Morgan Stanley’s RoboAdvisor Is ‘For the Children’

Robo-advisors are coming, just in time for the next generation.

Morgan Stanley is launching its own robo service in the fall of this year, as a way to more directly benefit its clients, the incumbent recently announced. The service is geared more towards the coming wave of consumers than the current, according to Andy Saperstein, co-head of Wealth Management for Morgan Stanley.

Saperstein noted at yesterday’s Deutsche Bank Global Financial Services Conference:

So we’ll launch our robo in the fall, which is effectively [a] self-directed type offering. It’s more of an accommodation towards children of existing clients, we’ll leverage it in our stock plan business, which has already 5 million participants and growing, because that’s the right challenge to be able to appropriately attract those types of clients.

Taking this type of dynastic approach with a new technology—i.e., building a specific offering so the children of your client’s children will stick with the bank—seems a fitting way for developing a financial product that relies on machine learning and artificial intelligence technology, like a roboadvisor.

The incumbent, which will reportedly pilot the service with 500 of its human advisors this coming July, is (like many others) taking a hybrid approach with the technology.

Its robo will provide detailed recommendations for a client’s portfolio to one of the bank’s human advisors, who will then use that information to assist the client—and, eventually, that client’s children.

According to Saperstein:

The third aspect of our digital strategy is really about empowering the advisors digitally with the ability to engage their clients more.

What you can do digitally through artificial intelligence or machine learning or different types of algorithms is just [look] through all of the information that’s out there in the world, and come up with customized recommendations for clients and present them to advisors, who then have the expertise, the understanding of the client. It’s a significantly better way to serve clients across the entire book much faster and, frankly, more effectively.

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