Morgan Stanley is a major financial-services firm based in New York. Its services include capital raising, M&A, restructurings, real estate, project finance, brokerage, investment and other financial-advisory services, financial and wealth planning, annuities and other insurance products, and global asset-management in equity, fixed-income and alternative investments. Amid the 2008 Wall Street crisis, it converted to a bank holding company and sold a 21% stake to Mitsubishi UFJ Financial Group Inc. The two firms are combining their Japanese securities units, creating Japan's third largest brokerage.
The company recently merged its brokerage group with Citigroup Inc.'s Smith Barney unit, forming Morgan Stanley Smith Barney, a joint venture with about 18,000 financial advisers, creating the largest retail brokerage force in the world. The company ranks among the 50 largest U.S. banks, but part of its appeal to clients may be its standing as an alternative to industry giants Goldman Sachs Group Inc. and JPMorgan Chase & Co. It has plans to launch new bank products and channels of business. Among the bank's challenges: rebuilding its trading operation, which was slammed by subprime loans. It will also be retooling its investment management business, which had heavy exposure to real estate and has been hit hard by the bear market. Morgan is selling its retail mutual-fund business, Van Kampen, to Invesco Ltd.
The bank is trying to change the restless, swing-for-the-fences culture that was badly shaken by the financial crisis. New chief executive James Gorman, an ex-McKinsey consultant, is expected to scrutinize every business and trading strategy at the firm. Trading is expected to remain the "engine room" of the firm. Other changes include a pay restructuring. The bank is factoring risk into compensation decisions for sales and trading teams, as per Federal Reserve guidelines, in addition to aligning pay and performance. Senior executives in revenue-generating divisions will see a portion of bonuses linked to performance over the next three years.
The bank will be in the market for several hundred currencies, equity derivatives, commodities and other traders over the next three years. The bank's securities business has recently added 350 people.
Morgan Stanley, like other firms, recently raised base salaries of some employees to make up for lower bonuses and is paying a larger proportion of compensation in stock that can't be sold immediately and can be clawed back for up to three years if the firm realizes losses on certain trading positions or investments. Members of the corporate operating committee will earn 75% of bonuses in stock, with payments subject to clawbacks and a portion to tied to the company's stock performance. Average compensation per employee was $235,193 in 2009. CEO James Gorman didn't take a cash bonus for 2009, instead receiving his pay in deferred compensation. Chairman John Mack passed on a year-end bonus for the third year in a row.
Will more advisers be jumping ship? About 2,000 have reportedly left since the Morgan Stanley Smith Barney joint venture with Citigroup began. When brokers cash their retention-bonus checks they'll have a number, which along with deferred compensation, that a rival would need to match to hire them. The package is a forgivable nine-year loan, so brokers would have to repay it should they leave the company before the end of the term. The packages range from 30% to 75% of production. About 6,500 brokers were eligible for the deal, which required production of more than $500,000 a year.
Morgan Stanley Smith Barney's financial advisers program offers training, mentoring and financial tools and technology. To apply, applicants must complete a talent assessment. Once in the job, employees have their choice of organized employee-networking opportunities, from American Indian to Latino groups and others.
For insight into the company culture, watch the video of Morgan Stanley economist Robert Feldman presenting "Career Hints from 30 Years in the Trenches." One tip: Monolingual candidates will have less luck landing a job here. Employees who speak more than one language are more cost effective when it comes to communicating with global clients.