Morgan Stanley is winning new business from RIAs since launching its cross-division initiative, which pairs investment management with equity strategies.
Morgan Stanley wants to bring more tailored investment management tools to independent advisors and recently repositioned its services under an initiative dubbed the "Integrated Firm for RIAs and Family Offices.” The goal is to unify business lines previously siloed across its investment management and institutional equities divisions, and make it easier for RIAs to access them.
According to Morgan Stanley executives, the initiative is paying off. Since it launched, the firm has raised nearly $1.5 billion across its entire suite of structured products from the RIA market, according to Lou Mandia, head of RIA strategy and distribution for the institutional equity division.
Mandia’s division offers investment strategies for the RIA channel, including options for clients with low-cost-basis concentrated stock positions looking to hedge downside exposure and provide liquidity from the portfolio in a tax-efficient manner.
The initiative pulls on resources from Morgan Stanley Investment Management, which manages about $2 trillion in assets and includes partners such as Parametric and Eaton Vance, according to executives.
“That allows us to just take what was already a broad, compelling suite of products and broaden it out even further and really customize solutions to a higher degree for financial advisors and their clients,” said Dave Michaud, co-head of North America intermediary distribution for the investment management division.
That may involve, for instance, combining a variable-prepaid forward contract (essentially a loan against a concentrated stock position) with a tax-efficient long-short SMA strategy.
Mandia said the goal is to serve the RIA market, now a $6.5 trillion space, more holistically.
“Now when we’re having these types of conversations with RIAs, it’s no longer about a specific product,” Mandia said. “We are most interested in servicing what I consider to be that institutionalized type of RIA and filling the void of that complex problem in the portfolio or pain point.”
The integration also provides the divisions with a clearer view of the RIA’s overall portfolio.
“Most of the time when you have this separated coverage across the two divisions, one hand doesn’t know what the other hand is thinking about and implementing for that client,” Mandia said. “Now we’re both going in and approaching that client at a holistic approach from a portfolio perspective.” That includes better integrating the onboarding and reporting processes, the firm said.
The firm has formed strategic alliances with other wealth management vendors to ease advisors’ access to its strategies, including partnerships with the big RIA custodians, Fidelity and Schwab, as well as alternative investment platforms such as CAIS, iCapital and Halo Investing.