Providing clients more investment choices, including whether they get full service, all-digital service or both, is absolutely crucial, and that’s one reason it decided to buy E-Trade and Eaton Vance, according to James Gorman, CEO and chairman of Morgan Stanley.
“If you don’t give them that choice, they will take their money elsewhere, so we wanted to give them choice,” he said Monday during the Securities Industry and Financial Markets Association virtual Annual Meeting.
Morgan Stanley announced earlier this month that it entered into a definitive agreement to acquire money manager Eaton Vance, which has over $500 billion in assets under management, in a deal with an equity value of roughly $7 billion.
“Eaton Vance is a perfect fit for Morgan Stanley,” Gorman said at the time, noting: “This transaction further advances our strategic transformation by continuing to add more fee-based revenues to complement our world-class investment banking and institutional securities franchise.”
Eaton Vance “gives us tremendous product” that is “complementary to the Morgan Stanley platform,” he said during an online SIFMA session Monday morning.
Once Eaton Vance is consolidated into Morgan Stanley, the firm’s pro forma revenues across all wealth and asset management will be $25 billion to $26 billion a year, he said, noting its institutional business does over $20 billion a year.
The Eaton Vance deal was announced just six days after Morgan Stanley wrapped up its purchase of E-Trade for $13 billion.
The E-Trade platform, among other things, “gives us a very strong derivative option trading business, it gives us a digital bank which we did not have,” it provides Morgan Stanley with “more durable wealth management-type revenues and we’ll be able to put some of our product on the E-Trade system,” Gorman said Monday.
It was just a “win-win for both firms,” he said, adding: “We’ll keep the E-Trade brand.” Some of E-Trade’s technology is “more sophisticated than what we have,” he conceded. But Morgan Stanley’s electronic trading in its institutional business “will go very well with their options trading business,” he said.
ESG Investing ‘Not a Fad’
Morgan Stanley, meanwhile, is offering clients a growing number of environmental, social and corporate governance focused investing options, Gorman said Monday.
ESG is “not a fad” and “is not going away,” he said, noting “our clients want to invest in ESG.”