Once again, a wirehouse is looking to cut into its support infrastructure while keeping the producing brokers happy. We will see if the strategy works over the long term.
Morgan Stanley plans to lay off about 1,600 people early next year, reducing its overall non-broker work force by about 3.5%.
In theory, the firm will still employ between two and three people for every producing advisor after the layoffs.
Any independent advisor making do with a part-time office manager / receptionist knows that's still a fairly deep level of support -- but the question is whether Morgan producers will see it that way.
It also remains to be seen whether the cuts will fall more heavily on staff from the Smith Barney side of the company. As Morgan continues to focus on its own legacy talent, brokers who came from Smith Barney in 2009 feel increasingly alienated.
The bonds tying them to the company are already getting thinner. Losing support staff they know will only accelerate that process.
If we see a real breakaway wave next year, this is where it might start.