With a “connected client journey” built on Morgan Stanley’s scale in three wealth management channels, the wirehouse aims to convince financial advisors to resist the lure of independence.
In a June 14 media event displaying the firm’s ecosystem of self-directed, workplace and advisor-led wealth management in the wake of its massive acquisitions of
Recruiting and
“It's effectively an integrated platform so we can serve any client, any investor in the United States, regardless of how old they are, regardless of what stage of life they're in, regardless of how much wealth they have, regardless of what their life circumstances are,” Saperstein said. “We have something for them where we can meet them where they want, whether it's in a self-directed channel; we can serve them in the workplace; we can provide them advice. If they want multiple channels, we can do that. If they want us to serve everyone in the family, we can do that as well. And we can grow with them along their journey.”
The combination of the wirehouse with E-Trade and the workplace 401(k) and stock ownership services offered by Morgan Stanley at Work gives clients the ability to schedule meetings with advisors, whether on their own motivation or through a nudge such as personalized content in their inboxes tailored to their situations, according to the firm’s presentation. Advisors won’t get access to the clients’ data without their consent, Finn noted. The brokers and their managers, however, can tap into referrals operating on the same split as other corporate leads of 70% into
“We actually don't let advisors see anything around the self-directed client's information until the self-directed client has opted in,” Finn said. “So typically what will happen — and there are a lot of different use cases, but I'll just give you one example — we might send some content to a client around retirement planning or donor-advised funds. That's been a big lift on the E-Trade side, a lot of interest in donor-advised funds. They may click on a button that says, ‘I want to be contacted by an advisor.’ They contact the advisor, they have a discussion, let's say, three months later, a relationship opens up. The advisor still isn't allowed to see the E-Trade self-directed data until the E-Trade client clicks an opt-in button and enables them to do that. So we're very careful about what we show.”
Tough recruiting fight
Such client data questions
In other words, the number and size of competitors to Morgan Stanley are only growing, whether among RIAs, independent brokerages or fellow employee wealth managers such as New York-based Snowden Lane Partners. Since launching in 2011, the firm led by former wirehouse executives has reached 70 advisors in a dozen offices managing nearly $9 billion in client assets after a record recruiting year last year, according to CEO Rob Mooney. In a demonstration of the
Regardless, the wirehouses “will continue to be a suitable home for certain people” based on their scale and resources, Mooney said. Over the long term, however, other advisors will leave their fold because of a “host of factors” including conflicts of interest, the democratization of investing tech and more choices about products and services for clients, he said.
“All of those compelling attributes of the independent market will continue to draw teams from the wirehouses,” Mooney said. “You're really seeing a bifurcation of the advisor slash wealth management world, where the highest quality people who want to be independent now have the channel and the ability to do that with a multitude of different types of firms.”
Those dynamics are why, for most advisors, the potential synergies across Morgan Stanley’s three channels add up to “a shrug” in the daily lives of their practices, according to recruiter Danny Sarch, the president of Leitner Sarch Consultants. It’s relying on the industry’s traditional so-called carrot and stick, Sarch said, pointing out the fact that the firm
“I see it as a way to reach people who are very comfortable with do-it-yourself-ing and hoping that they transition as their wealth grows. You can't be too early with this stuff,” he said. “They've kept a great name with the public. They've got a really good offering to clients and they make it very challenging for advisors to leave by threat of legal action.”
No RIA channel
Even as lawsuits
To be sure, such a business poses additional regulatory burdens as a custodian working with outside firms and strategic headaches beyond Morgan Stanley’s traditional area of expertise. Wirehouse brokers could view such a move as a competitive threat by their own company as well. At the media presentation, Saperstein rejected the premise of a question about why the RIA custodian didn’t fit into the ecosystem created by the firm in recent years.
“We don't have an RIA channel. We've been pretty public about the fact that we don't have one and we're not going to start an RIA channel within Morgan Stanley,” Saperstein said. “And, frankly, also it made it better for them and better for us to go with the sale.”
Regardless of that decision, Morgan Stanley is making the case to advisors that it has developed the best home for them among the wirehouses based on knitting together previously acquired firms dating back to the
“The time at which we started investing in these tools and technologies was also the time we started investing in a number of different additional capabilities for financial advisors, whether it was the quality of the research or the access to products — obviously the tools and technology for advisors, but also tools and technology for clients,” Finn said. “And that all coincided with a broader firm focus on wealth management. If you compare the size of wealth management at Morgan Stanley versus the size of some of the other firms’ wealth management businesses to their firms overall, it's night and day in terms of percentage. So there's just been a huge focus on supporting this business. And that comes from leadership on down and advisors recognize that, because we're able to launch things more quickly, we're able to get exclusives with our third-party partners. And so it has this positive snowball effect.”
