Morgan Stanley’s Vince Lumia Sees Rise of the “Mega” Team Post-Pandemic
The days are numbered for the solo practitioner or two-person team with an associate or two, a Morgan Stanley wealth management executive declared Thursday.
Vince Lumia, managing director and head of field management, who oversees the wirehouse’s network of approximately 16,000 financial advisors across roughly 600 branches, said the Covid-19 pandemic has accelerated the trend of teams getting larger, combining expertise across geographies, and appointing the equivalent of chief operating officers to run the day-to-day business.
“The new normal, post-Covid, will be dominated by even larger teams or mega teams,” Lumia told an online audience attending the Securities Industry and Financial Markets Association’s annual private client conference.
A Morgan Stanley spokeswoman declined to provide any statistics about how many of its 16,000 brokers are on teams or the average size of its teams.
The firm issued an internal report last year that said the fastest growing segment of the teaming population is the “mega team” of five or more advisors. These teams at Morgan Stanley grew by 29% year over year at the end of the second quarter of 2019, versus just 1% for two-person teams, according to the paper, titled “Emerging Trends of Our High Performing Teams.”
Wirehouses have emphasized teaming for years because they say that customers can benefit from having different specialists available. Recruiters say it also makes it more difficult for team members to move firms since they may have to leave behind clients governed by partnership agreements that can be subject to additional non-solicitation rules unless everyone agrees to move together.
“It’s hard when you’ve got five advisors in five different states, trying to convince them all to leave and, even when they’re on the same page, to coordinate it,” said Rick Rummage, a recruiter in Herndon, Virginia.
Lumia had said the goal in building larger teams is to achieve a “scalable and repeatable” investment process and client experience, and to meet a growing list of “complex” demands from clients around tax planning, trust and estate planning and philanthropy.
Teams are also adding support roles such as COOs or specialists to free up lead advisors for more prospecting, according to Lumia.
“Without capacity and scale, teams will spend their time doing administrative things, much of which is of much less value to the client,” Lumia said. “High performing teams are quicker to partner with other specialized advisors when opportunities require skills that are not a part of their own core strengths.”
With the pandemic’s acceleration of the use of video calls, advisors have a “greater willingness” to partner across geographies to bring in outside specialists and resources without the need for travel, Lumia said.
To be sure, the pandemic and the rise of larger teams has also triggered some break-ups, according to Rummage and a lawyer who has helped some brokers navigate complicated splits.
“It’s hard enough for two advisors to work together without any blow-ups,” Rummage said. “When you add a third, the difficulty is exponential. Eight, it’s a bloodbath when you break up, and it happens more than you’d think.”
In one recent example, highlighting the pressures that the pandemic has put on teams, a top-ranked Morgan Stanley broker with a $1 billion client book was ousted after he allegedly installed a listening device in his former partners’ office.
“Covid has really turned the industry into ‘Lord of the Flies,’” Cleveland-based lawyer Scott Matasar, who was not involved in the incident but represented brokers after their team dissolved, said previously in reference to the novel about stranded school boys fighting over how to govern themselves. “Everybody has been protecting their turf out of concern over what Covid meant for their bottom line.”