Morgan Stanley Joins Robo-Advisory Fray With Launch Of Morgan Stanley Access Investing

+1.88%
Upside
93.50
Market
95.26
Trefis
MS: Morgan Stanley logo
MS
Morgan Stanley

Morgan Stanley (NYSE:MS) became the newest entrant in the rapidly growing robo-advisory industry recently with the launch of its online investing platform, Morgan Stanley Access Investing. The robo-advisory space has seen fierce competition over recent years as the success of pioneering independent advisors has attracted the attention of the largest financial institutions. For the banks and asset management firms, a robo-advisory platform is a great low-cost distribution channel for their own investment products – giving them an edge over independent robo-advisors. In Morgan Stanley’s case, the launch of the new platform is also well-aligned with the bank’s overall strategy of growing its wealth and asset management divisions in the long run.

Morgan Stanley Access Investing (MSAI) should face stiff competition from incumbents including independent advisors like Betterment, Wealthfront and Personal Capital, and the robo-advisory platforms of asset management giants BlackRock (FutureAdvisor), Vanguard (Vanguard Personal Advisor Services), and Charles Schwab (Schwab Intelligent Portfolios) among others. Notably, MSAI’s launch comes nearly a year after wealth management rival Bank of America-Merrill Lynch launched its robo-advisory platform Merrill Edge Guided Investing (MEGI) this February.

We maintain a $50 price estimate for Morgan Stanley’s stock, which is slightly ahead of the current market price.

Relevant Articles
  1. Trailing S&P500 By 31% Since The Start Of 2023, Will Morgan Stanley Stock Close The Gap?
  2. Up 10% In The Last One Month, What’s Next For Morgan Stanley Stock?
  3. Where Is Morgan Stanley Stock headed?
  4. What To Expect From Morgan Stanley Stock?
  5. What To Expect From Morgan Stanley Stock?
  6. What To Expect From Morgan Stanley Stock?

See our full analysis of Morgan Stanley

Over recent years, the global asset management industry has seen a secular shift, with actively-managed funds gradually falling out of favor as low-cost exchange-traded funds (ETFs) grow at unprecedented rates. The success of ETFs can be attributed primarily to their popularity among retail investors. The retail investing market remains extremely under-served despite accounting for roughly 30% of all investable assets worldwide. This is because retail investors are generally sensitive to fund expense ratios, and the low-cost, convenience and transparency afforded by ETFs turned out to be an ideal fit for their investment needs. The meteoric rise in popularity of ETFs, in turn, also led to the proliferation of robo-advisory services. While traditional wealth managers remain the primary distribution channels for most investors, robo-advisory has seen rapid growth over recent years because of the retail investment segment. The trend is easily explained by the fact that robo-advisory platforms are simple to use, and usually have a simple, low-cost fee structure.

Asset management firms in the U.S. were early adopters of the robo-advisory channel for offering investment services to their customers, and over recent months the largest U.S. banks have either launched their own robo-advisory platforms (Bank of America-Merrill Lynch and Morgan Stanley) or are in the process of developing one (JPMorgan and Goldman Sachs). While these platforms are a great channel for the banks’ own investment products, banks are also able to cross-sell their products to existing customers – an advantage individual robo-advisors and asset management firms don’t enjoy.

The minimum investment requirement for Morgan Stanley Access Investing is $5,000 – indicating that the bank is targeting the mass affluent and emerging affluent segments. Morgan Stanley will pocket 0.35% of total assets as fees each year by offering the robo-advisory services, which works out to $3.5 million in fees for each $1 billion in assets managed through the platform. This should have a slightly positive impact on the overall fees for Morgan Stanley’s wealth management division (captured in the chart below).

View Interactive Institutional Research (Powered by Trefis):
Global Large CapU.S. Mid & Small CapEuropean Large & Mid Cap
More Trefis Research