Behind Morgan Stanley’s Workplace Strategy

Years ago, as Jeremy France of Morgan Stanley sees it, C-suite executives were getting all kinds of free educational advice that they could choose to convert into fee-for-service financial advice if they wanted.

Today, after years of strategic acquisitions, Morgan Stanley is offering that free education to the masses through the firm’s plan sponsor clients. The choice for a participant to move into financial advisement can happen with the raise of a hand, but to France’s mind, many participants can just use the free resources to better their overall financial situations and futures.

“I think there’s great connectivity between the 401(k) participant and wealth,” says the head of institutional consulting solutions for Morgan Stanley. “But it’s the holistic approach … it’s a great opportunity for people to think about better outcomes for their futures that weren’t happening before …. If you think about it, many big firms give out executive services, which is free financial planning. Why is it only important for them?”

Jeremy France

Morgan Stanley’s key ingredient in offering services to all, France says, is its business strategy of having a “complete arc” of services for a plan sponsor. Those services range from white-labeled, free educational tools addressing everything from the 401(k) to daily budgeting, virtual advice for a pressing issue, access to do-it-yourself investing via the firm’s E-Trade, or the ability to be put in touch with one of the wirehouse’s 16,000 financial advisers for a fee.

“We truly believe that is one of our competitive advantages,” says France, who moved into his role this year after leading the firm’s Graystone Consulting retirement plan advisement group. “When we go into an organization, we can truly sit in front of that plan sponsor and say that we can educate at every level.”

High Interest

That education, France says, is intentionally created to avoid conflicts of interest in terms of pushing employees to a Morgan Stanley wealth manager. Instead, he says, the education can look like it’s coming from the employer, and individual services will be offered “on a hand-raising-only basis.”

As the retirement and wealth convergence evolves, there are discussions around conflicts of interest that range from plan advisory and wealth shops to recordkeepers. Some advisers have argued that pure plan advisement should not be tied to wealth management options.

France, however, notes that in the past the only education everyday participants were getting were from their recordkeepers, and that often geared only toward rollover time as that is where higher fees could be captured.

“Recordkeepers would only advise on the 401(k), but when you think about retirement, it’s the 401(k), it’s the IRA, it’s [nonqualified] compensation depending on where you are in your career,” he says. “The real question became, when we talk about retirement, are we really covering what the asset pool is that you need for retirement? And most times, we weren’t.”

Meanwhile, he says, when Morgan Stanley’s Graystone retirement consulting division works with plan sponsors, they are focused 100% on the free education to participants. A participant crossover to wealth services “only happens when there is a hand-raiser who wants to take some action,” he says. “That action could be to meet to discuss asset allocation, to transact, or all the other things that might then move them into the private wealth side of the house.”

Buying It

Morgan Stanley, under former CEO James Gorman, has been building capabilities to service the workplace for a number of years.

In 2019, the firm acquired Solium, a workplace financial benefits firm, and rebranded it Morgan Stanley at Work. In 2020, it made a splash by acquiring E-Trade, a self-directed investment platform, and Gradifi Solutions, an education assistance solutions provider. In 2022, it acquired American Financial Systems, a nonqualified deferred compensation solutions firm.

Now, France says when Morgan Stanley does competitive analysis in the space, he believes his firm stands out for its in-house capabilities including stock plans, DC, DB, nonqualified compensation, and, of course, its broad wealth capabilities for all asset sizes. The only area Morgan Stanley isn’t in is healthcare, he notes.

In a January earnings call, Morgan Stanley’s new CEO Ted Pick called out workplace as one of “three-channels” to grow wealth management, also including adviser-led and self-directed client pools. Sharon Yeshaya, the firm’s chief financial officer, noted on that same call that, in the prior three years, the firm saw an average of $50 billion in workplace assets migrate to the adviser-led channel on an annual basis.

France, meanwhile, speaks to the robust library of resources and tactics regarding participant education that includes “Webinar Wednesdays,” “Money Mondays” free financial education, and one-on-one participant sessions.

To do all this work well, he notes, Morgan Stanley does need access to participant data. Often, that means partnering with recordkeepers and payroll providers, who may also still be offering education tools, with the financial services firm not necessarily replacing the providers’ services, but bringing an “additive and an additional benefit,” he says.

Overall, France credits plan sponsors with moving the participant education discussion forward—but notes that also means, if an advisory can step up to meet those needs, they may lose the client.

 “That’s why you need that whole holistic view, and the tools that we have in place today, which are adviser-driven, are looking at that full suite and making sure that it’s not a one-sided strategy,” he says. “That’s the conversation that you have to have with a plan sponsor that the recordkeeper can’t have.”

Correction: Story corrects the number of Morgan Stanley advisers.