The group has hired a lawyer to argue that they should be able to keep lucrative retention payments even if they quit, and they have also drafted a letter to Morgan Stanley CEO James Gorman outlining their concerns, though the letter has not yet been sent, the sources said.

Rebecca Rothstein, one of the firm's top advisers based in Beverly Hills, spoke to him on the group's behalf, two sources familiar with the conversation said.

Rothstein, who is close to Gorman and not part of the group, told him about the difficulties advisers and their clients are having - from trading delays and problems with foreign currency transactions to inaccurate account statements and bounced checks - and warned the group was planning to quit, one of the sources said.

Gorman told Rothstein that he was aware of the problems, and that management was working through the problems, the source said. He also told her that advisers should direct their complaints to Greg Fleming, who heads the brokerage division and is more closely involved with day-to-day issues.

The group of advisers - which one source said totaled 48 and two others said was roughly 40 - are still weighing whether to leave the firm. Several have individually voiced their concerns to Fleming and other senior executives who are working through the technology issues.

Morgan Stanley spokesman James Wiggins said the firm was aware that brokers have been voicing complaints about the new technology, but did not know anything about this specific group of advisers.

"No such letter has been sent to management and no mass exodus has been threatened," he said. "Management's door is always open to discuss with any concerns they may have."

Wiggins also said that while some brokers are bemoaning the changes Morgan Stanley has installed, there are others who have not complained about the conversion and, in fact, prefer the new system. "There is a very large number of financial advisers who are doing just fine," he said.

The firm declined to make Gorman or Fleming available for an interview.

Reuters was not able to obtain a copy of the letter, but was briefed on it by two Morgan Stanley Smith Barney advisers and an adviser from a rival firm who had seen it.

FINANCIAL BLOW

The group's revolt is the latest sign of the concerns about technology at Morgan Stanley Smith Barney, which was formed from the largest-ever U.S. wealth management merger when Citigroup Inc and Morgan Stanley agreed to combine their retail brokerage businesses in 2009. It employs nearly 17,000 advisers overseeing $1.7 trillion in assets.

The advisers' complaints stem mostly from the rollout of a new technology platform dubbed "3D" on which they manage clients' money, store information and look up research reports and market data. The system's rollout has taken longer than expected and been beset by technical problems that have angered clients and advisers.

Still, even some advisers who are upset about the glitches say that management appears to be taking the complaints seriously and working to resolve problems.

The firm has encouraged employees to submit complaints into a program called "We Hear You," and two senior executives in the U.S. operation, Doug Ketterer and Andy Saperstein, have been meeting with advisers in recent weeks to smooth over tensions, several sources said.

A large departure of disaffected brokers would be a blow to Morgan Stanley Smith Barney on both a financial and a reputational level because of their stature and the amount of money they oversee, industry experts said. The larger an adviser's client asset base, the more revenue he or she generates for the firm.

Several of the advisers involved in the budding revolt have worked at Smith Barney for decades. They 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. Those advisers either declined to comment on the matter or did not return phone calls and emails seeking comment.

A mass resignation's biggest impact would likely be a loss of assets as clients moved their money with the advisers, said Alois Pirker, research director at the Boston-based Aite Group, which studies wealth management trends. "It's not just that the asset count is down, but it also represents future revenue flows," said Pirker.

It is unclear where the advisers might go, though rivals such as Bank of America's Merrill Lynch division and Wells Fargo & Co are often trying to poach wealth managers with large sums of money under their control. Other advisers have left big firms in recent years to strike out on their own in independent wealth-management shops.

BROKERS SEEK LEGAL HELP

If the advisers decide to leave, they will ask to keep the retention awards - nine-year forgivable loans they received in two lump sums in 2010 and 2012 - that are supposed to be repaid if they quit, said the sources.

Lawyers who represent brokers in employee disputes say that it is unlikely the group would be successful in this effort, since contracts are usually written in air-tight legal language and firms like Morgan Stanley are aggressive in fighting such cases.

"The law is fairly black and white when it comes to the laws of a contract," said Rich Schwarzkopf, a New York-based recruiter who works with brokers.

Typically, when brokers leave before such "golden handcuffs" are unlocked, they go to a rival firm that offers an upfront payment to cover lost money.

Yet some advisers who are serious about leaving have been seeking legal advice regarding their ability to keep those payments, several recruiters and industry lawyers said.

Erwin Shustak, a San Diego-based lawyer who represents brokers in employee-dispute cases, said at least four different groups of Morgan Stanley Smith Barney brokers have contacted him recently.

"Everybody that has come to us has expressed the same problems," said Shustak.

(Reporting by Lauren Tara LaCapra, Ashley Lau and Jessica Toonkel; Editing by Alwyn Scott, Martin Howell and Leslie Gevirtz)

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