Morgan Stanley's wealth management chief, Greg Fleming, has just concluded a seven-city tour of the firm’s brokerage offices in an attempt to stem a broker revolt over the company’s new technology system that contains so many glitches that brokers often cannot sign-up new clients, the FOX Business Network has learned.
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The meet-and-greet between Fleming and brokers at the firm’s biggest offices produced mixed results, according to people with direct knowledge of the matter. Brokers have not left the firm in significant numbers amid the technology glitches, but anger remains high at the firm, with many still threatening to leave if the problems with the new system aren't fixed soon, these people added.
Morgan Stanley’s new technology system for its brokerage sales force — the largest on Wall Street — was sold by senior management, including chief executive James Gorman, as a way to equip the firm’s brokers with the modern technology needed to transact business in an environment where clients demand services above and beyond the simple tasks of buying and selling stocks.
Yet far from allowing brokers to engage in complex derivative bets, and foreign exchange transactions, the system has repeatedly broken down since it was implemented earlier in the year; brokers have complained that the system is unable to complete simple tasks as well as the firm’s old system.
The situation has reached an acute stage in recent weeks, as high-level brokerage teams have threatened to leave the firm if the system isn’t fixed, people with knowledge of the matter say. “The problem is that this thing just doesn’t work,” one brokerage executive told the FOX Business Network.
That prompted Fleming to make a personal appeal to top brokers to give the firm more time to fix the system; in recent weeks he visited large offices in Atlanta, Dallas, San Francisco, Los Angeles, Boston, Miami and New York.
In a statement, Morgan Stanley told FBN: “As he visits offices around the country, Greg Fleming has this message: ‘We're going to fix issues with the new technology and operations platform and make it easier for you to do business.’ Some improvements will be made quickly but some will take longer. This message is being well-received, and we've seen no spike in attrition of Financial Advisors and no threats of mass defections.”
Morgan Stanley under Gorman has made a big bet on its wealth management business, with just mediocre results, at least so far. Gorman considers the firm’s 17,000 brokers central in remaking the firm from one that took big risks in the securities markets into one that emphasizes providing advice to upscale investors, and corporations through its investment banking division.
But the brokerage business has repeatedly underperformed stated goals and many analysts are now doubting the strategy.
That said, people inside Morgan Stanley say Gorman plans to stay the course, and despite the technology snafus, broker retention remains high. According to one Morgan Stanley (NYSE:MS) executive, “some FAs may be upset by the new tech platform, but where are they going to go? Bank-emasculated Merrill? Scandal-ridden UBS? Down-market Wells Fargo? Independent, where they have to order their own paper clips from Staples? Most will not opt to jump from the frying plan into the fire.”