Morgan Stanley Smith Barney Datapoint of the Day

Includes: C, MS
by: Felix Salmon

How rich are Morgan Stanley Smith Barney's clients? Consider this:

  • According to the official press release announcing the formation of Morgan Stanley Smith Barney, the new joint venture will have "6.8 million client households globally - with a strong presence in the critically important high-net-worth client segment".
  • Morgan Stanley co-president James Gorman, who will chair the joint venture, says that "most financial advisers are hoping to serve clients who have $1 million in investable assets".
  • Citigroup's Mike Corbat is at pains to point out that Citi's "bank-branched advisors" -- the brokers who work out of Citibank branches and deal with smaller customers -- are not part of the deal.

Given all that, you might be forgiven for thinking that the median client would have at least half a million dollars in assets, and the mean client might be well into seven figures. But you'd be wrong.

According to that official press release, the joint venture will oversee just $1.7 trillion in client assets -- which works out at exactly $250,000 per client.

OK, it's unfair for me to talk about "just $1.7 trillion" -- $1.7 trillion is one hell of a lot of money in anyone's book. But clearly "the critically important high-net-worth client segment" doesn't make up that much of Morgan Stanley Smith Barney's client base. This is a decidedly middle-class shop, as befits its Dean Witter and Smith Barney heritage: all the talk about "wealth management" is basically window dressing, and/or client flattery.

Of course, if the average Morgan Stanley Smith Barney client has $250,000 now, there's a good chance that they had $400,000 at the height of the market in 2007. If the average client was down by 30% in 2008, that would mean that Morgan Stanley Smith Barney's clients collectively saw more than $700 billion of wealth evaporate last year. That's an entire TARP right there.