[ by Melanie Gretchen ]

Several dozen Morgan Stanley Smith Barney advisers could take tens of billions of dollars of client money away from the firm, according to people familiar with the matter.  Advisers and clients have drafted a letter to CEO James Gorman outlining their concerns surrounding a new technology system, which manages clients' money, stores information and looks up research reports and market data.  What it could cost the firm if they leave: $47 billion.  What it could cost the advisors: 9-year forgivable loans they received in 2 lump sums in 2010 and 2012, to be repaid if they quit.

What Seems to Be the Problem? Rebecca Rothstein, one of the firm's top advisers based in Beverly Hills, spoke to Mr. Gorman on behalf of the group, two sources familiar with the conversation said;  their concerns ranged from trading delays and problems with foreign currency transactions to inaccurate account statements and bounced checks.  Mr. Gorman said that management was working through the problems, and that advisers should direct their complaints to Greg Fleming, who heads the brokerage division and is more closely involved with day-to-day issues.

Firm spokeperson James Wiggins said not everyone is having the same problems, including others who prefer the new system.  "There is a very large number of financial advisers who are doing just fine," he said.

Who's Not Doing Just Fine

• Veterans of Smith Barney for decades run groups named after them in New York, New Jersey and California and are members of Morgan Stanley's Private Wealth Management Group, which only works with clients who have at least $20 million in assets.
• Four advisers who signed the letter, and whose names Reuters has learned, together manage about $47 billion.

"It's not just that the asset count is down, but it also represents future revenue flows." -- Alois Pirker, research director at the Boston-based Aite Group.

To date, the group has hired a lawyer to keep lucrative retention payments even if they quit.  Rich Schwarzkopf, a New York-based recruiter who works with brokers, wasn't so hopeful.

"The law is fairly black and white when it comes to the laws of a contract."

For further details, go to [Reuters, 8/31/12].