For Morgan Stanley, 'Digital Is Far More than Robo-Advisers'
Morgan Stanley outlined its plans for deploying automated advice tools, with executives emphasizing that it was only a part of its digital strategy.
"It's going to be important for the overall business and we believe that secular trends here reinforce that it will be advice plus technology," CFO Jonathan Pruzan told analysts during an earnings call Wednesday.
The discussion was prompted by an analyst who noted the fast growth of other firms' automated advice platforms, and then asked what Morgan Stanley's strategy is to protect its wealth management business "from this type of incursion."
Although intended to protect investors from market volatility, a decision by Betterment to temporarily suspend trading the morning after the British referendum has the wealth management industry wondering aloud if the robo-adviser harmed its reputation instead.
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"First of all, digital is far more than robos," Pruzan said. "And as you have heard in the past, we are paying considerable dollars and effort on this area."
Pruzan pointed to the firm's investments, including new mobile apps. He also noted new hires such as Naureen Hassan, who joined Morgan Stanley from Charles Schwab, where she oversaw the development of that firm's robo adviser, Schwab Intelligent Portfolios.
Pruzan said that the firm's strategy for digital focuses primarily on three areas: analytics to enable advisers and clients to make better decisions; automation so advisers can spend more time with clients; and new ways for clients to interact with the firm.
The discussion followed on the heels of recent robo-adviser announcements by rival firms. Wells Fargo said it would pilot a robo offering in early 2017. And UBS announced a partnership with the tech developer SigFig to develop digital advice tools for its approximately 7,100 advisers.
In an interview with CNBC, Morgan Stanley CEO James Gorman said that only 2% of Morgan Stanley clients are households with less than $100,000 in investable assets. More than $700 billion in client assets at Morgan Stanley come from households with $10 million or more.
Those comments echoed similar sentiments during the earnings call, when the chief executive emphasized the emphasized the diversity and variety of clients' needs – particularly those with more assets.
"You got to look at the complexity of client needs. Portfolio allocation, superior product, access to the underwriting calendar – all of these and other things are very important," Gorman said.
These areas are strengths of Morgan Stanley, Gorman said, adding that the firm is looking at digital in terms of how it can better serve these clients. "We're making the investments and we will continue to make them."