Morgan Stanley to Expand Wealth Business into Canada

Morgan Stanley said Wednesday that it will leverage the Calgary-based employee stock plan management company it bought last year to create a broad wealth management business in Canada.

Staffed by an unspecified number of international client advisor teams with expertise in advising employees on their company stock positions, Morgan Stanley Wealth Management Canada will also include a so-called virtual advice unit for inexperienced investors that it will establish in Toronto and a self-directed discount brokerage alternative, the wirehouse said.

The international advisors will initially be based in the U.S.

The new wealth unit is expected to begin operating in the fourth quarter, subject to regulatory approvals, and would be Morgan Stanley’s first wealth management business in Canada.

Morgan Stanley will source Canadian customers from Solium Capital, the stock management firm it bought last May for $900 million. Solium specialized in servicing employees of technology companies, and has been integrated into the wirehouse’s legacy stock-plan business that has been rebranded as Shareworks by Morgan Stanley.

“The creation of Morgan Stanley Wealth Management Canada will add wealth management services to our comprehensive suite of workplace financial solutions,” said Brian McDonald, a former Charles Schwab stock plan executive who joined Morgan Stanley in 2018, in a prepared statement.

The Canada expansion runs counter to the broad retraction of international retail brokerage business at Morgan Stanley and other large firms in recent years to avoid entanglements with anti-money-laundering rules and related regulations. In a sign of its reduced services for wealthy investors residing outside the U.S., Morgan Stanley last year merged its international wealth unit into its “private wealth” group for very wealthy U.S. citizens.

The Canada plan meshes, however, with the Solium growth strategy touted by Morgan Stanley executives. They hope to convert Shareworks stock-plan participants into full-fledged wealth customers by referring executives and other high earners to a limited group of financial advisors while directing the bulk of stock-plan participants to  “Virtual Advisors” call centers until their needs become more complex.

By establishing the new Canada unit as a Shareworks appendage, Morgan Stanley will prospect among its more than 350 Canadian corporate clients that have more than 275,000 stock plan participants holding more than $17.5 billion (U.S.) of assets.

Morgan Stanley has operated Canadian institutional securities sales and trading, investment banking, capital markets, and commodity trading businesses in Canada since the 1960s, and began its north-of-the-border stock plan business in 1999, it said in the news release.

Canaccord Genuity will provide clearing, custody and “customized wealth management” solutions to Canadian advisors and their customers, Greg Gatesman, cohead of international wealth management said in the news release.