10/09/2009 - 00:00

Brokers search for private client advisers

10/09/2009 - 00:00


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THE local office at newly formed Morgan Stanley Smith Barney has been given a mandate to ramp-up its private client adviser numbers, as Perth's broking sector settles into its new look.

THE local office at newly formed Morgan Stanley Smith Barney has been given a mandate to ramp-up its private client adviser numbers, as Perth's broking sector settles into its new look.

The newly merged group - formed after Citigroup merged its brokerage unit into Morgan Stanley's operations earlier this year - has 27 advisers that target wealthy clients, usually with at least $500,000 in investable assets.

Perth branch manager Stephen Chapman said a large part of his role was dedicated to recruitment.

He said a recent Sydney visit by James Gorman - a former Melbourne solicitor who lives in New York and heads the combined brokerage operations - reassured everyone that head office was pursuing growth.

"Let's just say there's more room this side and that's not enough," he said, pointing to an area in The Esplanade offices.

But as Mr Chapman acknowledges, finding suitable private client advisers is still difficult, even though the boom times - accompanied by labour shortages - have subsided.

The make-up of Perth's private client adviser market has changed significantly in a short period of time, due in large part to poachings and acquisitions.

Firms constantly jostle to take a larger slice of Australia's lucrative private wealth market, which ranks third in Asia Pacific (behind Japan and China) according to federal government agency Invest Australia.

Like many of the personnel at Morgan Stanley Smith Barney, Mr Chapman worked at Goldman Sachs JBWere, before taking part in a walk-out to Citigroup, which in turn merged its brokerage unit into Morgan Stanley.

Goldman's local broking office now trades under the JBWere name, although it is 80 per cent owned by the National Australia Bank.

Morgan Stanley Smith Barney's Stuart Beattie said Perth had a reputation for being over-brokered and underserviced, but he said the private client business was about looking after investors' entire financial health.

"It has given our clients a better experience than having a pure share portfolio and watching it tank," Mr Beattie said.

Blackswan Equities is the newest addition to the local broking sector, headed by chief executive Simon Lyons.

Mr Lyons said he would like to increase his 12-strong team of advisers to 20, and would look outside of the profession to find and train the right people.

"You are often better offer training a lawyer or accountant in portfolio construction and research ... and then letting them loose onto the public," Mr Lyons said.

Mr Lyons started his broking career as a private client adviser at Porter Western in the 1990s, which later merged with Macquarie. The former head of Macquarie's financial services group, Asia, has attracted a number of Macquarie advisers into the new group.

Blackswan is not an investment bank like Morgan Stanley or Macquarie, but it still targets highly sophisticated clients.

Perth is also home to mid-tier broking groups with their own niches.

John Pritchett, Perth retail branch manager of Patersons, said the firm accommodated the two types of customers - investors and punters - as long as the latter know the risks.

"There are people who treat [the sharemarket] like a TAB," Mr Pritchett said.

Advisers normally work on a commission-only basis, whereby they keep about 45 per cent of the revenue they generate for their firm.

Mr Pritchett said the firm would only take on someone with a plan to build business.

"They just have to know how they are going to grow a client base; nobody's going to give one to them," he said.

Being connected, be it through "Rotary, school or business" is key to the job, Mr Pritchett said.

Patersons has bulked up its business during the past year through the acquisition of Montagu Stockbrokers and Tolhurst Group.

Other new broker firms to the sector include Prescott Securities and Zurich Securities, while Hogan & Partners closed last year.


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