Morgan Stanley’s newest digital tool is only two months old, but the road to getting it here was much longer in the making.

“If you want to build one of these, it takes about six years,” said Jeffrey McMillan, chief analytics and data officer at Morgan Stanley. He was referring to the firm's "next best action" tool that analyzes an advisor's book to identify opportunities to connect with clients.

Yet even as the firm takes measure of its latest product launch, executives already have their eyes set on the next frontier for AI-driven technologies — a tool that could give advisors recommendations on how to handle emotionally-charged situations.

“It’s my view that we as an industry need to move up the value curve,” McMillan said the 2018 In|Vest Conference.

Jeff McMillan of Morgan Stanley speaks at In|Vest Conference
“It’s my view that we as an industry need to move up the value curve,” said Jeff McMillan, chief analytics and data officer at Morgan Stanley, at the In|Vest Conference.


Advisors, he added, are no longer simply providing investment advice. “They’re talking to you about divorces. They’re talking to you about having a child with a long-term disability, about a parent with dementia.”

McMillan said there are advisors and experts who have knowledge on how to better handle these issues, and he wants to see Morgan Stanley gather this knowledge, and share it with its advisors in a scalable way.

But like the firm's other technology projects, this would be no easy task.

Developing such a tool would entail experts going through thousands and thousands of phone calls, evaluating and logging good from bad answers, McMillan said. For more niche issues, it would require sitting down with experts, going over scenario after scenario with questions and answers to develop a corpus of knowledge. He emphasized that Morgan Stanley is not trying to create a bot that communicates directly with clients, preferring the advisor remain in the driver's seat.

McMillan agreed that taking the technology to that level would be similar to that of building the Encyclopedia Britannica. But while this kind of development is years away, it’s the direction Morgan Stanley has been looking toward.

The firm's "next best action" tool is one example of the firm's long-term approach to technology investments. First announced in 2017, it has been available to the firm’s roughly 15,700 advisors for two months. Advisors receive recommended actions to take for each client based on asset allocation, tax situation, preferences and values, McMillan said. For instance, an advisor might be prompted to send a customizable email notifying a client that it might be opportune to set up a 529 savings plan for a newborn grandchild.

The firm hopes that putting such tools in the hands of advisors will boost client engagement, and ultimately the bottom line.

“As long as they are pressing the button, and as long as they understand what the algorithm is telling them to do and why it’s telling them to do it, they love it because they know they can’t communicate with 250 clients the day the market dropped,” McMillian said. “They know they’re not engaging that $30,000 IRA as frequently they want to or should.”

Jessica Mathews

Jessica Mathews

Jessica Mathews is a reporter for Financial Planning, On Wall Street and Bank Investment Consultant.