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2. James P. Gorman

Industry Spotlight > Wirehouse Firms

Is James Gorman Afraid of the Big Bad Wolf of Independence?

By Mark Elzweig

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Morgan Stanley CEO James Gorman is calling “Olly olly oxen free” to all the financial advisors still working from home.

But this is no game of hide and seek. And I find it baffling that Gorman is insisting his wealth management force come to the office, all suited up. 

Not just every now and then. On average, he’s asking them to appear four days a week with their shoes shined. Put another way, advisors can work from home a maximum of 90 days a year.

Gorman has been a fantastic leader, saving Morgan Stanley from the brink of disaster during the financial meltdown of 2008-09.

Columnist Charles Gasparino says Morgan Stanley believes this is the way to toe the line for the Financial Industry Regulatory Authority, which is mulling new rules on working from home. 

Gorman likes to talk about re-entering “careerland” vs. staying in “jobland.” To build a career, he says you need to be in the office hobnobbing. 

Maybe.

I suspect Gorman is nervous that WFH arrangements serve as training wheels for advisors in his 16,000-strong employee workforce who may want to go independent. 

Wealth management is now at the center of Morgan Stanley’s growth strategy for the next few years. That’s why the firm spent $900 million in 2019 to buy global stock plan administration platform Solis Capital (now Shareworks), for instance, which it saw as feeding the future growth of this division.

WFH is an option many advisors — like many other professionals — have come to cherish during the pandemic. If they aren’t part of the Great Resignation, many workers are enjoying the flexibility and freedom that WFH affords. 

One of the great surprises of Covid quarantining has been that many people discovered a freedom that they didn’t know they could have: the ability and power to work from anywhere. 

In other words, what advisors do for clients is what truly matters — not their location. 

Like other professionals, advisors appreciate so many other aspects of WFH, like more time with family, no tiresome commutes and dressing down all day. 

One advisor told me that her gross production (or fees and commissions) has been up since the start of the pandemic. 

This improvement isn’t just due to the fact that she doesn’t have to commute. It’s also tied to the fact that “office life” is distracting. Water- cooler chat doesn’t help her boost her gross very much.

Seeking Freedom

Why return to the branch? In fact, I suspect many are thinking: Why be part of a wirehouse at all? 

Indeed, the recruitment pace for RIAs and independents continues to pick up. Other advisors with the WFH bug might be more likely to jump ship for other wirehouse and regional firms with more flexible policies.

Keeping advisors on board at some wirehouses has always been a challenge. Everyone wants a great producer.

By nature, producers are entrepreneurs. They’re more lone wolves than sheep who will follow the guy with the big shepherd staff.

Most advisors are decision-makers who take action to remove obstacles to the growth of their business. Sometimes, this involves tweaking their marketing strategy. It can also involve changing firms or business models. 

One of the great drivers of the migration of wirehouse advisors to the independent space has been their desire to maximize their control over their business lives. This means everything from their personal branding to the daily operation of their business. 

The breakaway movement continues to gain momentum because so many advisors place a premium on expanding their level of personal freedom.

Advisors & WFH

Entrepreneurial advisors are self-starters who generate their own clients and devise their own investment programs. They are not employees whose daily activities need to be managed and carefully scripted by hands-on supervisors. 

The hallmark of a successful salesman is the can-do attitude of “Just give me the tools and resources I need, and then stand back, get out of my way and let me get the job done!”

These issues may have influenced UBS to recently launch a work-friendly strategy for “eligible” U.S. employees, which stands to give it a recruiting advantage over Morgan Stanley. The new virtual work framework will allow at least some roles at UBS to be 100% remote and was “designed to appeal to [a] diverse talent pool and increase retention, while enhancing client service,” the firm said. 

It’s fair to say that this move puts Morgan Stanley at a disadvantage, since it is now locking its advisors into a limited number of work-from-home days. And Morgan Stanley’s “willingness” to talk about exceptions to this policy is not a strong selling point.

Perhaps Gorman fears that WFH during Covid-19 was the wolf in lamb’s clothing — a dress rehearsal for independence for many advisors. He’s calling them out. 

But he’ll need something more than the offer of a career to get everyone back into the corral — as advisors ask themselves, “Will it be worth it?”

Pictured: Morgan Stanley CEO James Gorman. (Photo: Brendon Thorne/Bloomberg)

Mark Elzweig

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