According to the Investment News, Morgan Stanley Smith Barney, the largest brokerage in the United States, will lay off between 200 to 300 adviser trainees and low volume producers in the firm’s advisory force by the end of the month.
Another source from Morgan Stanley confirmed the story, but added that the culling of weaker producers and trainees has been going on since the beginning of the year.
The source also confirmed that the general guidelines for the lay-offs are the following: trainees at the firm for between 6 to 36 months with less than $25,000 in annual production, and advisers with five years experience in the industry and at least one year at the firm with annual production of less than $75,000.
The guidelines are not hard and fast, according to the source, with those advisers and trainees showing potential given extra consideration.
The departure of weaker producers will improve the overall productivity of the Morgan Stanley Smith Barney adviser force. Average revenue per adviser stood at $742,000 on Dec. 31, 2010, according to the firm’s fourth quarter earnings supplement. That compares with the average Bank of America Merrill Lynch adviser production of $854,000 last year.
Morgan Stanley hired on 2000 trainees last year, and ended 2010 with an total adviser force of just over 18,100.
Many of these advisors will be leaving Morgan Stanley owing money on either promissory note agreements or trainee agreements, and the firm will likely pursue FINRA arbitration claims against these advisers to recoup any funds loaned.
The White Law Group represents advisors in various litigation matters, including promissory note defense and training agreement defense cases. If you are a Morgan Stanley Smith Barney advisor who owes money on a promissory note or trainee agreement and need legal representation, the securities attorneys of The White Law Group may be able to help.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors and financial advisors in securities litigation matters.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.