Tuesday’s headlines: Now the real challenge begins at MSSB

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The long and windy road for the Morgan-Stanley-Smith-Barney merger may have appeared to be actually winding down as last week Morgan Stanley announced it would buy Citi’s 49 percent stake in MSSB. But  Investment News reports that the challenges may have just begun for the firm’s 16,934 financial advisors, a figure which is down 6 percent from last year.

Problems with MSSB's technology platform pose the immediate challenge, but brokers and other observers say the bigger issue is a culture clash that has left legacy Smith Barney reps feeling demoralized, as well as continuing cost-cutting that could cause more of the firm's brokers to jump ship.

The heat is on now that the firm has set margin goals of nearly double current levels – growth expected to come from wealth management, as other areas of the business have struggled. Cuts have been made to the number of complexes, and some managers were moved to production – centralizing management in a way that “frustrates brokers and managers used to having local control,” the publication wrote.

A former Smith Barney broker described the attempt to meld the cultures as “a disaster,” describing Morgan Stanley’s model as “the old broker-dealer approach of ... manufacturing and selling product.” Several insiders quoted in the story say they expect MSSB defections in coming months.

MSSB denied the criticisms of pushing products, and claims that the tech issues have been resolved.

Other news:

Standard Chartered gave an upbeat presentation to investors, but avoided mention of insider trading charges.  WSJ
RBC plans to expand its wealth unit. On Wall Street
Q&A with Jason Kelly, author of “The New Tycoons: Inside the Trillion Dollar Private Equity Industry That Owns Everything.” DealBook
Applications for two-year, full-time MBA programs that start this fall declined for the fourth year in a row.  WSJ

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