NEW YORK (Reuters) - Morgan Stanley, the biggest U.S. brokerage by head count, told brokers Tuesday that it is standing down from the expensive recruitment wars, following similar steps taken earlier this month by competitor Bank of America (BAC.N) Merrill Lynch.
Morgan Stanley, which has more than 15,000 brokers, will “significantly reduce experienced adviser recruiting,” according to a staff memo from Morgan Stanley co-heads Shelley O‘Connor and Andy Saperstein that was viewed by Reuters. The news was reported earlier on Tuesday by the Wall Street Journal.
Merrill Lynch announced that, starting in June, it will no longer offer new prospects or recruits big upfront bonus checks to join its firm, a common and costly industry practice.
For years, brokerage executives have complained about the ceaseless competition among Wall Street firms to offer ever more lucrative recruitment packages to gain top advisers and their clients and assets.
The offers included a substantial sign-on check, plus a l bonus paid out over seven to 10 years based on sales and growth targets. They were used as the primary way to expand wealth management businesses, but critics said recruitment costs often outweighed returns.
Morgan Stanley will honor any approved recruitment offers made and in the “pipeline” by June 16 for brokers who are set to join the firm on or before Sept. 1, according to the memo.
The company will announce a new recruitment policy in the coming weeks, it said.
UBS AG’s (UBSG.S) Wealth Management Americas last year announced plans to curb recruiting.
Reporting By Elizabeth Dilts; Editing by Steve Orlofsky