By Reuters Published: 14:34 EDT, 17 January 2017 | Updated: 14:34 EDT, 17 January 2017 By Elizabeth Dilts NEW YORK, Jan 17 (Reuters) - Morgan Stanley inked deals with 10 technology outfits last year to improve the products and services it offers wealth-management customers, the bank said on Tuesday. Among the new partners are Addepar, which offers investment-tracking software, and Zelle, a digital payments network that aims to compete against the popular mobile application Venmo. Although the tools will not necessarily generate fees, they will help financial advisers do their jobs better, Morgan Stanley Chief Executive James Gorman said. They may also attract and retain customers who prefer digital options, he added. "We've got to be careful that we are not penny wise and pound foolish," he said. Big banks, investment firms and brokerages have been investing heavily in financial technology lately to avoid losing customers to Silicon Valley. In the wealth-management business, the most common threat has been so-called "roboadvisors," like Wealthfront and Betterment, which manage clients' money using algorithms. They tend to charge less than human advisers and cater to customers with relatively little money to invest. Morgan Stanley's wealth business is sticking to a model that favors wealthier customers, Gorman said. However, he left the door open to serving those who want purely digital advice, and said he expects all customers to want cutting-edge digital options going forward. "We will be building a lot of digital technology to support the financial advisors and the branch operations," he said. In December, Morgan Stanley said 20 of its top adviser teams would use Addepar's software to track wealthy clients' assets across all of their accounts - even those outside Morgan Stanley - to manage their assets better. Zelle, the peer-to-peer payments app, was developed by a group of big banks including JPMorgan Chase & Co and Bank of America Corp. It plans to launch later this year. In an earnings-related document, Morgan Stanley listed several other technology firms including cloud-based messaging service Twilio, data-analytics provider Cloudera and tax-software maker LifeYield, as partners it is using to modernize branches, communicate with customers and target clients who prefer digital options. Morgan Stanley has also made a number of key hires to build out its digital department, including Naureen Hassan, who joined as chief digital officer for the wealth business from Charles Schwab & Co Inc last year. The focus on technology is part of a broader strategy to increase profit margins in Morgan Stanley's wealth business to a range of 23-to-25 percent by next year, from a current 22 percent. As Gorman tells it, the technology can encourage customers to do more business with Morgan Stanley and allow advisers to use their time in more productive ways. Gorman feels "strongly" that Morgan Stanley will hit the 2017 target, he said. Morgan Stanley has also been trying to increase lending to wealth customers to bolster its bottom line. Since taking full control of the Smith Barney brokerage from Citigroup Inc in 2012, Morgan Stanley acquired a lush amount of deposits. It is working to put them to use through mortgages, lending against customers' investment portfolios and tailored loans that use fine art and other luxury items as collateral. Over the course of 2016, Morgan Stanley grew loans to wealth customers by 24 percent, to $55.3 billion. (Reporting By Elizabeth Dilts; additional reporting by Olivia Oran; Editing by Nick Zieminski and Lauren Tara LaCapra)
Morgan Stanley is partnering with 10 tech companies to improve the services offered in its wealth business. The bank has signed deals with firms including digital payments network Zelle and Addepar, which offers investment tracking software. These tools will help financial advisors do their job better, Morgan Stanley CEO James Gorman said. “Financial advisers are increasingly being asked to provide more sophisticated solutions for clients who want a better understanding of how they can invest better,” he said at an event on Tuesday.