Dozens of MSSB Financial Advisors Could Exit Over New 3D Platform

Dozens of Morgan Stanley Smith Barney financial advisors, managing “tens of billions” of dollars in client assets, are threatening to leave the firm because of its new technology platform, according to a report by Reuters.

The group of 40 or more advisors are reportedly frustrated over continuing problems with the firm's new 3D technology platform on which they manage clients' money, store information and look up research reports and market data. Recruiters have called this a key factor for many of the advisors who have left the firm in recent months.

In this case, “The group has hired a lawyer to argue that they should be able to keep lucrative retention payments even if they quit, and they have also drafted a letter to Morgan Stanley CEO James Gorman outlining their concerns, though the letter has not yet been sent," Reuters stated, quoting people familiar with the matter.

Rebecca Rothstein, one of the firm's top advisors in Beverly Hills, spoke to Gorman on the group's behalf, according to the Reuters report.

“Rothstein, who is close to Gorman and not part of the group, told him about the difficulties advisors and their clients are having—from trading delays and problems with foreign currency transactions to inaccurate account statements and bounced checks—and warned the group was planning to quit,” one of the sources told Reuters.

According to the report, Gorman told Rothstein he was aware of the problems and management was working on them.

However, Morgan Stanley spokesman James Wiggins said, "No such letter has been sent to management and no mass exodus has been threatened.”

Early last month, MSSB moved the final 3,000 financial advisers onto the system, Investment News reports today, adding that while the new platform is central to the brokerage's plans to reduce costs and improve profit margins at the firm, it's been a source of aggravation for many of the nearly 17,000 advisors at MSSB.

“With few exceptions, the advisors at MSSB are beyond frustrated with the new platform,” said Ron Edde, director of advisor recruiting at Millennium Career Advisors Inc. “3D may become the most marvelous platform in the industry, but many advisors feel they can't wait for the firm to iron out the problems.”

Reuters says it was not able to obtain a copy of the letter, but was briefed on it by two Morgan Stanley Smith Barney advisors and an advisor from a rival firm who had seen it.

Morgan Stanley Smith Barney was formed from the largest-ever U.S. wealth management merger when Citigroup Inc. and Morgan Stanley agreed to combine their retail brokerage businesses in 2009. It employs nearly 17,000 advisors overseeing $1.7 trillion in assets.