Morgan Stanley Fires Another Broker Over Inherited Account Issues
Morgan Stanley Wealth Management’s probe of alleged ‘inherited account’ abusers that led it to purge at least ten advisors in mid-November has claimed another inheritor.
The allegations involve Morgan Stanley’s Former Advisor Program (FAP), according to sources. It pays advisors who “sell” their books of client accounts to a colleague a percentage of payout on the accounts for up to five years after they retire. Morgan Stanley and other large firms have been promoting such “sunsetting” programs in an attempt to keep experienced advisors from leaving with their clients to other firms.
Witt, who was based in Dallas, Texas, joined Ameriprise Financial Services’ employee channel in nearby Plano last week. Reached there, he declined to comment, citing Ameriprise policy.
An Ameriprise spokeswoman confirmed Witt’s hire, saying he had been managing about $150 million in client assets, but declined to comment on Morgan Stanley’s U5 notice summarized on his BrokerCheck record.
In November, Morgan Stanley dismissed brokers in Florida, California and other states following internal investigations that insiders said were prompted by complaints from retirees in the FAP.
Morgan Stanley tweaked the program two years ago to make it more palatable to inheriting advisors by subsidizing some of the payout split they give up. It also promotes the program by pre-enrolling top-tier advisors well ahead of their retirements with a formula that gives them up to 80% of the payout when they first retire.
Witt spent much of his Morgan Stanley career in sales management posts, but shifted to becoming a full-time advisor about two years ago following a reorganization of Dallas management, said a former advisor at the complex.
A Morgan Stanley spokeswoman did not return a request for comment on Witt’s departure and career history, and on the status of its review of the FAP.
In their defense, some brokers accused of withholding credit to retired advisors by solely using their own production numbers said they had been instructed to game the system by their direct managers or simply made filing mistakes, according to lawyers representing them.