Morgan Stanley’s new robo-advisor is one of a series of changes affecting advisors at the firm, according to InvestmentNews. Their brokers and advisors are now working with technology in an attempt to retain younger clients and compete with other firms, the publication writes.
Why Morgan Stanley Has a Robo-advisor, and What It Means for the Firm
Morgan Stanley has cut back recruitment to focus on teams of advisors, digital platforms and efficiency, InvestmentNews writes. Experienced advisors are expensive, and the cut-back is in line with other firms such as Merrill Lynch and UBS Wealth Management Americas, the publication writes. Furthermore, Morgan Stanley has left the Broker Protocol, making it harder for advisors to leave the company, InvestmentNews writes.
In 2016 Morgan Stanley hired Naureen Hassan, who had previously run the robo-advisor, among other things, at Charles Schwab & Co. Inc., according to InvestmentNews. Morgan Stanley then launched its own robo-advisor, Morgan Stanley Access Investing, at the end of last year, the publication writes. Morgan Stanley might be entering the crowded robo-market to stop clients leaving for other digital platforms, such as Wealthfront and Betterment, according to InvestmentNews.
A robo-advisor may not help Morgan Stanley’s bottom line, however, as profits from online platforms are minimal at large firms, Steven Chubak, a brokerage analyst, tells the publication. And Morgan Stanley rival Merrill Lynch is already ahead, having experienced massive growth since launching their robo, Merrill Edge, in 2010, InvestmentNews writes. However, the separate earnings for Merrill Edge are not released so it is difficult to know the exact impact, according to the publication. That said, the wealth management units of Morgan Stanley and Merrill Lynch report pre-tax profits between 25% and 28%, compared to more than 45% for internet brokers such as ETrade and Schwab, InvestmentNews writes.
The impact that the robo-advisor will have on Morgan Stanley’s profits is as yet unknown, but it is one of many changes that will definitely affect the firm’s advisors, the publication writes.
