Morgan Stanley Eyes $4 Trillion in Client Assets Held Away
Morgan Stanley Wealth Management’s plan to gain more of its clients wallet share by using asset aggregation tools and financial planning is paying off, a senior company executive said on Wednesday.Since rolling out new asset-aggregation and planning technology over the past 12 to 18 months, the firm’s 15,700 brokers have uncovered around $60 billion that their customers keep in accounts at other banks, Chief Financial Officer Jonathan Pruzan said in a presentation at the Barclays Global Financial Services conference in New York.
“We are just scratching the surface to better identify these assets with our enhanced asset aggregation technology,” Pruzan said, noting the firm’s estimate that its wealth clients keep another $4 trillion outside of Morgan Stanley. About $2.6 trillion is held by direct Morgan Stanley Wealth customers and another $1.5 trillion from some 2.7 million people serviced through the firm’s expanding employee stock-plan business.
Pruzan did not discuss incentives it may be offering brokers and customers to attract the outside assets and did not specify how much of the $60 billion advisors have converted.
Morgan Stanley earlier this year purchased Solium Capital, an employee stock plan administrator that it believes will incrementally increase assets managed by the firm and create leads to attract younger investors to Morgan Stanley’s digital wealth products and, ultimately, to its advisors.
The firm has had a “real strong start” to its workplace business, adding more than 200 corporate clients since closing on the Solium deal at the beginning of May, Pruzan said. The wealth management unit also has tweaked its program for stock-plan specialists at the firm, restricting the title of “stock plan director” to fewer than 20 advisors.
Morgan Stanley’s wealth division provides more than 40% of the company’s revenue, and continues to work fruitfully with the company’s institutional and investment management divisions, he said. Brokers have received an incremental $11 billion of assets to manage annually in recent years from customers of the institutional securities group, and the firm’s investment management unit oversees about $75 billion for wealth clients, Pruzan said.
In the past two years, Morgan Stanley has introduced asset aggregation software called “Total Wealth View” as well as BlackRock’s Aladdin risk management software to get a view of client assets held away from the firm. It also uses artificial intelligence software to generate “next best action” investment ideas that brokers can send daily to their clients.
Pruzan said advisors are beginning to embrace the tools, an upbeat view that contrasts with Morgan Stanley Chief Executive James Gorman remarks in June about the firm’s big wealth technology investment. “If we’re honest about it, there’s a lot of the field who are not using it,” Gorman said. “You win not by having the most innovative thing; you win by having the best-used apps.”
Pruzan said Wednesday that Morgan Stanley brokers are widely adapting the use of financial plans to glue customers to the firm. The number of clients with such plans has grown 125% since April 2017, he said.
The firm in April adopted a compensation plan with bonuses based in part on the number of clients with plans and cut brokers’ revenue payout to 25% of fees and commissions on households under $250,000 who do not have a financial plan.
—Jed Horowitz contributed to this story.