Morgan Stanley and Citigroup today laid the groundwork for Morgan Stanley’s eventual full ownership of their joint brokerage venture, Morgan Stanley Smith Barney, announcing a deal seen as attractive for Morgan, now a retail wealth management behemoth beset by negative public attention on its own troubled internal integration project.

Morgan and Citigroup said Morgan will purchase Citi’s 14 percent stake in Morgan Stanley Smith Barney, along with approximately $5.5 billion of deposits, at an implied 100 percent valuation of $13.5 billion. The venture was sealed in 2009 in the aftermath of the 2008 financial crisis. Morgan currently owns 51 percent of the venture. Morgan and Citi also agreed terms for Morgan’s purchase of Citi’s remaining 35 percent stage by June 1, 2015. (See Morgan Stanley Press Release.)

“This mutually beneficial agreement gives both parties certainty and transparency on price and timing, and is a significant milestone for Morgan Stanley in the implementation of our strategy,” said James Gorman, Morgan Stanley’s chairman and CEO, in a statement.

Still, people familiar with the deal said both firms grappled over the valuation. They reportedly came to their own side agreement despite an independent appraisal to the contrary. Citi originally tagged an implied value of about $22.5 billion on the venture compared with Morgan’s $9.5 billion, these people said. “We would argue that the deal is in everyone’s favor,” Jim Wiggins, a spokesman for Morgan Stanley, told REP., adding that it also provides “certainty” to shareholders and investors.

Among the ranks of Morgan’s 17,000 financial advisors, the announcement was seen by one FA as a positive step for the giant brokerage. “I don’t really have an opinion on it at all—everyone knows the deal has been struck and the rest of the piece [of the join venture] is going to get acquired,” said a major producer for Morgan Stanley in Beverly Hills, Calif., told REP.

The firm has been fending off reports of snafus, computer crashes and glitches in its integration of Morgan Stanley and Smith Barney. Most FAs were recently converted onto a Web-based platform. In REP.’s latest Financial Advisor Report Card, last published in December 2011, Morgan Stanley ranked at the very bottom in terms of integration progress at wealth management houses. (See, REP., Broker Report Card 2011.)

“We are also getting some very positive feedback so it is not universally negative. When you do an integration like this, there are issues you work through,” Morgan Stanley’s Wiggins told REP. “When you do a technology integration of this size, people are going to have issues but we are addressing them.”

Wiggins contended the integration had not led to a spike in FA turnover.  “We asked Smith Barney advisors to switch over from a [mainframe] platform they were using for 20 years,” he said.  Wiggins acknowledged, nonetheless, that the firm’s unified Web-based platform did not have all the functionality that some FAs had been accustomed to. But that was offset, he said, by new superior functionalities and tools that were fast and flexible.