Morgan Stanley Wealth Management Review

Financial services behemoth Morgan Stanley offers an extensive list of services to individuals, families, businesses and institutions through the firm’s wealth management division, Morgan Stanley Wealth Management. The division’s offerings include both portfolio management and financial planning services. Though it’s headquartered north of New York City in Purchase, New York, the firm serves clients around the country and the world.

Assets under management (AUM): $1,075,993,037,67

Minimum investment: Varies by account type, but typically $10,000 for an account with a financial advisor

Individual investor to advisor ratio: 128:1

Fee structure: A percentage of AUM, fixed fees, commissions, other (miscellaneous fees)

Headquarters: 2000 Westchester Avenue Purchase, NY 10057 Website: www.morganstanley.com Phone: 914-225-1000

All information included in this profile is accurate as of September 17, 2021. For more information, please consult Morgan Stanley Wealth Management’s website.

Overview of Morgan Stanley Wealth Management

Morgan Stanley Wealth Management is one of the largest financial services firms in the country, managing more than $1 trillion in assets under management (AUM). The firm has locations in every state as well as the District of Columbia, with more than 700 offices in total.

Morgan Stanley Wealth Management operates as both an investment advisor and a broker-dealer, allowing clients to pay a fee per account or to pay per transaction. The advisory team consists of 15,000 employees, while around 22,000 employees act as broker-dealers. Many of those advisors originally worked for Citi’s Smith Barney but came aboard after the 2009 merger of Morgan Stanley’s Global Wealth Management with Citi’s Smith Barney.

Morgan Stanley Private Wealth Management remains a division of Morgan Stanley Smith Barney LLC. The larger Morgan Stanley is a publicly traded firm that formally opened its doors at 2 Wall Street in 1935.

Which types of clients does Morgan Stanley Wealth Management serve?

In particular, the team provides specialized advice to entrepreneurs and other professionals living outside the United States, as well as to sports and entertainment stars. While the bulk of the firm’s individual clients are not high net worth, the firm does serve a large swath of high net worth individuals, defined by the SEC as those with at least $750,000 under management or a net worth of at least $1.5 million.

The required minimum investment varies widely by account. A digital advisory product known as Morgan Stanley Access Investing requires as little as $5,000 to start investing. Most financial advisors require a minimum of $10,000 to manage a client’s portfolio. To access specific outside managers, clients need to put up a lot more, anywhere from $50,000 to $5 million or more, depending on the manager.

Services offered by Morgan Stanley Wealth Management

Investment management: Morgan Stanley Wealth Management offers an extensive lineup of options to manage portfolios, each targeting a slightly different need or audience. Whether clients are just starting out, are already sophisticated investors, want to oversee their account or take a hands-off approach, or are interested in third-party managers or not, the firm has a suitable account option.

Financial planning: The firm also offers a la carte financial planning, including services targeting retirement planning, education planning and insurance planning. Clients can buy a one-time written plan or get ongoing planning and monitoring complete with a new financial plan at least every 36 months.

Wealth management: The Private Wealth Management division helps ultrahigh net worth families manage all aspects of their financial lives, including legacy and estate planning, philanthropy and family office services.

Digital advisory program: In the digital advisory program, known as Morgan Stanley Access Investing, clients invest in one or more model strategies managed by the firm. The team has created a proprietary algorithm to recommend an investment strategy based on client answers to an investment questionnaire. The strategies typically consist of mutual funds and ETFs. Clients can add a tilt toward specific social or thematic issues. To participate in the program, clients must agree to electronic communication.

To recap, here is a complete list of services offered by Morgan Stanley Wealth Management:

• Investment advisory services/portfolio management
• Financial planning services
  • Trust and estate planning
  • Charitable planning
  • Education planning
  • Retirement planning
  • Business planning
  • Tax planning and management
  • Cash flow forecasting
  • Spending analysis and budgeting
  • Long-term care planning
  • Insurance/risk management
• Pension consulting services
• Selection of other advisors
• Educational seminars and workshops

Separately, through its broker-dealer licensing, the team places individual trades and is paid per trade. Clients should consider if they are better off using the firm’s registered advisory services and paying a flat advisory fee or if they would rather use the broker-dealer services and pay per transaction.

Morgan Stanley also has other divisions that operate in nearly every other major category of the financial industry, including investment banking and capital markets; sales and trading; and research and investment management.

How Morgan Stanley Wealth Management invests your money

Morgan Stanley Wealth Management’s investment approach varies based on each client’s preferences.

Clients can elect to have a financial advisor manage their portfolio on a discretionary basis, meaning the advisor can buy and sell without the client’s express permission. In that case, the advisor may create a custom portfolio generally composed of the following investment types:

• Mutual funds
• ETFs
• Individual equities
• Debt
• Cash equivalents
• Alternative investments, such as private equity, hedge funds, real estate funds, private credit funds, venture capital funds and funds of funds

The exact recommendations will vary by the advisor, according to their own personal preferences and styles, as well as the client’s financial situation and investment objectives, though advisors must stay within investment guidelines set by the firm.

Clients also can choose to have their financial advisors recommend a specific manager who will oversee the client’s money or a specific strategy, including single- and multi-strategy options. The firm also offers consulting services for clients looking for advice but who prefer a non-discretionary relationship in which they manage their money themselves.

For those interested in environmental, social or thematic investing, the firm has established an Institute for Sustainable Investing. This allows investors to put their money to work in a way that has a positive environmental or social impact, or that reflects their personal values, such as gender diversity. The firm also offers clients a number of other portfolio themes, such as those focused on investing in robotics, biomedicine, defense and cybersecurity or emerging markets.

Fees Morgan Stanley Wealth Management charges for its advisory services

Portfolio management fees: Fees for portfolio management services vary by advisor and account type, and are negotiable. The firm does specify, however, that the maximum annual asset-based fee typically allowed to go to Morgan Stanley is 2%.

Keep in mind that clients who work with an advisor as well as additional managers will owe extra management fees, adding up to another 0.75% to their annual rate. The fee typically covers management, transaction and custody costs.

Separately, clients are responsible for internal mutual fund fees. They will also owe transaction fees when a firm other than Morgan Stanley executes trades for their portfolio.

Fees are typically paid in advance, usually on a monthly basis.

Financial planning fees: For financial planning services, clients generally pay a maximum fixed fee of up to $5,000 for a one-time plan. However, the fee may run as high as $10,000 if the plan covers more than $5 million in assets and the advisor has a specific educational designation, such as a chartered financial analyst (CFA) or certified financial planner (CFP).

Digital advisory program fees: Investors starting out or trying to reach specific goals, such as paying for college or saving for a down payment for a new home, may look to the firm’s digital advisory tool. Only $5,000 is required to get going, and you can invest in model portfolios for a 0.30% annual fee.

Morgan Stanley Wealth Management disciplinary disclosures

Morgan Stanley Wealth Management, as well as its predecessor firms, have disclosed many regulatory items over the past 10 years, largely stemming from the SEC. Many items were settled by the firm without admitting or denying the accusations.

The Securities and Exchange Commission (SEC) requires all registered investment advisors to disclose on their Form ADV whenever the firm, an employee or an affiliate faces disciplinary action, such as criminal charges or civil lawsuits, that are material to a client’s evaluation of the advisory business or the integrity of the management team.

Here are some of the more notable instances among the firm’s list of disclosures:

• In 2020, the firm entered into a $5 million settlement agreement with the SEC, which found that Morgan Stanley Wealth Management provided incomplete and inaccurate information about transaction-based costs for clients.
• In 2018, the firm paid a civil penalty of $3.6 million, without admitting or denying the findings, to settle allegations that it did not implement policies reasonably designed to prevent personnel from misappropriation of assets in client accounts, after a financial advisor initiated unauthorized transactions in four accounts. The firm fully repaid the affected clients.
• In 2017, the firm paid an $8 million penalty to settle allegations that it solicited approximately 600 non-discretionary accounts to purchase specific single inverse ETFs funds without, among other things, properly disclosing the features and risks.
• In 2017, the firm paid a civil penalty of $13 million to settle allegations, without admitting or denying the findings, that it inadvertently charged advisory fees in excess of what it disclosed and agreed to with certain clients, among other issues.

For more information and to view the firm’s Form ADV paperwork, you can visit its IAPD page.

Morgan Stanley Wealth Management onboarding process

1. Search for an advisor near you: Clients can search for an advisor or for a branch location by using the search tool on the firm’s website.
2. Sign a client agreement and/or secure an outside manager: Before clients formally start working with an advisor, they’ll need to sign an agreement that lists the specific services being offered and the price. Clients may also need to separately establish a relationship with an outside manager, since sometimes they’ll pay that manager separately from Morgan Stanley.
3. Stay in touch and receive regular reports: Once the relationship is underway, the frequency at which clients will hear from their advisor or team will vary, but most clients receive at least quarterly performance reports. In certain cases, such as when an advisor has recommended outside managers, the advisor should touch base annually to make sure the client’s investment criteria has not changed.

Where Morgan Stanley Wealth Management is located

Morgan Stanley Wealth Management has a huge footprint, with branch offices in every state in the U.S., plus the District of Columbia.

Is Morgan Stanley Wealth Management right for you?

Morgan Stanley Wealth Management offers something for everyone. The firm’s large national presence means clients in every state can consider the firm. Ultra-high net worth investors and anyone with complicated needs will find additional services, such as insurance and estate planning, family office services, access to alternative investments and private banking.

On the other hand, investors who are just starting out or have straightforward goals can look to the low-cost Morgan Stanley Access Investing program for portfolio management, or use the digital platform. All types of investors can tap the firm’s a la carte financial planning services for help reaching a specific goal.

Remember, it’s up to clients to negotiate fees with each individual advisor, since no standardized firm-wide fee schedule exists. Thus, clients who prefer to know how much they’ll pay upfront, without needing to shop various advisors, may want to look elsewhere, as will clients who learn their fees are close to the firm’s maximum rate of 2%.

Before choosing an advisor, make sure to ask plenty of questions and do ample research to ensure you find an advisor who is right for you.

The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.