Client trading activity was high last year, but in 2021 it’s “off the charts” at Morgan Stanley’s platform for self-directed investors, according to CFO Jonathan Pruzan.
Daily average trades are 50% higher year-to-date than they were in the fourth quarter when Morgan Stanley averaged 1.1 million, Pruzan said.
And client engagement has soared in the first quarter as self-directed investors have opened more new accounts at the firm in 2021 than in the third and fourth quarters of 2020 combined, according to Pruzan, who spoke at a
The CFO’s comments come as Reddit-driven investors have sent shares of companies like GameStop skyrocketing. Robinhood, the free trading app, has been a focal point in the ongoing GameStop saga. While Morgan Stanley’s traditional wealth management business tends to focus on affluent and wealthy investors seeking financial advice, the firm has a big platform for DIY investors since it acquired E-Trade last year. Morgan Stanley’s traditional channel served about 2.5 million households at the end of the fourth quarter; its self-directed platform served 6.7 million,
Meme stock traders took their latest cues from a cryptic tweet and favorable short-seller report.
Although Pruzan said that “self-directed platform engagement has performed extraordinarily well,” he cautioned that this did not necessarily indicate a change in risk tolerance, since investors on the self-directed platform may also maintain managed accounts at Morgan Stanley or elsewhere.
Pruzan also suggested that part of the surge in such activity might be due to the pandemic and the new work-from-home environment millions of Americans have found themselves in. “Whether that evolves when people go back to work, we’ll have to see. But right now retail engagement is at levels we haven’t seen before,” he said.
It was Morgan Stanley’s acquisition of E-Trade that allowed it to implement a three-pronged strategy to reach more self-directed investors and potential clients. The firm has expanded into workplace benefits, which it sees a pipeline of future clients. With E-Trade’s and its internal metrics, Morgan Stanley now has direct insights into investor behavior across the wealth spectrum, from small accounts and DIY clients to the ultrawealthy, according to Pruzan. In the future, that may help the firm identify business opportunities.
“Our ability to analyze investor behavior is extraordinary,” Pruzan said.
