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Technology > Investment Platforms > Robo-Advisors

Morgan Stanley to Combine Robo Offerings Within E-Trade Brand

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What You Need to Know

  • Morgan Stanley plans to shift Access Investing to its E-Trade ecosystem and soft close it to new clients in December.
  • Fidelity announced a similar merger of its robo offerings last week — a move that makes sense, according to Joel Bruckenstein.
  • It seems like Morgan Stanley is giving up on its digital dreams for the MS brand, Nexus Strategy's Timothy Welsh says.

Morgan Stanley is consolidating its robo-advisor businesses, saying Monday it plans to shift its Access Investing robo business to within its E-Trade from Morgan Stanley ecosystem.

That will leave E-Trade from Morgan Stanley’s Core Portfolios as the only robo-advisor business at the wirehouse.

The move came only one week after Fidelity Investments said it would merge its automated Fidelity Go and hybrid Personalized Planning & Advice robo-advisor businesses, effective Nov. 1.

Echoing what he said of the Fidelity move a week earlier, Joel Bruckenstein, Technology Tools for Today (T3) head, said on Tuesday by email that the Morgan Stanley consolidation “makes sense.”

“I think the E-Trade brand is more aligned with the type of investor that would seek out a robo offering,” he told ThinkAdvisor. “Also, the differentiator for Access seems to be theme based investing. I would observe that there are likely less expense alternatives to Access, so perhaps it just did not have the traction to justify a distinct offering.”

But Timothy Welsh, president and founder of consulting firm Nexus Strategy, told ThinkAdvisor: Morgan Stanley’s move shows “just how far behind the institutional wealth managers really are.”

“Rationalizing their robo advisor offering they launched under Morgan Stanley back into E-Trade is basically them giving up their digital dreams for the MS brand and going back to what they’ve always done, which is to depend on their employee advisors to service clients in an analog fashion,” Welsh added.

Morgan Stanley said in February 2020 it was buying discount broker E-Trade Financial for $13 billion, creating a firm that could have over $3 trillion in client assets.

Platform Upgrades

A new “Balanced” model portfolio is being added to the Core Portfolios lineup, and the platform’s “roadmap includes the addition of key Morgan Stanley Access Investing features such as tax loss harvesting,” the wirehouse said.

“The updates are part of the E-Trade integration” into Morgan Stanley as the firm “seeks to leverage the strengths of each product offered in its suite,” it said.

Core Portfolios, currently offered by E-Trade Capital Management, was “specifically designed to help meet the needs of digitally inclined investors and exists within E-Trade’s … digital brokerage platform, making it a natural home for Morgan Stanley’s robo-advisor,” the firm said Monday.

Core Portfolios provides clients with a managed, diversified portfolio that Morgan Stanley said can be set up online in just minutes.

After a short series of questions, investors receive a model portfolio recommendation and can invest with a $500 minimum and a 0.30% annual fee, the firm noted.

Clients can further personalize portfolios using smart beta and socially responsible strategies. Core Portfolios is being offered with no advisory wrap fee to new accounts for a limited time, the company pointed out.

A new “Balanced” model portfolio — 50% equities and 50% fixed income and cash — was added to the Core Portfolios model lineup in September.

Over the next few months, Core Portfolios will work to add premium features from Morgan Stanley Access Investing, including tax-loss harvesting, which it noted can help manage tax consequences. 

“Throughout the integration we have looked for opportunities to combine Morgan Stanley’s deep wealth management expertise with E-Trade’s digital prowess,” according to Chad Turner, head of Morgan Stanley Wealth Management’s Digital Direct Channel.

“Today represents an important step in that effort, wherein we are combining the most sought-out features of both Core Portfolios and Access Investing to offer an exceptional experience for digitally inclined and beginning investors,” he said in a statement.

Morgan Stanley Access Investing will “soft close” to new clients in December, the company added.

(Pictured: Morgan Stanley headquarters in New York; Photographer: Victor J. Blue/Bloomberg)


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