Morgan Stanley Refers Call-Center Customers Back to the ‘Field’

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After years of pulling small accounts away from full-service advisors by referring them to no-frill call centers, at least one large firm is trying to reverse some of the flow.

Morgan Stanley has begun contacting customers whose “household” accounts have reached $1 million to encourage them to work with full-service brokers in branches, according to people with knowledge of the strategy. It had previously limited the suggestion to the small number of call-center accounts with $2 million, and had not systematized the process, the people said.

The firm has upgraded its technology and processes to identify and easily transfer the accounts, and its call-center employees will attempt to make the referral to the originating broker if he or she is still in the branch system, they said. The first outbound calls to million-dollar call-center customers began two weeks ago.

The Client Advisory Center, which Morgan Stanley recently rebranded as Virtual Advisor in an attempt to attract younger investors, holds about $11 billion of customer assets, a significant portion of which represents accounts of the firm’s own employees, one well-placed source said.

A company spokeswoman would not comment on how many million-dollar accounts reside in Virtual Advisor or on its total assets.

The reverse-referral strategy shift is driven primarily by an attempt to reformulate Virtual Advisor as an origin point for customers early in their wealth-accumulating lives, rather than as a net for “mass-affluent” investors who brokers cast aside, often at the urging of their managers. (Morgan Stanley does not pay brokers on accounts under $100,000, and Merrill Lynch sets the payout-qualifying floor at $250,000.)

At the heart of the new strategy is Morgan Stanley’s plan to pitch Virtual Advisor to employees of companies who use its expanding stock-plan administration services. The company is buying Solium Capital, Inc., a Canada-based firm stock plan administrator specializing in high-tech and other start-up companies. The $900 million deal is expected to close this quarter.

To prime Virtual Advisor for its new role, Morgan Stanley has pared the products available through the unit (which could explain why it hopes to shed some customers used to the full-service menu) and adjusted its pricing, largely downward, to a tiered model aimed primarily at fee-based managed accounts. The call center also expects to double the size of its  salaried-broker staff over the next 18 months, said a person familiar with its plans.

The call center operates through teams of 12-to-15 people based in Florida and Arizona who have access to notes on particular customers and are expected to conduct six-month reviews with them. To participate, customers must have a Morgan Stanley app and/or an online account.

Virtual Advisor is run by Jaime Sobrepera, who joined Morgan Stanley two-and-a-half years after almost three decades at Merrill Lynch. He oversaw the client-contact operations of Merrill’s call centers and of Bank of America’s “Merrill Edge” discount brokerage unit.

In a sign of the new mass-affluent client conscription strategy, Sobrepera has shifted his reporting line from Vince Lumia, head of Morgan Stanley Wealth Management’s branch-based brokers, to Jed Finn, the division’s chief operating officer who recently added the stock-plan business to his domain.

Morgan Stanley also is positioning  its low-cost “robo” service called Access Investing to  the self-directed investors it expects to attract from employer stock plan programs. Paul Vienick, another Merrill Edge emigrant who joined Morgan Stanley concurrently with Sobrepera, is in charge of Access Investing.