Summary List Placement
Morgan Stanley has been working to integrate E-Trade into the firm since the deal closed in early October, and the chief operating officer of its wealth division shared details around how the teams are coming together a little over a month into the process.
“We’re starting to see a lot of places where there are quick wins: in terms of E-Trade clients who want a higher level of advice, in terms of our employees and clients who want self-directed brokerage capabilities, and of course on the corporate side,” Jed Finn, who also heads up the firm’s corporate and institutional solutions group, said in a recent interview with Business Insider.
For instance, the firm is looking to bring together E-Trade financial consultants’ clients “who may be looking for a deeper level of advice, or more product access, or a different type of service that historically E-Trade couldn’t deliver by themselves,” and suggest pairing them with a “pre-selected pool” of Morgan Stanley financial advisors, he said.
The firms have analytics to help identify those clients, said Finn, who was interviewed as part of the virtual Future of Fintech conference hosted by CB Insights.
He also described the inverse — that is, wealthy clients who want the ability to invest or trade on their own.
“One of the things that became very clear over the last several years is even our highest-net-worth advisor’s client still has some portion of their wallet that is more self-directed in nature,” without the full-service wealth component, he said.
The process that Finn detailed, now that the complex integration of the two firms is in its early days, goes to the heart of why Morgan Stanley acquired E-Trade, which will keep its brand on its self-directed business.
The investment bank was seeking out smaller, Main Street customers through E-Trade’s popular self-directed brokerage platform who might one day become lucrative clients of its mammoth wealth management division.
It was also after E-Trade’s stock-plan administration platform that expands Morgan Stanley’s own equity administration business, the platform formerly known as Solium Capital, which also opens up opportunities to one day lock in long-term wealth management clients who are high earners.
Financial advisors within the wealth management division, which oversaw some $2.85 trillion in client assets as of September 30, are building relationships with E-Trade financial consultants and introducing new opportunities to sell investments to clients, Finn said.
For instance, “they’re saying, ‘Okay, you might want access to this new alternative fund, or you might want to participate in this kind of third-party manager, or you might want access to this lending solution.'”
E-Trade’s financial consultants act in many ways as advisors to clients, focusing on bringing in and retaining new households and locking them in for the long haul. They are required to hold standard industry licenses, like the Series 7 and Series 63, according to recent E-Trade job listings.
Still, they have fewer products and capabilities at their fingertips than a full-service wealth advisor who caters to higher-net-worth clients.
When Business Insider asked what Finn saw as the most prominent risk facing his business today, he noted ongoing efforts to protect clients’ data has been a prime focus.
“It’s really about protecting clients’ data, because nothing kills credibility like losing access to data, or having a breach, or having some situation where clients don’t feel that they can trust the firms,” he said.
“So we invest a tremendous amount of money in protecting our clients’ data, because that is an existential crisis. Everything else — strategy, capability, brand, operations, positioning — we really like the hand that we’re playing with,” Finn said, without referring to specific instances. “We just have to make sure that we continue to protect our clients at all costs.”
Many financial services firms, including wealth managers, are renewing their focuses on customers’ data protection. Last month, the Office of the Comptroller of the Currency, which regulates banks including Morgan Stanley, fined the firm $60 million for data security incidents that could have impacted clients of its wealth management division.
The bank had notified some clients in July that their data may have been compromised, though “concluded that it would be very difficult for anyone to access or misuse the data,” according to a memo obtained by AdvisorHub.