Morgan Stanley’s global wealth management business net revenue rose to $3.4 billion for the first quarter, while its total advisor ranks dipped to 17,800 in line with previously reported plans for cuts.

The wealth management business’ net revenue was up from $3.1 billion from the previous year due to higher commissions and asset-based revenue. The group had pre-tax income of $348 million compared with $278 million for the first quarter of 2010.

The results come as Morgan Stanley continues to absorb the Smith Barney business it currently co-owns with Citigroup. In 2009, Morgan Stanley acquired a 51% stake in that business, with the ability to take that ownership to a full 100% in five years.

For the wealth management business in the first quarter, Morgan Stanley took in $274 million in income after its allocation to Citigroup and before taxes. Pre-tax margin for the first quarter was 10%.

Compensation expenses rose to $2.1 billion, an 8% increase from the previous year. The compensation to net revenue ratio was 62% compared with 64% a year earlier.

Morgan Stanley had a total of 17,800 financial advisors at the end of the quarter, the total expected for the firm due to plans for cuts first reported in March. Those cuts targeted 200 to 300 low producing financial advisors and trainees, a source familiar with the situation confirmed at the time, and were expected to bring the force to the 17,800 total. Targets for the cuts included advisors with less than $75,00 in production and trainees with $25,000 or less in production, but would be considered on a case-by-case basis, the source said.

Each advisor had an average annualized revenue of $767,000 at the end of the quarter, and about $97 million in average total client assets.

Client assets totaled $1.7 trillion at the end of the quarter, with net new assets of $11.4 billion and net new flows of $17.8 billion in fee-based accounts. Fee-based accounts represented 29% of client assets, or $501 billion.

Non-compensation expenses rose to $964 million from $855 million the previous year.

The results for the wealth management business come as Morgan Stanley reported $7.6 billion in net revenue for the quarter compared with $9.1 billion a year earlier. That included a $655 million loss from a Japanese securities joint venture. First quarter income was $966 million, down from $1.8 billion for the same period in 2010.

Earlier this week, Morgan Stanley’s global wealth management President Greg Fleming, who took over that position from Charles Johnston in January, announced new changes shifting the business’s leadership ranks. That included the addition of JPMorgan Chase executive and Smith Barney veteran Jeff Hack to the position of chief operating officer.