For a long time, the stable of generously-paid, high-volume finance jobs in America has been mostly populated by the country's army of financial advisors. Financial advisory isn't Wall Street exactly, but with pay averaging around $230k it's not exactly Main Street either. And financial advisor jobs have been comparatively easy to come by - Morgan Stanley alone employs nearly 16,000 of them. But times are changing, for the worse.
In a presentation yesterday at a conference in New York, Andy Saperstein, Morgan Stanley's head of wealth management, spelled out the changes coming to the bank's army of financial advisors. Once the individual advisor was king; nowdays it's now all about the team.
Revenue growth for financial advisory businesses has been decoupled from individual advisors, said Saperstein. Instead of one man or woman working with his or her loyal clients, the new model involves increasingly specialized roles in highly integrated teams. The individual FA is being replaced by a team of developers, client services professionals, portfolio managers and alternative investment and lending specialists.
These teams are becoming increasingly productive. Top-producing financial advisors might bring in between $1m and $2m in revenues, but Saperstein said Morgan Stanley's teams are already close to bringing in $50m and that this should rise to $75m to $100m over time, aided by technology.
Teams are therefore the future. And as they take control, Morgan Stanley expects the number of financial advisors it employs to dwindle - without effecting revenues. At the same time, more emphasis will be given to mass affluent clients, served through Morgan Stanley's recent acquisition of Solium Capital.
All of this should sound familiar to Wall Street bankers and salespeople who've seen their personal relationships shifted to the franchise and supplanted by technology for years.
Morgan Stanley isn't expecting to do away with its financial advisors altogether - analysts at KBW point out that Saperstein expects Solium's clients to scale up the value chain and to meet the bank's financial advisors eventually. However, as financial advisor numbers are squeezed, Wall Street escapees will find it harder and harder to build a second career advising the man on the street how to prepare for retirement.
In the meantime, it seems most existing financial advisors are hunkering down. - Saperstein said FA attrition is the lowest it's been since Morgan Stanley's acquisition of Smith Barney in 2012.
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