch lost three teams to Rockefeller Capital Management worth $12 million in revenue, three teams departed once again prior to the 3-day weekend, taking over $15 million in revenue with them. The seven brokers who left represented 134 years of combined experience with Merrill.

The largest team departing Merrill was the Jones Connolly Group based in Florida, producers of $10.4 million, managing $2.5 billion in assets. The team will open a new office in Orlando; advisors are Garrett M. Jones (21 years at ML), Sean P. Connolly (13 years at ML), Gregory H. Pollock, and Phillip T. Dobbs along with seven support staff. Mr. Jones and Mr. Connolly have been frequently recognized on the Forbes “Best in State” advisors list. 

The other team moves included Trent Cowles; a $2.7 million producer based in Indianapolis who’d had a 30-year run at Merrill. Mr. Cowles manages $450 million in assets and moves along with two support staff. Paul Leach, based in El Segundo, California took his $2.4 million trailing to Rockefeller as well after 15 years with the firm. 

Lastly, after 12 years at Merrill, Len Mangiaracina, a $3.1M/$400M  SVP who has a very sophisticated CIMA-based practice in North Bethesda, Maryland, departed for Morgan Stanley. He was recruited by Brandon Wiggins who is a rising star at Morgan Stanley, who has taken a sophisticated approach to recruiting and growing a major presence in his region. 

Rockefeller has 91 private wealth management teams under the leadership of ex-Morgan Stanley President Greg Fleming. Why the move under this timing? Even though advisor’s might have missed a vesting of restricted stock units’ moment at Merrill, the 3-day President’s weekend allows them more time to contact customers in the transition while former colleagues are out of the office presumably. Over the last five years, Merrill’s focus has been on hiring newbie recruits without experience whilst pressuring seasoned advisors to adapt to the shifting agenda and culture under Andy Sieg or be out. 

On the question of attrition out of Merrill in January, Andy Sieg stated, “half of those who have left in recent years have been serial career movers while others have left because they could not handle compliance requirements or for offers that defy any rational economic analysis.” Of course, this isn’t true and is Mr. Sieg just blowing more steam not truth. 

If Merrill advisors were not that successful in moving their assets, then these firms would not be raising their offers. The packages teams are receiving in the moves are extraordinary, thus forgoing a potential payout is worth it.

Large Team At J.P Morgan Securities Decamps For Morgan Stanley In NYC

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Yet another large team in a money center city at J.P. Morgan Securities just left the firm for Morgan Stanley. We doubt you’ll be surprised as to why they decided to migrate to their new firm.

Joel Bodner and Mark Horowitz have taken their $750M in client assets and more than $5M in annual production to Morgan Stanley based on the chasm that exists between the two firms with respect to technology, platform, and client service.

Prior to joining J.P. Morgan in 2015, Mark served as Principal at Bernstein Global Wealth Management for nearly 12 years. A is known as a talented advisor who is very highly respected in his community from wealth management and his philanthropy, writing books, and speaking series. Mark dedicates a significant portion of his free time to poverty alleviation. Through the Mesila organization, a nonprofit focused on guiding families toward fiscal responsibility, he has traveled around the world, raising public awareness about the importance of financial stability and independence. Mark is also involved with Sister-to-Sister, a group founded to help widows and divorcees regain their financial footing. He volunteers with Professional Career Services, a nonprofit that offers low-cost career training and education. In addition, Mark serves as Chairman of the Board of BINA, whose mission is to provide guidance and support to thousands of brain injury survivors and their families.

Joel joined J.P. Morgan in 2015, as a Vice President and Wealth Advisor with J.P. Morgan Wealth Management. As the key Portfolio Manager with over 15 years of experience in the financial services industry, Joel creates tailored investment strategies and comprehensive wealth management plans for high-net-worth individuals, families, and institutions. Joel began his career as an Associate at Merrill Lynch in 2002.  Joel is an active member of his community on the South Shore of Long Island, New York, where he lives with his wife and three kids. Joel sits on the board of his Temple and on the board of TOVA, an organization that provides adult guidance and mentoring services for children who need additional supportive, caring adults in their lives.

Mr. Bodner and Mr. Horowitz will be joining Jeff Reiss, Complex Manager, Morgan Stanley in Long Island, NY. Mr. Reiss is known amongst his colleagues as an ‘advisors manager’ who aims to work tirelessly on behalf of the advisors he is charged with leading.

Over the past decade, there has been a common theme at J.P. Morgan Securities – disappointment. JPMS has taken a back seat in every meaningful category as a forgotten division within the global investment bank. Technology is lacking, offices and facilities are outdated, and the ability to cut through red tape is nearly impossible. Other than the name of the firm, there is little reason for teams the size of Mr. Bodner and Horowitz to remain.

One specific issue that was noted recently was the looming and ongoing problems associated with the JPM Private Bank taking larger accounts away from JPMS advisors. See article from AdvisorHub.

Irrespective of long-term relationships with one client or another, JPM Private Bank advisors are prioritized and handed accounts directly out of the book of JPMS teams. That is certainly enough to drive ambitious advisors into the welcoming arms of competitors like Morgan Stanley.

Morgan Stanley Draws Two Merrill Private Wealth Teams with $11.8-Mln Combined in Boston and NY

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Morgan Stanley on Friday reeled in a 31-year Merrill Lynch lifer in Boston and a four-broker Merrill team in New York producing $11.8 million in annual revenue combined as it continues to keep up the pressure on its wirehouse rival.

The hires followed at least two other million-dollar-plus recruits in recent weeks from Merrill, one in Cleveland and the other in the outskirts of Atlanta that represented another $5.3 million in revenue.

In the largest of the moves, Marcella “Marcie” Behman, who ranked 33rd on Forbes’ 2021 list of America’s top women advisors, left Merrill’s private wealth management office on Friday in Boston to join Morgan Stanley in Middleton, Mass., a Morgan Stanley spokesperson confirmed. She moved with four client associates: Jaclyn Snell, Mary Chase, Owen Murray, and Teddy Smith.

Behman had generated $7 million trailing 12-month revenue from $1.3 billion in client assets, according to a source familiar with her practice. She has a $4 million account minimum for new business, according to Forbes.

Behman had led the Behman Group within the firm’s private wealth unit, formerly known as the private banking and investment group (PBIG), serving ultra-wealthy clients, according to her registration records and former firm biography. She was not immediately available for comment, according to a person answering the phone at her new office.

Her former partner at Merrill, Steven T. Smith, had left in 2018 for UBS Wealth Management USA.

In the other Friday move, the four-broker New York team known as MKM Group decamped from Merrill’s private wealth management unit for Morgan Stanley.

The team, which includes Robert M. Matluck, Lee B. Konopka, Rachel B. McCormack, and Jonathan D. Moskowitz generated $4.8 million in annual revenue from $575 million in client assets, according to a source familiar with their practice. Matluck and Konopka had worked out of White Plains, New York, while McCormack and Moskowitz worked out of New York City in the Bank of America Tower, according to their BrokerCheck reports.

The most senior member of the group, Matluck, a 35-year industry veteran, started at Advest, Inc. in 1983, and worked at now-defunct technology investment bank L.F. Rothschild, Unterberg, Towbin, where he served as a senior executive, according to his LinkedIn and BrokerCheck records. He worked at Unterberg and successor firms before moving to UBS in 2009 and then Merrill in 2013, according to his BrokerCheck report.

Konopka, with 29 years in the business, started at Smith Barney in 1992 and moved to UBS in 2008, and Merrill in 2013, according to his BrokerCheck report.

McCormack had spent all of her 15 years in the industry with Merrill, according to her BrokerCheck report. Moskowitz, with 12 years of experience, started out with Collins Stewart from 2006 until October 2008, next registered with now-defunct brokerage Merriman Curhan Ford & Co. in 2010, and did stints at three other firms before joining Merrill in 2014, according to the database.

A Merrill spokesperson did not respond to a request for comment on either of the Friday departures.

The departures come as Merrill has been looking to moderate rising attrition with a series of policy tweaks, defensive measures, and spurring enthusiasm about returning to offices. A senior Merrill executive last month said the rate of competitive departures ticked back down to 3.9% in the third quarter, in-line with historical averages and down from what a spokesperson previously said was 5% in the second quarter.

Merrill has stood by a veteran broker recruiting freeze implemented in 2017 while Morgan Stanley has been aggressively hiring in recent years and CEO James Gorman last month touted the firm’s achievement of the unusual industry feat of net positive recruiting when comparing the of new hires to those who have left.

The Friday exits followed at least two other previously unreported Merrill-to-Morgan Stanley moves in recent weeks. On November 5, a producing manager for Merrill in Cleveland, Ohio who had spent his entire two-decade career with the firm parted ways with his team to join Morgan Stanley in the nearby suburb of Westlake, according to registration records.

Steven M. Rini, who started with Merrill in 2000 and had been serving as resident director since 2012, individually managed $320 million in client assets generating $1.5 million in annual revenue at his former firm, according to a source familiar with his practice.

Three advisors listed on Rini’s former team’s website, Dan A. Bragg, Steven Wickstrom, and Matthew Meyer, remain registered with Merrill, according to their BrokerCheck reports. The team was formerly known as the DBSR Wealth Management Group but now is called CLE Wealth Management, according to the Merrill website.

Rini and Bragg, who have spent all of his 43 years in the business with Merrill, did not respond to requests for comment for this story.

In Gainesville, Georgia last month, a duo of Merrill brokers who had produced a combined $3.8 million in annual revenue from $480 million in client assets also left for Morgan Stanley, according to a source familiar with their practice and registration records.

Thomas R. Johnston, a 28-year industry veteran who had spent his entire career with Merrill, and J. Thomas “Tommy” Turner, a 23-year broker who had joined Merrill in 2002 from PPA Investments, Inc. on Oct. 1 moved to Morgan Stanley to form the Johnston Turner Group, according to their BrokerCheck reports and team website.

Johnston, who ranked 14th on Forbes’ 2021 list of best-in-state wealth advisors, produced $2.5 million from $360 million of the team’s client assets while Turner produced $1.3 million from the remaining $120 million in assets, according to the source.

The Merrill spokesperson did not comment on the departures in Cleveland or Gainesville, which were confirmed by the Morgan Stanley spokesperson.

Original article: AdvisorHub

2022 Comp: Merrill Sweetens the Pot for Brokers Taking On Defectors’ Accounts

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Merrill Lynch Wealth Management is making it more lucrative for brokers to try and retain customer accounts when advisors in their office leave for the competition, a senior executive said in announcing the firm’s 2022 compensation plan on Tuesday.

Starting January 1, Merrill is ending a penalty that was put in place in 2018 and reduced payout on accounts transferred from a departing broker by 50% for the first year and will instead pay the assigned broker on the full amount of revenue those accounts had generated, the executive said.

Merrill also widened the time window brokers have to solidify relationships with transferred clients from one year to six months, the executive said. During that year, Merrill will refrain from having the lost account dock brokers’ net new asset flows, which would hamper their ability in some instances to hit targets for bonuses. Merrill expanded the time to one year based on broker feedback, the executive said.

“Our goal is to make sure you can have confidence in retaining clients knowing you won’t be impacted by any losses for a full year, and you’ll be compensated for any effort you are putting into retaining those clients,” Kirstin Hill, Merrill’s chief operating officer, said in unveiling the changes on separate a call with brokers on Thursday, according to a person who listened to the call.

Merrill is also keeping unchanged the breakpoints in its core cash grid that pays brokers 34% to 50% of revenue but will adjust how it calculates brokers’ payout level. Under the 2022 system, brokers will qualify for their pay hurdle each month based on rolling 12-month production rather than setting payout based on an end-of-year snapshot with a mid-year look back.

The new system is more friendly for customers and regulators because it does away with the potential conflict for brokers to try to generate additional fees and commissions to hit a higher hurdle by the end of the year.

“Perceived or real, it is a concern among regulators, and we are an outlier in terms of still having that,” Hill told brokers.

Rival wirehouse Morgan Stanley, for example, put in place a rolling grid system in 2018. (Similar to Merrill’s transferred account policy, Morgan Stanley also in 2016 said it would not pay brokers on accounts transferred from defectors unless they retained at least 50% of assets after three months.)

Merrill is leaving unchanged the so-called growth grid, which was also introduced in 2018 and adds or subtracts 100 basis points of payout depending on net new assets and household growth, according to the company. Under the current hurdles, which were reduced during the Covid-19 pandemic, brokers must add a net of three households and grow assets 2.5% year-over-year to maintain their current pay.

Merrill is on track this year to pay a net $130 million in additional compensation tied to the growth grid program, the company said. Around 80% of brokers are set to maintain their current pay or receive additional compensation this year.

Merrill’s 2022 plan also maintains its team grid policy granting all members the cash grid rate of its top producer as long as the team meets a “client engagement standard.” Roughly 90% of teams have met that benchmark, which requires that 30% of the team’s clients are purchasing services from parent Bank of America or Merrill in three of the four following categories: fiduciary investment advice, trust and insurance, lending, and core banking, the same executive said.

Merrill will provide the 10% who have not yet met the standard until 2023 to do so, as well as leave all of those that qualified in 2021 as eligible for next year, the executive said.

To some brokers’ chagrin, Merrill Lynch Wealth Management President Andy Sieg, who last month telegraphed few changes, acknowledged on the Tuesday call with brokers that the firm was keeping in place a controversial 3% haircut that the firm introduced in 2019 on their production credits.

“This is a common feature across the industry in advisor compensation plans,” Sieg told brokers, noting many competitors hide similar haircuts in how they credit brokers on advisory revenue. “It helps us further invest in you and the firm.”

Hill also noted that the plan has a cap at $40,000 of ineligible production credits per year and the highest cash payout amount that a top producer could lose is $25,000.

“Certainly, you can rest assured it will be reviewed again as it was this year,” Sieg said of the haircut.

In recent months, Merrill has sought to soothe broker qualms as dozens of high-end producers have jumped to the competition. The wirehouse in August launched an eight-week campaign, tagged Project Thunder, that highlighted policy changes it was making based on advisor feedback. The changes included: relaxing the rules for onboarding clients with marijuana-related businesses, plans to increase brand advertising, and the introduction of a  new mobile tool called the Mobile Advisor Experience or “MAX” that integrates several broker desktop features into one application.

Sieg told brokers on Tuesday he did not have an expectation that it would solve all of their concerns but hoped they would see it as a “downpayment” on the firm’s willingness to make changes.

Merrill has also made other changes to improve retention of clients of departing brokers, including piloting a program of “client experience specialists” who call on customers as soon as their broker leaves to introduce them to a new broker at Merrill and offer incentives, such as fee discounts, to those clients who stay behind.

The comp changes are also being unveiled on the eve of Merrill opening a new, higher-paying Client Transition Program for retiring advisors that were announced in 2019 but does not officially start until November. The program, which is open to those who are 55 years old and have at least five years of service at Merrill, has a first wave of enrollees who will start in the program next week, the person said.

Original article: AdvisorHub

U.S. banks see wealth management boom on borrowing, new assets

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Big U.S. banks’ wealth management businesses put in another stellar performance in the third quarter, buoyed by record levels of new money flowing into accounts and surging demand from clients to borrow against their investment portfolios.

Morgan Stanley Inc (MS.N), JPMorgan Chase & Co (JPM.N), Bank of America Corp(BAC.N), and Goldman Sachs Group Inc.(GS.N) each reported double-digit growth in wealth management loan balances and revenues this week.

While the COVID-19 pandemic devastated large chunks of the economy and put millions out of work, extraordinary government measures aimed at mitigating the economic blow have also boosted the fortunes of the wealthy by pushing down interest rates and driving a massive stock market rally.

Global financial wealth soared to a record high of $250 trillion in 2020, according to a June report by Boston Consulting Group.

That has increased demand for money managers, increased the value of assets managed by these brokerages, and made it more appealing for customers to borrow.

“At the high net worth end of the spectrum, lending products have been very healthy and you’re seeing that at firms like Morgan Stanley where wealth management loan balances are up over 30% year over year,” said Devin Ryan, an analyst at JMP Securities.

Morgan Stanley’s wealth management business reported revenues of $5.935 billion, up 28% from last year. Wealth management loan balances reached $121 billion, up 33% year on year, mostly from clients taking out mortgages and borrowing against their investments.

A booming area of lending for wealth management brokerages, so-called securities-based loans or lines of credit, allow clients to borrow up to a certain percent of the value of their investment accounts to spend on anything except more securities. As those investment accounts have grown in value, so have loans.

Bank of America’s Merrill Lynch Wealth Management reported record revenues of $4.5 billion, up 19% over last year, while loan balances grew 10% to top $133 billion.

At JPMorgan’s asset and wealth management business, revenues were 21% to $4.3 billion, while average loans rose 20% from last year.

Both Bank of America and JPMorgan said the primary driver of loan growth was securities-based loans, followed by mortgages and custom loans.

Morgan Stanley, which gets around half of its revenues from wealth management, said net new assets rose by 89% to $135 billion in the third quarter from the prior quarter, helped in part by the acquisition of a group of retirement advisers that brought $43 billion in fee-based assets to the bank.

Bank of America reported that, over the past year, it has brought on more than $112 billion in net new assets across its global wealth management business.

Merrill Lynch also added 4,200 net new households, the bank said.

Goldman Sachs, which has a smaller wealth management unit catering to the extremely rich, said wealth management net revenues jumped 40% from last year to $1.64 billion, while loan balances were also up 40% to reach $42 billion.

JPMorgan does not break out net new assets for its asset and wealth management business.

Original article: Reuters

Morgan Stanley Poaches Billion Dollar Advisors From Citi

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Morgan Stanley landed a team of seasoned, high-producing advisors—the latest big recruiting move amid a competitive market for elite talent.

The firm’s newest hire, The Hanes Haber Group, came from Citi Personal Wealth Management, a unit of Citigroup. The group’s namesakes, advisors Robert Hanes and Josh Haber, are industry veterans based in New York.

Joining them in the move to Morgan Stanley are advisors Adam Wood, Dennis Lee, Erez Avidan, and Dillon Walker; financial advisor associate John Vigh; and client service associates Brandon Lyons and Anchal Rana.

That group had approximately $1 billion in assets under management and $8.9 million in annual revenue, according to a source familiar with their move.

The team’s profile, still available on Citi’s website as of Friday afternoon, listed several additional team members who appear not to have joined Morgan Stanley. They are wealthy advisors Damian Pereira, Gonzalo Blanco, Lisandro Enferri, Mariano Pinto, Peter Nielsen, and Timothy Shaw.

A spokesperson for Citi declined to comment on the matter.

Haber joined Citibank’s high-net-worth platform in 1999, according to his profile on the bank’s website. Five years later, he co-founded the Hanes Haber Group with Robert Hanes.

“It was Josh’s vision to build a team of financial advisors with different core competencies to best serve their client’s needs,” the website says. “The team was developed with a core focus on financial planning and custom asset management for high net worth individuals and their families.”

Hanes started working at Citibank in 1990 as a management associate in the company’s executive training program, according to his profile on the company’s website. He became a financial advisor three years later.

Morgan Stanley left the Broker Protocol, an industry agreement that eases advisor transitions between employers, in 2017 and cut back on recruiting at the time. It’s since stepped up its efforts and picked up some notably large teams. For example, in August, the firm hired Dane Runia and his $3.2 billion teams from Merrill Lynch. Runia was featured this year on Barron’s Top 100 Advisors and Top 1,200 Financial Advisors. In February, Morgan Stanley hired ex-Merrill advisor Robert Runkle, who was on Barron’s Top 1,200 advisor ranking in 2021; his team’s assets were listed at $1.2 billion.

Originally posted on Barrons.

SOURCES: Morgan Stanley Is Asking (Forcing) Large Teams And Their Biggest Producers To Sign Retention/Retirement Bonuses

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In conversations with two different sources ‘in the know,’ we’ve learned that Morgan Stanley is asking their largest producers to sign what sound, look, and smell like retention bonuses but are being sold as retirement compensation.

Here is the setup from one of our sources:

“Morgan Stanley is telling advisors/teams above $5M to take a payment of 100% of their current T12 and connecting it to their retirement deal. In other words, take about half of your retirement deal (which is 220%) now and sign this document that you are staying and keeping your business here at Morgan Stanley.”

“You can imagine what the unspoken consequences of not signing that deal look like to management. If you don’t take the cash it signals that you are more inclined to leave the firm than stay. Now you’ve got a target on your back. If you dot and I or cross at wrong you’ll get fired. That’s the intention here. So this isn’t a retirement bonus, but rather a retention scheme.”

We spoke to another source that backed up these claims. All of this is being done in a very quiet, closed doorway with the firm’s largest producers. And Morgan Stanley has set a precedent over the past year that they won’t blink in firing big producers – not just for industry violations, but rather internal firm policy violations.

As, effectively, the biggest firm on the street Morgan Stanley management can make these moves. They can put this kind of pressure on advisors and not worry about the cultural implications. Keeping it ‘niche targeted’ to its top 10% or so of producers makes it seem/feel almost like a perk.

Take a step back and consider the cost. What sounds to good to be true probably is – a financial firm doesn’t give money away for free. Think about it.

BIGGEST LOSERS! The Biggest Names In Banking And Wealth Management Are Getting Crushed

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You would think that name recognition and brand value would still hold some sort of sway in this industry. The numbers tell a different story altogether.

The biggest losers when it comes to high-level talent in wealth management are some of the biggest names banking and wealth management has ever seen: J. P. Morgan, Merrill Lynch, and Morgan Stanley. All of them are taking historic talent losses and client assets are following them out the back door.

But it isn’t all about the headline. Each of those firms is ‘losing’ for very different reasons. Let’s deconstruct the dynamics of each firm.

1. J. P. Morgan – compensation and culture are the big problem here. UBS has decided to exploit those pain points for headliner Managing Directors across the country at JPM. It has worked flawlessly. Yes, recruiting deals and ongoing compensation are leading the conversation; but culture and JPM leadership being completely unable to stem the tide is a bigger issue. Outlook – systemic issues with no end in sight.

2. Merrill Lynch – a slow bleed connected to a cancerous host that is Bank of America. They changed the name to ‘Merrill’ and loaded up advisors with bank products. Every meaningful team that remains at ML is either in discussions to leave or has signed retirement deal paperwork and grinning and bearing it. Outlook – the thundering herd has been slaughtered.

3. Morgan Stanley – this story is very different than the two above. MS attrition is just that; a function of industry churn at the biggest firm on the street. Taking a closer look,
Morgan Stanley has recruited just as many teams and client assets as they’ve lost so far this year. This isn’t a culture problem or a management problem; rather an industry problem. Outlook – current talent drain will slow.

These firms are as high profile as they come and it’s a great study in culture. The way they are responding to the talent losses is very, very telling. BofA/Merrill just doesn’t seem to care, which projects institutional malaise and that the division is not integral to the larger entities’ success. JPM has no idea how to deal with what is going on at the Private Bank; which proves institutional arrogance (and incompetence). Morgan Stanley is dealing with losses by aggressively recruiting from its competitors, proving that the current trend at that firm will subside.

Three biggest losers, three different narratives, three different outcomes.

Keep An Eye On The Uptick In Morgan Stanley Recruiting; Dallas Merrill Team Another ‘Competitive’ Win

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Morgan Stanley isn’t grabbing all of the recruiting headlines in wealth management these days, but their trajectory is worth noting. Their latest win in Dallas is notable given the competitive nature of the bidding versus rivals old and new.

The terms of the deal haven’t been disclosed but landing a Merrill team doing $5.5M in annual production these days is no small feat. Merrill may be the most heavily recruited ‘away’ firm on the street right now, so every ML situation is competitive.

The group that migrated to Morgan Stanley in Dallas is captained by 39-year vet John Calandro along with his brother and son, Kevin Calandro, and Rob Calandro. They manage more than $720 million in client assets and brought with them admin staff Shea Self and Jonathan Hicks as well as Redding May.

Now here is the competitive bidding part of it – this was a three-horse race. UBS and Rockefeller were both heavy contenders for this team’s services and pushed their deals higher.

A source close to the negotiations had this to say, “each firm had pushed their deals and deal structures to the limit and well past 300%, ML teams are commanding premiums right now.”

And there is the money line: Merrill teams are commanding premiums right now. Including deferred comp balances, the Morgan Stanley deal breached the 350% number. Cha-Ching!!

Morgan Stanley will continue to be aggressive and maybe the ‘belle of the ball’ for the second half of 2021. Get your popcorn ready.

Private Bankers Listen Up! The Difference Between Deals Offered By UBS And Morgan Stanley

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Two firms have made the biggest impact in recruiting private bankers away from J. P. Morgan, Goldman Sachs, Bank of America, and Citi. Both UBS and Morgan Stanley have decided that recruiting a different subset of teams from firms that could be called ‘non-traditional’ is worth every dime they can spare.

So what is the difference between what UBS and Morgan Stanley are offering these teams? **a quick reminder that UBS has been significantly more successful in their pursuit of private bankers by nearly 4x versus Morgan Stanley.UBS and Morgan Stanley are near equals when it comes to product, platform, and comp grid payout. The difference lies in the valuation of the business and client relationships that private bankers have built over a number of years.

Here is the money line: UBS is offering a deal based on the gross annual revenue (think ‘scorecard’ or ‘gross credits’) of a private banker or team, and Morgan Stanley is making their offer based on the net revenue (W-2).

Let’s break it down a bit. Currently, UBS will look at a gross credits annualized report for a Goldman Sachs team and put together a 250% deal on the top-line numbers. If that number is $10M, then the deal turns into a $25M deal in an instant.

Morgan Stanley (focused on the net number) will ask that same team for their W-2’s and construct a deal based on the lowest common denominator associated with the ‘trickle down’ revenue model for a Goldman Sachs team. A $10M team at Goldman will have W-2’s that will show +\- $1M. A 250% deal based on ‘net’ numbers ends up making out at $5M.UBS = $25MMorgan Stanley = $5MThe dramatic difference in those numbers makes it crystal clear why UBS is winning private banking competitive recruitment 4-1. Evaluating competing deals that are separated by 5x generally makes the decision simple.

As of today, UBS is the clear choice for private banking teams.