Morgan Stanley’s acquisition of E*Trade will bring the firm’s wealth management business and its advisors more opportunities to interact with clients receiving equity awards. In an exclusive interview with WealthManagement.com, Brian McDonald, managing director and co-head of Morgan Stanley at Work, described plans for two new features and ongoing integration plans that are expected to be available before the end of the year.
Morgan Stanley has two options for end-clients receiving equity awards: the Shareworks program it built following an acquisition of Solium and the Equity Edge Online business it picked up in its E*Trade transaction. By the end of the year, it plans to attach a self-directed brokerage account to Shareworks, a feature already available at Equity Edge Online.
The goal is to eliminate gaps between brokerage accounts and equity awards, said McDonald about the yet-to-be named feature. “What's great about that is it allows for individuals who have equity awards through their company—as those vest and they sell shares and deliver proceeds—all of those will come into their self-directed accounts,” he explained.
Although Morgan Stanley has “fairly sparse” data for 2019, because it formally launched its liquidity business at that time, it did $500 million in company-led liquidity events that year, according to a company spokesperson. Last year it supported $4.4 billion in company-led liquidity events, on just the Shareworks platform, and experienced a “meaningful acceleration” in the second half of 2020.
Morgan Stanley has seen $1.1 billion in liquidity events on its associated platforms in the first quarter of this year, he added.
Morgan Stanley at Work will also be bridging the gaps between its proprietary financial planning capabilities and the equity stock options analysis tool available to Morgan Stanley advisors. The objective is to make equity awards, increasingly a source of wealth building among employees, more fully utilized, and incorporated into, end-clients’ financial planning, said McDonald.
Analysis and financial planning will be available for both clients who have Morgan Stanley advisors, as well as end-investors without a Morgan Stanley advisor but who are stock plan participants at Shareworks or Equity Edge Online.
The latter group could be a source of new clients for Morgan Stanley advisors, said McDonald. “If there was a [corporate] client that said, ‘For our top 500 executives we'd love for you to have advisors work with them and do this analysis.’ We'll do that for them, free of charge, and help them understand how to make sense of the equity grants that they've received.” Because of vesting schedules and other variables affecting equity awards, the complexity of the grants will vary but still be beneficial, he said.
The software available at Morgan Stanley allows its advisors to “engage with those individuals and help them make sense of what they have,” he added. “Hopefully many of them will see the value of not only the tool, but the advice that they'll get from our advisors and want to work with us on a long-term wealth management relationship.”
Morgan Stanley continues to build out the data rails between the business lines it has, eventually planning for full automation of information flowing between the E*Trade features, its Shareworks features and its proprietary software, said McDonald. The addition of the self-directed brokerage accounts to Shareworks should be live by the end of the year. The equity awards analysis tool is currently available at Morgan Stanley, he added, with developers working to fully automate the flow of data across the Morgan Stanley at Work tech ecosystem.