Morgan Stanley's big bet on winning over unicorn startup employees is starting to pay off
- Morgan Stanley's chief financial officer said Thursday that the firm's newly acquired Solium Capital - now known as Shareworks by Morgan Stanley - has won 265 corporate clients the deal closed in May.
- Shareworks runs a platform for tracking a host of companies' employees' stock awards and options - typically enjoyed by many start-up employees who may eventually become full-fledged wealth management clients of Morgan Stanley financial advisers.
- The Solium deal gives Morgan Stanley greater access to a younger client base, its CFO said.
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Morgan Stanley's largest acquisition since the financial crisis and a big bet on a younger generation is drawing in new clients, an indication the firm is continuing to double down on its boring, yet steady wealth management business.
The firm's chief financial officer, Jonathan Pruzan, said Thursday that the firm's newly acquired Solium Capital - now known as Shareworks by Morgan Stanley - has won 265 corporate clients since the $900 million deal closed in May.
"In terms of the economics and how we think about this business, it was really to get access to a younger and different client base," he added. "It's a direct channel."
Shareworks runs a platform for tracking a host of companies' employees' stock awards and options - typically enjoyed by many start-up employees who may eventually become full-fledged wealth management clients of Morgan Stanley financial advisers. Solium has more than 3,000 stock plan clients, with one million participants, including fast-growing companies like Instacart, Shopify and Stripe.
The growth comes as competition ratchets up across the wealth management spectrum. Legacy wealth managers like Morgan Stanley and rival UBS along with newer - and dirt-cheap - digital entrants are vying for younger customers' dollars as analysts expect a massive wealth transfer in the coming years.
"We're going to start using our digital tools, our virtual advisers, to provide service for those clients, and they'll be priced competitively," Pruzan said. "And we still think the economics of that channel and getting into that business is a very attractive one for us."
The Shareworks deal was also a play for assets that clients hold away from the firm they hope Morgan Stanley's financial advisers can instead oversee. Shareworks employees have $1.5 trillion of assets in other accounts.
The firm's wealth management business reported $2.6 trillion in clients assets, a 3% rise from a year ago, and a 1% dip in annualized revenue per representative. Pre-tax income of $1.2 billion rose 4% from a year ago.
The unit's adviser headcount dropped by 102 people compared to the same time last year. Total representatives fell to 15,553 from 15,655 one year ago.