Morgan Stanley denies report that it plans independent platform for advisers

Morgan Stanley today denied a Fox Business report from Wednesday claiming that the wirehouse was considering an independent model for its reps and advisers, all of whom are currently employees.

According to the report, Morgan Stanley was "said to be discussing a plan that would turn many of its brokers into independent contractors with an affiliation with the firm in order to handle investments of its retail, or small investor, clients."

The news story cited unnamed senior brokers at the bank as sources.

Morgan Stanley shot down the notion that it was changing how it worked with its advisers. "We have absolutely no plans to change the employment classification of our financial advisers," a company spokesperson said.

Morgan Stanley's 16,000 reps and advisers are employees of the firm, whereas registered investment advisers working with a custodian own their businesses or are paid as independent contractors. While advisers at big banks like Morgan Stanley are paid a smaller percentage of revenue (about half) than so-called independent advisers, they typically have wealthier clients and generate substantially more revenue.

Morgan Stanley, however, appears to be considering less of a real estate “footprint” in urban money centers like New York and Hong Kong in the future as the vast majority of employees, including financial advisers, work from home during the COVID-19 pandemic. Spending on offices for employees is one of the largest costs for banks and brokers like Morgan Stanley.