The number of staff serving Morgan Stanley's wealth management arm fell from 10,470 to 9,000 in the year ending Feb. 28, according to the bank's first-quarter statement.
The 14 percent drop results from 1,000 redundancies in the division's U.S. broking arm and a cut in the number of trainees. But there have been several departures and hires. "Morgan has been suffering from a revolving-door syndrome for months," said a rival.
To rebuild the division, John Mack, chief executive of Morgan Stanley, recently seized an opportunity to hire James Gorman, Merrill Lynch's well-respected private client chief. Last quarter's one-off equity remuneration cost of $80 million relating to the wealth division relates partly to Gorman's package. The remuneration cost pushed the division's quarterly pre-tax profits down to $23 million against $353 million, including exceptional profits of $220 million.
Recent departures from Morgan Stanley's wealth division include former London-based chief investment officer Simon Brewer, who has become chief executive of Vantage Investment Advisory.
Adviser Warwick Ryan has left to join a new fund management group, Heptagon Capital, set up by former Morgan advisers Tarek Mooro, Fedrick Plyhr and Eran Ben-Zour last year. Italian specialists Carlo Michienzi and Andrea Brignone left last year to set up a venture.
Gorman's overhaul of his U.S. business has led to the departure of Rick Sanchez, head of client coverage, and Michael Burke, director of national sales.
However, Gorman has been successful in luring three of his former U.S. colleagues from Merrill Lynch - Michael Rogers, Jerry Miller and Richard Skae.
Morgan Stanley has also recruited Alexander Classen, former head of Goldman Sachs' Swiss wealth office, to become head of sales for Europe and the Middle East.