Morgan Stanley to Launch Small Retirement Plan Platform

The wirehouse says its advisors can use the technology to offer small-business clients the ability to handle 401(k) plans with under $10 million in assets

Morgan Stanley building in New York (Photo:AP) Morgan Stanley building in New York (Photo:AP)

Morgan Stanley says it is developing a retirement program for small 401(k) plans, called ClearFit, in cooperation with recordkeeper Ascensus, so that its advisors can offer the “turnkey” service to clients in need of plans with less than $10 million in assets.

Morgan Stanley has been telling its 15,700-plus advisors that many of its planned changes will happen regardless of what happens to the Labor Department's new fiduciary rule under a Trump presidency. The wirehouse has said its retirement account clients can work with commissions or fees in the future and that it will be lowering some charges for trades.

“Partnering with Morgan Stanley, we have developed a simple approach for employers to meet their fiduciary responsibilities, while contributing towards the financial well-being of their employees,” said Kathleen Connelly, head of client experience and relationship management at Ascensus, in a statement.

For the program, Morgan Stanley will serve as the ERISA investment manager and select plan investments, which will entail a multi-manager approach and nonproprietary funds. Target-date models passed on Morgan Stanley’s proprietary retirement glidepaths also will be used. 

The news of Morgan Stanley's expansion into the retirement plan marketplace comes within hours of news that robo-advisor Betterment is working with ADP, the business outsourcing firm for payrolls and employment benefits.

The partnership aims to let employees of companies that use ADP’s payroll system to direct their 401(k) contributions to Betterment for Business through the ADP Marketplace, a cloud-based app for human capital management, beginning in the second half of the year. It’s designed for firms that already have 401(k) plans in place who could choose to convert to one managed by Betterment for Business.

As for the wirehouse's approach to the now-delayed Department of Labor fiduciary rule, the firm appears to be keeping its flexible approach.

"With or without the rule, we fundamentally believe that serving our clients well and continuing to lead the industry forward require that we provide an increasingly higher standard of care for our clients across both retirement and non-retirement assets,” explained Shelley O’Connor and Andy Saperstein, co-heads of the wealth management unit in a memo shared with advisors on Jan. 26.

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