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How Morgan Stanley Aims to Lure Smaller Investors

June 19, 2017

After years of pursuing millionaire investors, Morgan Stanley is opening the floodgates to its financial advice services for the mass affluent — albeit through its robo platform only, the Wall Street Journal writes.

The wirehouse’s robo-advisor, scheduled to go live this fall, will have a minimum investment of just $5,000, according to recent SEC filings cited by the paper. The platform will rely on algorithms to assess the client’s risk profile and recommend portfolios of mutual funds and exchange traded funds, according to the filing.

Morgan Stanley’s robo, which comes with a 0.45% annual fee, will also allow some customization, such as a focus on socially responsible investing, the Journal writes. This month Morgan Stanley employees begin testing the robo service, dubbed “Morgan Stanley Access Investing,” the firm told its brokers last week, a source tells the Journal.

“These robo-advisory solutions make sense for that segment of the market that has frankly been traditionally undeserved,” Naureen Hassan, Morgan Stanley’s chief digital officer for wealth management, said earlier last week at the firm’s conference, according to the paper.

Hassan also said the wirehouse will first target its robo toward children of existing clients or other people it has a relationship with, the Journal writes. In addition, the robo will be offered to participants in employee stock purchase programs handled by Morgan Stanley, she said, according to the paper. That amounts to around $30 billion in vested shares and a potential reach of 1.5 million participants, who also have $500 billion in additional assets, according to Hassan.


Morgan Stanley’s robo will also be a way for its brokers to bring on clients whose needs become more complex, brokers familiar with the platform’s development tell the Journal. The wirehouse is offering brokers referral commissions for bringing clients to the robo platform, according to the SEC filing cited by the paper.

Morgan Stanley’s robo-advisor is part of a wider effort to harness technology for its wealth management business. In July, the firm is starting a pilot program that will employ machine learning to advise brokers on various client life events and recommend suggestions of new products. The firm is also developing a Siri-like virtual assistant to help brokers parse through Morgan Stanley’s internal research.

By Alex Padalka
  • To read the Wall Street Journal article cited in this story, click here.