Got less than $680,000 to invest? Morgan Stanley doesn’t want your business

Got less than $680,000 to invest? Morgan Stanley doesn’t want your business
The big wealth manager palms off 'low value' clients in Australia.
JUL 13, 2023

Morgan Stanley Wealth Management is shifting its focus to cater to Australia's affluent individuals, while collaborating with wealth manager Ord Minnett to handle clients with lower net worth. According to the Australian Financial Review, customers possessing less than A$1 million in assets (U.S. $683,000), will be given "the option" to transfer their accounts to 472 employee Ord Minnett. The U.S. firm claims this strategic move allows it prioritize high-net-worth accounts, not-for-profits, and family office funds.

The decision to reevaluate its client base arose from Morgan Stanley's exposure to inactive wealth management clients with less than A$1 million. The company has decided that the associated costs and time required to conduct Know Your Customer and Anti-Money Laundering checks on these accounts outweigh the returns, impeding the firm's ability to concentrate on more affluent clientele.

Morgan Stanley informed its team of 103 financial advisers in Australia about the review this week. The next step involves notifying eligible clients who can migrate their accounts to Ord Minnett.

A spokesperson for Morgan Stanley emphasized their commitment to providing a top-tier offering for high-net-worth, ultra-high-net-worth, and not-for-profit clients in Australia. The firm has initiated a formal review process, which is expected to conclude within several weeks.

Once the review is completed, impacted clients will be contacted and presented with alternative solutions, where appropriate, ensuring a smooth transition.

It's worth noting that the collaboration with Ord Minnett does not involve the sale of assets or branches to the stockbroker. Clients with assets below $1 million can also choose an alternate money manager instead of transferring to Ord Minnett.

Australia’s Hayne royal commission in 2018 exposed alleged misconduct within the wealth management and financial advisory sector, prompting significant changes in how wealth advisers operate. The subsequent increase in regulations for advising less-wealthy clients, combined with heightened tertiary requirements, has resulted in a decline in financial advisers. As a result, leading wealth management firms now prioritize winning over high-net-worth clients who engage in more transactions and generate higher fees for advisers.

Morgan Stanley's move comes amidst notable personnel changes within the organization. Ian Chambers retired as head of wealth management in November, and Rebecca Hill and Matthew Nicholls were appointed as co-heads. However, Mr. Nicholls departed in May, leaving Ms. Hill as the sole head of the business. Raha Nasseri assumed the role of chief operating officer of Morgan Stanley's wealth division in April, following her relocation from the bank's Hong Kong office, where she held the position of executive director.

In terms of rankings, Morgan Stanley's wealth management arm currently manages approximately $42 billion in client assets. Last year, 24 of its private client advisers were included in Barron's Top 100 Financial Advisers List.

Under the leadership of CEO James Gorman, who announced his departure in May, the bank has prioritized wealth and asset management over investment banking during his 13-year tenure. Gorman, an Australian himself, previously served as co-president in charge of wealth before assuming the CEO role in 2010. Since then, he has overseen the acquisitions of wealth and asset management businesses ETrade and Eaton Vance.

Latest News

RIA moves: True North adds $353M California RIA as SageView grows North Carolina presence
RIA moves: True North adds $353M California RIA as SageView grows North Carolina presence

Plus, a $400 million Commonwealth team departs to launch an independent family-run RIA in the East Bay area.

Blue Owl Capital, Voya strike private market partnership for retirement plans
Blue Owl Capital, Voya strike private market partnership for retirement plans

The collaboration will focus initially on strategies within collective investment trusts in DC plans, with plans to expand to other retirement-focused private investment solutions.

Top Commonwealth advisor to recruiters: Stop with the cold calls already!
Top Commonwealth advisor to recruiters: Stop with the cold calls already!

“I respectfully request that all recruiters for other BDs discontinue their efforts to contact me," writes Thomas Bartholomew.

Why AI notetakers alone can't fix 'broken' advisor meetings
Why AI notetakers alone can't fix 'broken' advisor meetings

Wealth tech veteran Aaron Klein speaks out against the "misery" of client meetings, why advisors' communication skills don't always help, and AI's potential to make bad meetings "100 times better."

Morgan Stanley, Goldman, Wells Fargo to settle Archegos trades lawsuit
Morgan Stanley, Goldman, Wells Fargo to settle Archegos trades lawsuit

The proposed $120 million settlement would close the book on a legal challenge alleging the Wall Street banks failed to disclose crucial conflicts of interest to investors.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.