MSSB to pare number of complexes

MSSB to pare number of complexes
In a bid to cut costs, MSSB plans to substantially pare the number of its complexes. The brokerage also plans to shrink the ranks of its nonproducing managers.
AUG 29, 2012
Morgan Stanley Smith Barney LLC is reducing the number of complexes in the brokerage to 86 from 118 and cutting the number of nonproducing managers to 85 from 150, according to a report on the FundFire website. MSSB spokeswoman Christine Jockle said the story was accurate but declined to comment further. The firm, a joint venture between Morgan Stanley and Smith Barney LLC, reduced the number of regions in the organizational structure to 12, from 16, last month and clearly plans to cut overhead further. “This kind of cost cutting is typical in challenging markets,” said executive recruiter Mark Elzweig. “[MSSB] is continuing to look for ways to cut overhead and achieve better profit margins.” Morgan Stanley chief executive James Gorman has had a difficult time getting to the 20% pretax profit margin he targeted when he assumed leadership of the company in 2009. Last quarter, the margin was 12% — a 1-percentage-point improvement over the previous quarter. The rocky transition to a new technology platform was completed last month, with the final Smith Barney advisers migrating to the new system in early July. An unnamed MSSB executive quoted in the FundFire story said this was the final reorganization of the combined brokerages. “This will be the structure for the foreseeable future,” the executive told FundFire. The executive indicated that the number of producing branch managers would be increased and that about 40 branches would be consolidated by the firm this year. Morgan Stanley currently is in negotiations with Citigroup Inc. to purchase an additional 14% of the joint venture that was formed in 2009.

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