Morgan Stanley takes low-priced approach on robos
Morgan Stanley rolled out its own robo advisor, joining a growing list of firms that offer such automated investing services, including rivals Merrill Lynch and Wells Fargo.
The New York City-based brokerage says its Access Investing robo is now available to clients with at least $5,000 to invest.
The service is charging 0.35% of assets annually; fees exclude those levied by fund managers. By comparison, competitor Wells Fargo’s Intuitive Investor platform charges a 0.50% annual advisory fee and Merrill Lynch’s robo platform charges 0.45% a year.
Launching a robo that is less expensive than those of its peers is a “good strategy” for Morgan Stanley, says Alois Pirker, research director at Aite Group. This will help the firm draw in a younger clientele and maintain accounts from one generation to the next.
Pirker adds that another strong point for the firm's offering is that it is built on its existing goals-based wealth management technology, which may help differentiate it from other mostly portfolio-based offerings.
Morgan Stanley also touted the technology as a potential growth tools for its roughly 15,000 advisors. Though it will shepherd any beginning investor to the offering, it is meant to appeal to a younger client, the firm said.
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“Morgan Stanley Access Investing is an opportunity for financial advisors to grow their book of business by making connections with prospects earlier and eventually establishing full service relationships when clients are ready,” Naureen Hassan, the firm's chief digital officer, said in a press release.
Morgan Stanley’s robo is also the product of substantial investments the company has been making in its technology offerings. In 2016, the firm hired Hassan, a Charles Schwab veteran, to head its burgeoning digital efforts. While at Schwab, Hassan had overseen the development of the asset management firm’s robo advisor. Since then, Morgan Stanley has been rolling out new digital tools and experimenting with new technologies, such as artificial intelligence.
Advisors are looking at robos due to their appeal to millennial investors, trying to determine how these platforms fit into their practices and whether they represent a threat to their business model.
Clients are increasingly looking to firms to be one-stop shops for their wealth management needs, says Jeanie Wyatt, CEO of South Texas Money Management, an RIA with about $3 billion in assets. Wyatt says her firm has been exploring adding a robo offering to its platform.
"We've looked at a number of them. We probably will take advantage of some robo service because I think that as people get busier, get older — we just see this strong inclination to have everything under one umbrella," she says.
The only way to do that, Wyatt adds, is to have an offering for small accounts.