Post-coronavirus, Morgan Stanley, Goldman Sachs could look very different
Major restructuring being discussed at Morgan Stanley
FOX Business’ Charlie Gasparino says sources are telling him Morgan Stanley financial advisers may be converted to independent contractors which could change the way Wall Street does business. He later discusses the speculation of a merger between Wells Fargo and Goldman Sachs.
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The coronavirus and its impact on how Wall Street conducts business has sparked widespread speculation that two major investment banks, Morgan Stanley and Goldman Sachs, could see vast changes in the coming months, FOX Business has learned.
The talks about radical changes at the top of Wall Street come as the pandemic with its various lockdowns, quarantines and new work rules, has begun to upend business plans across corporate America. Most of the big banks and major U.S. corporations headquartered in the New York metropolitan area will be reopening in mid-June but first only with essential workers coming into the office. New York City locations are not expected to return to normal worker capacity until later in the year or early 2021.
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Big firms, meanwhile, are looking to reduce their real estate holdings and offices in high-density places like New York City because of fears of a second wave of the virus and to cut costs given the sky-high rents in Manhattan and the surrounding areas. Firms have begun to eye expanding investment banking and sales jobs in lower-density urban locals such as Denver; Jacksonville, Florida; Nashville, Tennessee; Austin, Texas; and Charlotte, North Carolina, financial services recruiters tell FOX Business.
The moves will save the big banks money on expensive overhead but also could severely damage real estate and other businesses in New York City that relied on tens of thousands of Wall Street office workers to make money.
Morgan Stanley, which boasts the biggest brokerage sales force on Wall Street with close to 16,000 financial advisers, is one of the firms looking to slash its real estate budget, FOX Business has learned. It is said to be discussing a plan that would turn many of its brokers into independent contractors with an affiliation with the firm in order to handle investments of its retail, or small investor, clients, according to senior brokers at the bank.
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The move would make Morgan Stanley's brokerage division resemble the model used by Charles Schwab Corp., which has relationships with outside so-called independent financial advisers that work with the firm's clients.
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Under the plan, the brokers would work from home offices. Morgan would slash real estate costs in big cities like New York and other expenses. The benefit to the brokers is that they are allowed to keep most of their client fees and hand a smaller portion to Morgan, which would execute trades and provide them with research, according to brokers who have discussed the matter with their branch managers.
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The discussions come as the vast majority of the firm's brokers are already working from home as the firm continues to plan for its reopening from the pandemic lockdown. Brokers tell FOX Business while some advisers in smaller-density cities and suburban areas could return to their offices this summer, many, particularly in New York City, could continue to work remotely in home offices through the remainder of the year.
People at the firm say the broker work arrangement hasn't hurt client relationships, which is why there is so much talk among financial advisers about the plan. Another reason the speculation is growing: Morgan chief executive James Gorman has publicly stated the firm can operate with a smaller real estate footprint, something that the independent contractor model would immediately achieve.