Digital expectations are rapidly changing, and to be successful five years from now, firms need to shift gears today, says Greg Fleming, president of Morgan Stanley Wealth Management. In an interview with On Wall Street, Fleming talks about how robo advisors are just one facet of an evolving competitive landscape, and why the firm is growing its training program.
HOW IS THE RISE OF ROBO ADVISORS AFFECTING YOUR FIRM?
It’s not the rise of robos that affects Morgan Stanley. It’s the continuous rapid progress of digital in our industry, as it is across our society. You have billions of mobile devices in the hands of people all over the world. If you walk down the street and do an informal survey, look at the number of people that are typing or talking on a device. That’s what we are dealing with, and robos are a piece of it.
HOW ARE YOU ADAPTING TO THOSE CHANGES?
We want the same information available to the advisor and the client in an easily obtainable format. We want the client to feel that every interaction with Morgan Stanley Wealth Management is seamless.
Let’s talk about how a client might come to the firm. We have a process for onboarding a client. We want that to be seamless, efficient and timely for the client. We want to ask the right five or six questions, not 50, and we want it to be digital.
So from the time the client begins to interact with us, it’s all digitally enabled. We don’t want someone who is 25 years old to come here to be a client and face a process that takes days.
We want it to be quick, digital and seamless. Why do we do that? Because from the time that a 25-year-old millennial interacts with Morgan Stanley, they’ll say, “Wow, that was easy.”
That is what I want — the millennial telling people that this large firm functions and operates as facilely as any firm in the space.
WILL MORGAN STANLEY DEVELOP ITS OWN ROBO ADVISOR?
One of our great competitive advantages is our best-in-class financial advisors. We believe in the benefit from these trained, experienced professionals.
That is going to stay at the heart of our model. If we have a client that wants to engage with us digitally, because they are either more comfortable with that or have less resources, we want to facilitate that. But as they develop more assets and more needs, we will transition them to a financial advisor. They can get that better from us than anyone else because one of the things we have that a startup doesn’t is best-in-class intellectual capital.
MORGAN’S HEADCOUNT HAS COME DOWN IN RECENT QUARTERS. HOW MANY ADVISORS DO YOU WANT?
We’re not targeting a specific level. It has come down a little bit. We’ve been focused on being disciplined on advisor productivity. Our advisors are best in class, and they want us to run the business efficiently.
HOW DO YOU RATE MORGAN’S EFFORTS TO BRING IN YOUNG ADVISORS?
That’s a big priority. The client base is going to change dramatically over the next 15 years. Over half the workforce will be comprised of millennials. We believe that we need a significant representation among millennials to serve millennials. We are actually increasing the size of our training program a little bit.
HOW BIG IS THE PROGRAM?
North of 1,000 trainees are brought through every year now. We are increasing the percentage coming through the program. It is a major priority for us.
YOU’VE ALSO BEEN GROWING THE FIRM’S BANK CAPABILITIES.
It’s been a big part of our growth. It’s an important part of the earnings trajectory for Morgan Stanley.
We estimate that our clients have half a trillion in cash away from us. So we want to attract some of that cash over to us, and this fits into our development of our banking apps. And we can lend that back to clients in terms of securities-based lending and other loans. Advisors and clients are working on their entire balance sheet.