With its purchase of ETrade Financial, Morgan Stanley is expanding its online and so-called self-directed investment platform for the less than ultra rich.
In the process, Morgan Stanley, with 15,468 financial advisers, has wound up moving in the direction of its fierce competitor, Merrill Lynch, which has seen its online brokerage platform, Merrill Edge, become one of its fastest growing business segments, as well as a fertile training ground for young financial advisers.
Indeed, in its investor presentation about the deal, Morgan Stanley, which is buying ETrade for $13 billion in stock, noted that ETrade ranked among the top three self-directed brokerages, with 5.2 million client accounts and $360 billion in retail client assets. In a footnote to the presentation, Morgan Stanley noted that ETrade's peers include Fidelity, Charles Schwab and TD Ameritrade, which are currently working to complete a merger, and Merrill Edge.
Morgan Stanley's CEO, James Gorman, a former McKinsey & Co. senior partner, was in charge of Merrill's brokerage business before jumping to Morgan in 2006, so he clearly understands his competition.
For years, the large wirehouses like Morgan Stanley have been pushing brokers to stop working with less profitable clients, or those with assets less than $250,000 to $500,000. But through platforms like ETrade or Merrill Edge, those clients still have a home at a full-service brokerage, one recruiter noted.
"The industry has realized it’s profitable to service these smaller relationships," said Louis Diamond, vice president and senior consultant at Diamond Consultants, an industry recruiter. "It’s advantageous for a bank or wirehouse to work with these clients with a tech platform like ETrade, and as the account grows, you have a massive sales force of highly trained advisers to work eventually with those clients."
Merrill Edge has also proven to be a training ground for younger financial advisers, noted another recruiter, Danny Sarch, of Leitner Sarch. In the spring, Merrill said it was hiring 300 young advisers, many of whom had experience working with Merrill Edge.
"Will ETrade be a place to prepare young advisers for Morgan Stanley?" Mr. Sarch asked.
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
