Morgan Stanley Pushes Harder for Deposits as It Nears Loan Capacity
Morgan Stanley has has hired a marketing specialist from leading robo-advisor Betterment to light a fire under its effort to build a pool of deposits from retail brokerage customers and fuel its drive into profitable lending.
Paul Halpern, who was Betterment’s chief marketing officer, will join Morgan Stanley’s Private Banking Group later this month to lead deposits and banking services. The group works with the firm’s almost 16,000 brokers to sell loans and other high-margin bank products.
Morgan Stanley has been bumping up against capacity in funding loans to wealthy retail clients, and Halpern will be developing new deposit programs and products, said Eric Heaton, who runs the private banking group and will be Halpern’s boss.
“That’s been a key priority of wealth management, but we reached a point last year where those deposits were fully deployed,” Heaton said.
As interest rates rise, brokers can expect more promotional certificate of deposits and other products as Morgan Stanley advances its efforts to become a primary cash-management provider as part of its overall wealth management profile, he said.
Halpern will replace Tom Duffy as head of the deposits and banking services unit, Morgan Stanley said.
Duffy is moving to a newly created position as head of strategic initiatives and analytics for the private banking group, where he will work with product and support groups on “important strategic products” and report to Barry Goldstein, the firm’s chief operating officer, according to a memo Heaton sent to advisors on Tuesday.
Morgan Stanley has a larger brokerage force than competitors such as Bank of America’s Merrill Lynch Wealth Management, UBS Wealth Management USA and Wells Fargo Advisors, but those firms have pushed their brokers longer and harder to deliver their parent banks’ credit products to wealth management customers.
Morgan Stanley is a relative newcomer to commercial banking, getting its bank holding company charter during the crisis of 2008 as part of the Federal Reserve’s efforts to restore confidence in the financial system.
As of June 30, it had $172.6 billion of deposits and $70 billion of retail loans on its balance sheet, up 20% and 8% respectively from 12 months earlier. Bank of America’s global wealth and investment management division, comprised primarily of Merrill Lynch’s retail brokerage business, had average deposits of $236 billion during its second quarter and average loans outstanding of $161 billion.
Morgan Stanley has nevertheless been generating much of its profit and revenue increase from lending, an area that Chairman and Chief Executive James Gorman has been promoting.
Halpern is expected to continue the firm’s drive to enhance its array of retail CD programs and develop new cash-management product promotions, Heaton said.
Prior to joining Betterment in 2017, Halpern spent four years at Merrill, where he ran marketing for mass affluent segments. He had previously worked on product and website marketing roles at E*Trade Financial and Capital One Financial Corp., according to LinkedIn.
“Given his marketing background, he’ll be front-and-center working on strategies and building a team to engage advisors and a system to help them understand our offerings,” Heaton said.
Halpern will also work with Paul Vienick, head of Morgan Stanley’s online/mobile and digital banking initiatives, to develop digital banking products, Heaton said.
Down the road, the firm also hopes to integrate lending and cash management product suggestions into Access Investing, the firm’s new artificial intelligence-driven platform that prompts advisors with product recommendations for clients.
“There’s obviously a lot of risk and suitability issues that we need to get our arms around before we go directly digital to clients in lending products,” Heaton said.
—Jed Horowitz contributed to this story.