Morgan Stanley launches a robo-advisor after 16 month pilot

Morgan Stanley has launched its digital wealth management service, Morgan Stanley Access Investing, after a 16-month pilot.

The service is available on desktop and mobile.

Access Investing was built entirely in-house and is fully automated.

The service is goal-oriented, has a $5,000 minimum investment, a 0.35% fee, and offers a range of 11 portfolios, some of which are active-passive and others fully passive and consisting of ETFs. Additionally, it includes a socially responsible option and multiple customization tools, the bank told BI Intelligence in a phone interview.

Access Investing has been designed to help Morgan Stanley pull in a new generation of users. Although the service is available to new customers, its primary purpose is to enable Morgan Stanley’s 16,000 financial advisors to better target current clients' children. These millennials currently have simpler financial needs, and less wealth than their parents, yet still need investment advice, says Morgan Stanley’s head of digital advice product development, Erik Jepson.

As such, an automated investment platform, with a lower price point thanks to the use of ETFs, should satisfy their requirements. As they accumulate wealth, they will develop more complex investment needs, and can then easily be transferred to Morgan Stanley’s bespoke — and more expensive — investment service, providing the bank with an effective cross-selling and client retention strategy.

Morgan Stanley's decision to precision target its service seems well thought out. The investment banking behemoth doesn't seem to be trying to compete directly with digital wealth manager startups like Betterment and Wealthfront for the broader US mass market, as its minimum investment suggests, but is instead using Access Investing to play to its strengths and focus on a demographic whose needs — current and future — it knows well already.

It's not the first US incumbent to take this route: Bank of America Merrill Lynch launched its automated platform, Merrill Edge Guided Investing, in February with a similar strategy in mind. As more banking giants jump on the digital investment bandwagon, this focus may pay off.

Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider's premium research service, has put together a detailed report on the evolution of robo-advising that scopes the current market for robo-advisors, providing an updated forecast through 2022. In addition, it explains the different types of robo-advisors emerging, details how startups and incumbents are working to ensure the success of their products, and outlines what will happen to the market over the next 12 months.


More Articles