Morgan Stanley expects to hire 75 advisors in the U.S. this year to target rich Latin Americans investing in the world's biggest economy, part of a strategy to focus on the region as other international banks retreat.
"We plan to continue to recruit successful teams from our competition this year," James Jesse, the New York-based firm's head of international wealth management, said in an interview.
One of the bank's strategies is to attract ultrahigh-net-worth individuals by offering them resources similar to those available to institutional clients such as hedge funds and corporations, including economic and equity research, investing strategies, hedging and bespoke products, Jesse said.
The new hires would bring to 435 the number of people Morgan Stanley has helping foreigners with their U.S. investments, after the company added 75 advisors with $25 billion in assets under management during the past two years, Jesse said. Morgan Stanley's worldwide wealth management business had a total of 15,889 advisors with $1.98 trillion of client assets as of the end of December.
The firm has been relying on higher profit margins in the wealth management and brokerage businesses to help counter a decline in bond-trading revenue and stricter capital requirements in the wake of the financial crisis. About half of its $35 billion in net revenue last year came from managing investments and wealth.
Credit Suisse said in October it would wind down its U.S. private-banking operations because it didn't have the scale needed to compete without significant new investments. Morgan Stanley negotiated an exclusive deal to recruit 35 U.S. advisors at the Zurich-based firm who cover Latin American clients, while Wells Fargo reached a deal for its roughly 250 brokers who focus on domestic clients.
"Close to 100% of the Credit Suisse advisors have signed their letters to join Morgan Stanley," Jesse said.
Wealthy individuals have about $10 trillion invested outside their own countries, according to Morgan Stanley. Roughly $1.4 trillion is in the U.S., with $900 billion of that from Latin Americans. High-net-worth clients from that region represent about 70% of the bank's international wealth management business, accounting for approximately $90 billion in assets under management, more than any other firm, Jesse said.
THE COMPETITION
Morgan Stanley is also hiring teams from competitors such as Bank of America, which last year shifted its strategy for international investors to serve richer clients. Existing international accounts at the Charlotte, N.C.-based bank must maintain a minimum $1 million balance, up from $500,000, while new accounts must have between $2.5 million and $5 million. Morgan Stanley accepts clients with a minimum of $500,000.
Bank of America is also adding resources to the Merrill Lynch wealth management business to serve clients investing in the U.S. who fit the new criteria, according to a spokesperson. Latin America is an important core market, with the bank serving clients in Brazil, Chile, Colombia, the Dominican Republic, Mexico, Panama and Peru. The bank said in January that it hired Fabio Concesi from Citigroup for its Miami office and Teresa Valdes-Fauli Weintraub in Coral Gables, Fla., from Fiduciary Trust International.
Jesse said Morgan Stanley has 12 offices serving Latin American individuals, with the largest in New York and Miami.
The U.S. has emerged as one of the top destinations for wealth invested by individuals outside their own countries, behind traditional offshore sites such as Switzerland, the U.K., the Caribbean and Singapore, according to Morgan Stanley. Many families have second homes in the U.S., send their children to American universities or are looking for residency, Jesse said.
John Moore, Morgan Stanley's chairman for the Latin American business, said economic and political instability in the region in the past few years is adding to the argument that wealthy investors shouldn't have all their assets managed locally.
"We have found increasing opportunities to connect our individual and family-office clients to advisory, financing and other banking services," Moore said. "In Latin America, relationships are critical and tight-knit," he said, adding that "the wealth network is highly complementary to our other activities in the region and beyond."
About 30% of Morgan Stanley's business in Latin America comes from wealth management, Moore said.
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