Morgan Stanley puts a digital spin on advisor training
Morgan Stanley’s digital transformation of its wealth management arm is extending beyond an evolving set of technology tools to its advisor training program.
A third of Morgan’s trainees are being inducted into a digital-first approach with the intention that these advisors-to-be will be deployed to the branches and help veteran brokers take to the firm’s burgeoning suite of tech tools. The wirehouse has around 1,200 trainees annually, according to executives.
“If you don’t have an adoption strategy, then I don’t think you have a tech strategy,” says Jim McCarthy, national sales manager at Morgan Stanley.
The company began adding staff to the program more aggressively as Morgan Stanley started ramping up its tech rollout, which includes new panning software, mobile capabilities, asset aggregation, and a robo advisor.
“The current configuration started late last year in earnest,” says Andy Saperstein, co-head of Morgan Stanley Wealth Management.
Of course, these trainees still receive 80 hours of financial planning training, executives say.
“The reason it works so well from the [program’s] POV is that they show up in a branch as a resource,” McCarthy says. “They immediately have credibility and value because they bring something of value. They also get to demonstrate that value to a variety of different teams, and they each get to see if there is a chemistry fit.”
While Morgan Stanley will continue more traditional training methods, this may also be an easier way for new advisors to thrive as young talent has historically struggled to find success in a lucrative, but challenging profession.
“Almost any other client service industry, whether it’s investment banking or accountants, you start off more as an apprentice, you learn useful skills and these days a lot of those skills leverage useful technology and learning from your mentor, who is the senior person in the office or on the team. And you grow from there. It’s a much more intuitive way to be successful in a business like this. [Through] your interactions with clients and team members, you will be adding immediate value because of what you learned in your training,” Saperstein says.
To develop new technology, the firm has pursued a mix of in-house development and contracting with third parties such as Yodlee for aggregation and BlackRock’s Aladdin for risk analysis. Among the firm’s proprietary technologies is a next best action tool, which uses predictive analytics and client data to develop predeveloped messages that advisors can send to clients. The messages are tailored to each client based on their investing goals.
The rollout is also not yet done. The firm is planning further improvements based on part on advisor feedback. In other words, it’s an iterative process.
Executives declined to specify how much the firm has spent on these efforts. But they repeatedly underlined their importance to the future of the company.
Of course, Morgan Stanley isn’t alone in making such investments. In recent years, a number of robo advisor startups have challenged big firms. And Morgan Stanley’s traditional rivals have also redoubled their own efforts in this arena.
UBS’s American unit launched a robo advisor solution earlier this year after more than 18 months in development. To complement that effort, the Swiss firm has plans to boost the number of financial advisors at its call center by 25% to approximately 170 by year’s end.
Likewise, Bank of America has rolled out its own robo advisor and is upping its own hiring efforts for Merrill Edge, the bank’s self-directed service. Bank of America intends to hire an additional 300 financial advisors for the call center.
These digital investments come as more clients demonstrate a willingness, even a preference for digital investing options. Almost 40% of mass affluent Americans report being comfortable consulting artificial intelligence for financial advice, according to a recent Merrill Edge survey.
Of course, it’s also still early days for many of these new technologies.
Morgan Stanley Access Investing, the firm’s robo solution aimed primarily at young investors, launched in December. The robo offers portfolios composed of mutual funds and ETFs, blending active and passive investment strategies; it has an investment minimum of $5,000 and a fee of 35 basis points of AUM.
Morgan Stanley executives declined to specify how many client assets the robo has.