What You Need to Know
- Deals with E-Trade, Eaton Vance and others have grown the firm's base to 14 million relationships with $8 trillion in held-away assets.
- The wirehouse is seeking to build trust with participants and corporate clients through its workplace offerings.
- The overall M&A market continues to be active and will likely remain so, unless there is volatility.
One of the key benefits of Morgan Stanley’s recent acquisitions of E-Trade and Eaton Vance is they provided the wirehouse with a path to significantly expand its client relationships, according to Jonathan Pruzan, Morgan Stanley chief operating officer.
“We had roughly 3 million relationships” only a couple of years ago, and that number has now grown to “14 million-plus net relationships,” after those and other recent acquisitions were completed, he said Tuesday during the Barclays Global Financial Services conference.
“The ability for us to provide services for a much larger customer base is important,” he said, noting those 14 million relationships have $8 trillion of assets held away. “We manage about $4.5 trillion in our wealth business and, so even before getting one incremental customer, if we can get any share of that $8 trillion, that would be a huge home run,” he explained.
Morgan Stanley’s workplace strategy was also “ignited” in 2019 with the acquisition of stock-plan administrator Solium Capital, now Shareworks by Morgan Stanley, and then again with the acquisition of E-Trade, a Morgan Stanley spokeswoman told ThinkAdvisor on Monday.
“This is a funnel,” Pruzan said Tuesday, noting the company now has about 6 million participants in the workplace.
“While their wealth is growing and their stock is vesting, we’re trying to build trust and relationships with them,” he explained. “We have a privileged position because we’re already inside the company and already have access to them. And so through content and education and financial wellness, we’re trying to build relationships with this client base such that when stock vests or they need services [like] advice, we’re in sort of the pole position to be able to convert them to a client or add incremental services to what we do for them.”
Morgan Stanley, however, is “agnostic” about what service model clients choose, he said. “If they’re in the workplace and they want to be on a self-directed platform, that’s fine, or digital advice or [the] financial advisor model or even the family office model that we’re building,” he noted.
“We just want to be capturing more clients and then be able to grow with those clients and, as their needs change, be able to provide a customer experience that’s seamless between the service models and allows us to provide the services they want, when they want them and how they want them,” he explained.
Another “nice thing about this funnel” is that Morgan Stanley can add corporate relationships, he noted. For example, in the first quarter, Morgan Stanley partnered with Wilson Sonsini, a law firm that he said gave the wirehouse private capital capabilities. “Recently, we brought in an institutional consultant that manages retirement money for smaller businesses” also, he added.
Growing the number of corporate relationships and “growing the top of the funnel is going to provide future growth for us,” he said.