Morgan Stanley Eliminates Divisions, Names New Field Boss
Morgan Stanley is once again shuffling executives at its wealth management unit as it looks to streamline leadership of its salesforce of almost 16,000 brokers, according to an internal memo sent Friday that was reviewed by AdvisorHub.
The company, which derived 42% of its revenue from its wealth unit in the first quarter, is eliminating its two remaining geographic divisions and promoting private wealth head Vince Lumia to be “head of the field” directly overseeing the brokerage force and reporting to Morgan Stanley Wealth Management co-heads Shelley O’Connor and Andy Saperstein, who signed the memo. The changes come as the firm seeks to “make investments to help our clients” and “position us for continued success,” they said.
“To best achieve these objectives and to bring decision making even closer to the client, we are eliminating the divisional level and naming a new Head of the Field with the goal of flattening the organization and further empowering the regional directors and local managers,” O’Connor and Saperstein wrote.
Bill McMahon, who had led the Western division, and Rick Skae, who headed the Eastern division, will become vice chairmen, according to the memo, which was confirmed by a Morgan Stanley spokeswoman.
Mandell Crawley, the chief marketing officer for Morgan Stanley, will take over Lumia’s former role as head of private wealth management. He will also have responsibility for institutional client coverage, the memo said.
Morgan Stanley last restructured its field leadership in January, when it moved to six regions from eight. Those six regional managers will now report to Lumia, according to the memo.
Jim McCarthy, who leads national sales, and Liz Dennis, head of strategic client management, will also report to Lumia. Colbert Narcisse, who heads international wealth management, reports to Lumia, O’Connor and Saperstein.
The current plans are aimed at further reducing what senior executives perceived to be a “top heavy” leadership structure at Morgan Stanley, one former executive said, and come amid chairman and chief executive James Gorman’s company-wide cost-cutting campaign. The firm reported a 24% profit margin in the first quarter, within Gorman’s stated target of 23% to 25% by the end of the year.
The announcement also comes a week before the Labor Department’s fiduciary rule is set to take effect on June 9, an indication of the emphasis the firm is placing on margins and also a sign that it feels that it is fully prepared for the rule, which is expected to significantly increase documentation and disclosure requirements. Saperstein said this week in a presentation at the Deutsche Bank Global Financial Services conference in New York that the firm is “ready now to where the June 9 deadline will come and go.”
The changes also come as Morgan Stanley has pulled back from recruiting veteran brokers and said it’s more focused on hiring “digital associates” to help advisors use technology, such as an algorithm that will target sales to clients based on their investing behavior, a development that some managers and recruiters read as a further erosion of power for middle managers at the firm and across the big four wirehouses.
Buzz about a reorganization had been building for some time among current and former managers at the firm but seemed to hit a crescendo recently with the consolidation of a complex in Dallas and several branch manager jobs being left open after managers left. The firm also relocated Lumia, along with 90 private wealth advisors, to its banking headquarters in Times Square in effort to generate closer ties between the banking and wealth units, according to a Reuters report.