Morgan Stanley Smith Barney

Morgan Stanley Smith Barney is a joint venture of the independent investment bank Morgan Stanley with Citigroup, who own the Smith Barney wealth management brand. The two banks will be merging their wealth management divisions, Morgan Stanley Global Wealth Management group and Citi Smith Barney. All the other parts of Morgan Stanley and Citigroup are unaffected by this move.

The merger was announced in 2009 with Morgan Stanley taking the controlling stake and paying Citigroup $2.7 billion, thus helping Citigroup to pay off its debts to the US government and enabling it to run its own affairs. This was seen by some commentators as the end of Citigroup’s “financial supermarket” approach where a customer could get any financial service they needed from the same institution with the scope for cross selling financial services that this would allow. Later in the year Citigroup announced that it was going to sell all the shares to Morgan Stanley, making Morgan Stanley Smith Barney a fully owned subsidiary of Morgan Stanley.

Morgan Stanley Smith Barney has 18,000 advisors, 1,000 offices worldwide and serves 8.6 million households. It provides asset management, investment banking and brokerage services to individuals, corporations and governments worldwide. The services include investment advisory services, financial planning, wealth planning, credit and lending products, cash management, annuities and insurance, retirement and trust services.

It has announced plans to expand the number of advisors. Its aim is to focus on the “ultra-high net worth” clients by combining the Morgan Stanley division “Private Wealth Management” with Smith Barney’s “Citi Family Office” offerings.

Citi Smith Barney was the wealth management arm of Citigroup. It was firmly integrated into a larger group that was aiming to be a comprehensive financial offering from current accounts to investment offerings. The bank used to be known as Smith Barney before being acquired by Travelers Corporation, who renamed the brokerage to Salomon Smith Barney. It was the brokerage department of a number of financial corporations before Travelers. It had last been an independent brokerage in the 1980s, and this had been formed in 1938 through a merger of Charles D Barney & Co and Edward B Smith & Co, two stockbrokers founded in the second half of the Nineteenth Century. Business week had ranked Smith Barney as the top full service brokerage firm for customer service.

Morgan Stanley is one of the largest investment banks in the world, headquartered in New York City. It has 600 offices in 36 countries and employs more than 60,000 people. It was founded in 1936, when one of its founders, a grandson of J P Morgan, spun off the investment banking elements from the celebrated merchant bank J P Morgan & Co. This was as a result of the depression era Glass Steagall Act which forcibly separated commercial banking operations from investment banking operations. J P Morgan’s board preferred to stick with the more profitable and prestigious commercial banking, and so had to lose its substantial investment banking operations. Although Morgan Stanley was founded as an investment bank and spent most of its life as an investment bank it applied, along with Goldman Sachs, for a bank holding company license, submitted to ensure that it would be under federal regulation and able to take advantage of any federal subsidies.

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