Morgan Stanley gets aggressive in luring brokers

Gorman, who will replace existing CEO John Mack early next year, nearly tripled the operating profit of Morgan Stanley's wealth management business in three years and helped drive the joint venture with Smith Barney.

Morgan Stanley paid USd 2.75 billion to Citigroup for 51% of the venture and has the right to increase its stake starting in three years. Citi will continue to own a "significant stake" through at least mid-2014, the companies have said.

The recruitment package brings Morgan Stanley Smith Barney in line with other top firms such as Merrill Lynch Global Wealth Management, said Darin Manis, chief executive of recruiting firm RJ Makay in Colorado Springs, Colorado.

"Our recruiting is competitive with everyone else's on the Street," said Morgan Stanley Smith Barney spokeswoman Christine Pollak. Pollak declined to confirm the terms of the package circulated by head hunters.

Merrill Lynch, which has struggled with broker defections since the heavy losses that led to its acquisition by Bank of America Corp., already is offering recruits a very strong package, Peterson said.

He added that Wells Fargo & Co might improve its offer, and that UBS, which recently named former Merrill executive Robert McCann as its Americas wealth management CEO, should soon have an offer out.

"UBS has no deal on the table. They have a brand new management team and we expect a deal to be announced fairly quickly," Peterson said.

The entire brokerage space is in ferment after the industry consolidation that followed last year's financial meltdown. Wells Fargo acquired Wachovia Corporation's brokerage, which included the former AG Edwards, as part of its takeover of the troubled

Charlotte-based bank at the beginning of the year.

(Reporting by Elinor Comlay and Clare Baldwin; editing by Christian Plumb and David Gregorio)