If uptake of a new tool is any measurement, Morgan Stanley reps aren’t interested in supplying clients with sustainable investing options.

Most of the wirehouse’s roughly 16,000 financial advisors have yet to start using a sustainable investing analytics and reporting tool that evaluates client portfolios and calculates if their mix of assets matches their environmental, social and governance (ESG) and impact investment goals, even though the wirehouse unveiled it six months ago.

But those delays hardly worry the Morgan Stanley team members who developed the tool. While the team declined to quantify exactly how many FAs have adopted it, they said the number far exceeds 60. Yet the team insists it factored in, prior to introducing the new tool, a long learning curve for FAs about ESG and impact investing.

“Number one, we have to educate our advisors,” Lily Trager, an executive director and the director of investing with impact for Morgan Stanley Wealth Management, told reporters who were invited this month to learn more about the tool that the wirehouse named “Morgan Stanley Impact Quotient.”

Morgan Stanley’s FAs have historically “been one of the biggest kinks in the hose, in terms of being able to get our clients allocating their dollars to the [ESG and social impact] space; a lack of understanding from financial advisors who, you know, maybe just from a generational perspective, or from a complexity of their job perspective, didn’t take the time to understand the space,” Trager said.

Years of development led to Morgan Stanley’s rollout this summer of its new FA-facing tool, which lets clients first set priorities among more than 100 ESG, sustainability, and impact goals, including ones set by the United Nations, as well as their own customized concerns about climate change or gender pay gaps.

The tool uses both outside ESG rating agency data and Morgan Stanley proprietary analytics to “instantly assess the alignment of [clients] investments with those preferences,” according to Morgan Stanley’s marketing material.

Ultimately, the tool offers recommendations for investments to increase alignment between each clients’ ESG and impact goals and their portfolio composition.

Morgan Stanley management engaged in multiple stages of beta testing the tool and conducted a pilot with 300 of its advisors before sharing it with the entire roster. All Morgan Stanley advisors, after taking a less than 30-minute digital training course on the tool, have access to it.

“Our goal is to get those [FAs] who we believe are more inclined to utilize this tool on a regular and consistent basis,” Trager said. “So, if you think about what defines an advisor that might be more inclined to utilize Morgan Stanley’s Impact Quotient, it would be one who’s digitally engaged, who also has clients that are focused on sustainable impact investing. We’re also working with advisors who are growing, who are innovative and want to leverage more innovative solutions to deliver value to their clients, so it is a subset of the overall 16,000 that we think are going to be most inclined to in this early, early roll-out of the tool,” she added.

Positive early signs

But “early signs of traction are very positive,” Trager said. “Different advisor segments are going to use this tool in different ways to meet their client’s needs,” she said, adding “It’s not one monolithic, you have to pick it all or, or use none of it.”

The tool sits on advisors’ desktops and helps them take clients through three stages of establishing and customizing their ESG or social impact strategy — identifying what it is, evaluating if their current portfolio matches it, and then learning about investment changes and adds that would create a better alignment.

Trager and other of the development team members concede shortages of verifiable ESG, sustainability and social-impact related data limits the tool’s current capabilities.

The Morgan Stanley development team crafted the software and technology behind the tool so, as better and verifiable data sources about ESG and impact consequences of investments grow, its capabilities will grow with them.


“We built this tool to really capture the broadest areas of interest that clients have, even if the data is not available today. We think that’s actually a critical component of the tool because if we limit the discovery process to only what’s reportable today, as the market quickly grows, we’d have to go back to clients and advisors and say, ‘Oh by the way, this is now available,’” Courtney Thompson, a vice president in Morgan Stanley’s Global Sustainable Finance group, explained.

“We didn’t want to have that shortcoming in the tool and the ability for clients and advisors to have a holistic conversation about what matters to them,” Thompson added.

Trager stressed that her team’s ambitions extend even further; they even hope their tool pushes all stakeholders in the ESG and impact investment sectors to develop more data and analytical infrastructure.

“We also think we can use our platform as a global financial services firm to actually shift the market and reflect back to the data providers where there’s client demand and where there’s gaps and ultimately build that data over time. So that’s an important role that Morgan Stanley Impact Quotient is playing — building infrastructure for the industry,” Trager said.