Thus, the growth in the retail business. Investment banks have not completely ignored this market. This has forced Morgan to look for ways to sell the mutual funds. In a comparable move, Salomon Inc. has recently linked up with Fidelity Investments' brokerage unit to sell stocks to Fidelity's brokerage clients. The retail industry itself is changing too.
Brokers typically get a higher commission from selling mutual funds put together by their employer.
Merrill Lynch, for instance, has recently introduced a program that permits relatively small investors to pay brokers a flat percentage of assets under management, rather than by trade. The idea is that the broker's profits grow only if the customers do well. The objective of a manager is to maximize the wealth of shareholders by undertaking projects that create value. Thus, a merger becomes viable only if it creates additional value for shareholders. In this case, the after merger market value of Morgan Stanley, Dean Witter, Discovery, Inc. should be greater than pre-merger combined market values of Dean Witter and Morgan Stanley.