Morgan Stanley launches ETF-based robo-advisor

Dec 13th, 2017 | By | Category: ETF and Index News

Morgan Stanley has become the latest entrant into the US robo-advisor market following the official launch of Morgan Stanley Access Investing after a successful six-month pilot programme.

Morgan Stanley enters robo-advisor arena with ETF-based service

Morgan Stanley’s digital wealth management service is available to clients with a minimum $5,000 initial investment.

The automated digital wealth management service consists of ten portfolios, comprising a mix of blended active-passive solutions, as well as purely passive portfolios constructed using ETFs.

Clients can choose from a range of strategies, including core portfolio solutions or more thematic plays including sustainability and gender diversity.

Investors must make an initial investment of at least $5,000 to access the service, which costs 0.35% per year in fees in addition to the costs involved in holding the portfolios’ underlying securities.

The level of the initial investment requirement is indicative of the firm’s desire to target the mass affluent and emerging affluent segments of the market while simultaneously reaching out to younger US-based investors of the Millennial Generation, who generally have simpler financial needs but less wealth compared to their parents’ generation. According to Erik Jepson, head of digital advice product development at Morgan Stanley, the use of ETFs within these portfolios is instrumental in offering a relatively low entry price for investors.

The giant asset manager may have its work cut out for it, however, as the robo-advisory space in the US looks increasingly saturated. Just this year, other major US players including Charles Schwab and Wells Fargo launched their own digital wealth management services, adding to a sizable list of US-based asset managers with existing products including BlackRock, Fidelity, Vanguard, JP Morgan, and Bank of America Merrill Lynch.

Following a trend that is becoming common within the robo-advisor space, investors will be able to access the service via their mobile phones (compatible with both iOS and Android operating systems).

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