Morgan Stanley’s surprise fall

Morgan
Stanley
posted
a loss in the third quarter and was unable to beat analysts’ forecasts.

The
firm reported a net loss applicable to shareholders of $91 million on 7 cents
per share-well below the average 15-cent forecast from Street analysts. Profits
a year ago stood at $498 million on 38 cents per share.

Revenue
was down 20 per cent to $6.78 billion from $8.47 billion a year earlier. Much
of that was due to lacklustre trading volume in the quarter- trading revenue
took a 58 per cent hit to $1.44 billion from $3.40 billion a year ago.

Goldman Sachs suffered the same trading woes in
the third quarter net revenues dropped of 28 per cent to $8.9 billion thanks to
a 36 per cent decrease in trading revenue.

CEO
James Gorman said he was “not
satisfied” with the quarter’s results. Morgan Stanley’s global wealth
management firm which includes a majority stake in the Morgan Stanley Smith
Barney brokerage joint venture, added $5 billion in client assets during the
quarter. The firm’s 18,119 advisers oversee $1.6 trillion in client assets, up
5 per cent from $1.5 trillion a year earlier.

By
comparison, rival Merrill Lynch’s 15,340 advisors manage $1.52 trillion in
total client assets. Merrill’s advisors are more profitable individually with
an average production of $841,000 per financial advisor compared with MSSB’s
$686,000 in revenue per advisor.

The
two firms are in a battle for highly productive advisors and are offering hefty
recruiting packages to lure brokers away from one another and other rivals like
UBS.