Launched in December 2017, Morgan Stanley Access Investing is a robo-advisor aimed at younger investors, particularly millennials. Access Investing provides automated investment advice that leans heavily on Modern Portfolio Theory (MPT) principles. Morgan Stanley describes the program as an entry tool, allowing financial advisors to “grow their book of business by making connections with prospects earlier and eventually establishing full service relationships when clients are ready.”
New clients can designate narrow portfolio themes, adding socially conscious or emerging tech exposure that will appeal to many younger investors. Account diversity is disappointing, with 401(k) rollover, individual taxable, traditional IRA, and Roth IRA account types. There are no joint accounts for spouses or partners, no college savings accounts, and no trust accounts.
Competitive advisory fee
Based on best modern portfolio management practices
Top-tier financial institution
Offers socially conscious investing options
No performance data
Can't speak with a financial advisor
High fund expenses
Weak goal planning and tracking tools
The account setup process for Morgan Stanley Access Investing is easy and intuitive. A well-constructed setup process asks you to pick and name an investment goal from a list and follows up with questions about your age, assets, initial and ongoing contributions, and time horizon. Questions around your risk tolerance and investment objectives complete the profile, generating one of three core portfolios, customized by objectives and thematic options that include socially conscious choices.
The questionnaire can be completed anonymously and saved for up to 90 days before funding the account. Your profile is used to populate your portfolio with relatively expensive ETFs and mutual funds, adding some hidden costs that can add up. You can ask for reasonable restrictions on what is in your portfolio, but you can’t carry out trades within the account or make other changes without retaking the questionnaire and providing different answers.
A $5,000 minimum is required to fund your portfolio, which can be designated as an individual taxable account, traditional IRA, or Roth IRA. New clients can also roll over a 401(k) or other qualified retirement plan held with a former employer.
Goal setting and tracking tools are underwhelming for a top-tier financial institution. The goal list has been constructed for younger investors, with topics that include paying for a wedding, saving for retirement, general income growth, starting a business, paying for your education, and buying a car. Unfortunately, you can’t speak with an advisor as part of this process, and the goal tracking resources lack tools or procedures to proactively determine if investments are on track. In addition, the goal can’t be changed once it is funded, potentially forcing you to open a second account.
The account management interface features basic performance data, trading activity, account services, and long-term financial projections stretched across an axis that subdivides favorable, average and unfavorable market conditions. The fine print states that the automated system will alert the client whenever the portfolio risks “missing the goal,” prompting additional contributions. This can be spun as goal tracking, but it lacks the sophistication that other platforms have introduced for keeping investors engaged and on track.
Goal setting resources available to clients are similarly underwhelming, with Ideas and Expert Insights blogs featuring high-level reports but few basic tutorials and no goal planning calculators, tools, or “how-to” articles. In addition, articles are presented in a linear format, with no search boxes, tables of contents, or breakdowns between basic, intermediate, and advanced topics.
When it comes to account services, Morgan Stanley’s Access Investing has all the basics you would expect from a firm of its pedigree. Access Investing provides ongoing portfolio management and funding options that include mobile check deposit. You can make deposits, set up recurring deposits (monthly only) and initiate withdrawals through the account interface. Interest is paid on your unallocated cash through an FDIC-insured overnight sweep into affiliated banks. Morgan discloses that it receives payment for order flow through those institutions, potentially reducing interest paid to clients.
Access Investing offers you an impressive selection methodology, but it comes at the cost of higher than average fees. Mutual funds and ETFs populate Performance Seeking or Impact portfolios that combine elements of active and passive management, while a Market Tracking portfolio focuses on low-cost index ETFs. Content methodology further subdivides into one of five investment models and one of eight thematic headings, adding a great deal of flexibility. The investment models follow the classic risk scale, labeled as wealth conservation, income, balanced growth, market growth, and opportunistic growth.
Social and high-tech themes add the final customization layer, giving you the opportunity to choose from the following categories:
- Global Frontier
- Defense & Cybersecurity
- Emerging Consumer
- Inflation Conscious
- Gender Diversity
- Climate Action
The portfolio management through Access Investing is generic, but that is all most investors need. The portfolio is managed through Morgan Stanley’s proprietary goals-based wealth management technology, guided by investment experts. The approach follows basic MPT principles, stressing the benefits of diversification and investing early to achieve long-term financial goals. As with rivals, algorithms don’t base decisions on market timing or short-term performance. Your portfolio is rebalanced whenever assets drift 5% or more from intended allocations. Portfolios also rebalance automatically on a quarterly basis. Tax harvesting is available at no charge as an opt-in feature for taxable accounts.
The website is mobile-ready and easy to read. Access Investing promises a fully mobile-optimized experience, allowing you to “access accounts across all devices.” Curiously, Morgan Stanley Wealth Management’s dedicated and full-featured Android and iOS mobile apps aren’t mentioned or linked anywhere on the website, forcing visits to Google Play and the Apple Store to actually get them on your device.
Access Investing is part of the wealth management section of the massive Morgan Stanley website, and finding the program can take a few clicks because it is just one of many offerings. A useful but incomplete FAQ fails to complement a professional marketing presentation that has been written for the layperson. This forces you to hunt for details through disclosures and other fine print.
Support is available by phone and email, but Morgan Stanley does not list service hours and there is no live chat for prospective or current clients. Contact attempts produced a variety of waiting times, averaging three minutes and 25 seconds. This is a slower-than-usual telephone response, and a representative on one call wasn’t knowledgeable about the basic program when we did get through. A dedicated FAQ contains too much general information and not enough details, again forcing you to slog through legal documents.
Education & Security
Educational resources that are available to you through Morgan Stanley Access Investing are extensive. In fact, this may be a case of too much of a good thing, as the sheer amount of educational material can be overwhelming for newer investors. The unwieldy size of the resources is compounded by the lack of a search function, table of contents, or breakdown by experience level.
The security is sufficient and meets the industry standard. The website uses 256-bit SSL encryption, while the mobile apps support two-factor authentication. The wholly owned Morgan Stanley Smith Barney LLC holds client funds, providing access to Securities Investor Protection Corporation (SIPC) and excess insurance.
Commissions & Fees
The robo-advisor charges a competitive 0.35% advisory fee for assets under management, paid quarterly, and there are no termination fees. However, the actual portfolio content may carry high expenses, potentially lowering your annual returns. This is especially true when populating your portfolio with socially conscious and high-tech funds, which can be quite expensive.
Morgan Stanley publishes a disclosure of estimated expense ratios for each sub-category, along with a listing of each category’s mutual fund and ETF universe. Performance Seeking and Impact portfolios generate high fees for an automated program, averaging between 0.31% and 0.61%. While the limited focus of some of these portfolios no doubt require more work to maintain, it is difficult to justify expense ratios over 0.30% in a robo-advisory offering. In contrast, the Market Tracking portfolio generates the lowest cost with expense ratios between 0.07% and 0.12%. In addition to the large fee differential of the funds, Morgan Stanley collects payment for order flow by directing trades to certain liquidity providers and fund families, potentially adding another hidden cost.
Is Access Investing a Good Fit for You?
Access Investing is aimed at the millennial generation, with age-appropriate goals, thematic investing, and excellent mobile access. However, the high $5,000 minimum, lack of joint accounts and hefty mutual fund fees may pose barriers to entry for many individuals who finally have the assets needed to fund long-term investment plans. It is likely that Morgan Stanley has taken these limitations into account and is seeking the most affluent young investors in hopes that they upgrade to full service in coming years.
If you are planning to have a long-term relationship with Morgan Stanley, then Access Investing is a good entry point. The affluent millennials that Morgan Stanley is after are probably not as fee-conscious as retail investors with limited capital tend to be. Moreover, Access Investing has clearly put some effort into creating portfolio categories that will interest young, affluent investors. Finally, there is an undeniable level of prestige that comes with having your portfolio at Morgan Stanley. After all, the firm can trace its roots back over one hundred years to the House of Morgan that the legendary J.P. Morgan built. However, if you are not a socially conscious, affluent investor with capital to invest into the Morgan Stanley brand, there are more affordable options in the growing robo-advisory space.
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