Welcome to Financial Advisor IQ

How Morgan Stanley’s New Robo Helps its FAs Reach Downmarket

By Thomas Coyle December 5, 2017

In its first foray into robo investing — and with an eye to helping its financial advisors attract so-called next-generation clients — Morgan Stanley’s wealth management division is out with a robo offering for investors with as little as $5,000 to put up.

Morgan Stanley Access Investing meshes with the firm’s “ongoing efforts to develop leading digital tools that can deliver the firm’s human capital and insights to more clients, with greater efficiency and personalization,” according to a company press release.

In other words, Morgan Stanley — whose traditional retail brokerage platform can require investment minimums of $1 million or more — is using technology to help it reach downmarket.

“Morgan Stanley Access Investing leverages the firm’s intellectual capital to reach a broader audience of investors who are looking to achieve their financial goals,” says Naureen Hassan, Morgan Stanley Wealth Management’s digital-development chief.

As an online investing service, Access Investing is geared to help clients with “less complex needs” put together, monitor and periodically rebalance portfolios using some of Morgan Stanley’s goals-based investing and financial-planning technology, according to the press release.

Access Investing is also meant to give traditional platform FAs employed by Morgan Stanley ways to target prospects early on with a view to “establishing full-service relationships when clients are ready,” says Hassan, whom Morgan Stanley hired away from Charles Schwab early in 2016 with a specific mandate to help devise and hone digital tools and platforms for the firm’s 16,000-plus advisors and over 3.5 million clients.

“We want a human in the middle to validate that information and the applicability of that information.”
Naureen Hassan
Morgan Stanley

This is meant to work in one of two ways.

When a Morgan Stanley FA “refers somebody into Access Investing, that client is associated with” the advisor in question, Hassan tells FA-IQ. These advisors are able to stay in touch with such clients over time and, if needs be, take them on as full-service clients.

All Access Investing clients, including those who become Access Investing clients without referrals from Morgan Stanley reps, receive digital communications from the firm offering specific services such as financial planning. Unmatched clients who express an interest are matched with flesh-and-blood FAs “based on geography or subject-matter expertise,” says Hassan.

Chris Randazzo, Morgan Stanley Wealth Management’s chief information officer, says the system has the wherewithal to deliver “broader benefits across our business and empowering us to release product innovations faster” because it uses the firm’s goals-based advisory platform.

And though Randazzo describes Access Investing as “built entirely in-house,” further iterations are likely to feature open-architecture solutions as add-ons for clients and, where applicable, advisors, the spokeswoman for a third-party tech vendor (who asked not to be named) tells FA-IQ.

On this point, Hassan will only tell FA-IQ that Access Investing, like Morgan Stanley wealth management technology in general, “will continue to evolve” and be rolled out when and as it makes sense to do so.

Naureen Hassan

For instance, Morgan Stanley advisors already have access to client-service tools that use “data analytics, artificial intelligence and predictive and machine learning,” says Hassan. But these things “aren’t yet robust enough to use without the advisor in the middle.”

Adds Hassan: “We want a human in the middle to validate that information and the applicability of that information.”

Matching clients with allocation outputs from Morgan Stanley’s Global Investment Committee, Access Investing features core portfolios of mutual funds and ETFs, an all-ETF market tracker and a choice of seven portfolios built around themes such as sustainability, gender diversity, new technologies and emerging-market trends.

Some of this is designed to appeal to issue-oriented next-gen investors. Morgan Stanley says 86% of millennials, born between 1980 and 2000, are interested in various shades of socially-responsible investing.

Giving these prospects the ability to “invest in what they believe” is the point of pushing past traditional portfolio allocation in Access Investing, says Morgan Stanley Wealth Management product manager Lisa Shalett.

Morgan Stanley’s foray into robo services follows analogous developments at a couple of rival firms.

In mid-November, Merrill Lynch’s online platform Merrill Edge debuted a tool to help self-directed clients make more informed investment decisions about individual stocks as part of a push begun early this year to broaden support for clients.

Earlier last month, Wells Fargo Advisors launched Intuitive Investor, a robo-advice platform aimed at novice do-it-yourself investors with as little as $10,000 to work with.