By Jayson Forrest - Managing Editor  - IMAP Perspectives

This year’s awards finalists represented a range of organisations with quite different approaches to portfolio management and client engagement. The Licensee Managed Account category was supported by BlackRock, which provided the judges with the Aladdin risk management tool to use for the comparison and assessment of portfolios.

According to IMAP Chair and judge, Toby Potter, when considering the Licensee Managed Account category, the judges were not just appraising the licensee’s portfolio construction process, but also portfolio consistency, its investment philosophy, availability of resources, and client communication.

“It was important for the judges to consider the way in which portfolio objectives were set out for advisers and their clients. This includes the way in which clients are taken on the investment journey, and the way in which the advice process is made manifest to them,” says Toby.

Morgan Stanley Wealth Management’s approach to investing and asset allocation is driven by research. With a global research team comprises of 750 analysts, strategists and economists, the manager takes a bottom-up view to investing. And with the Morgan Stanley research team operating out of 21 countries, team members are able to provide local insights, which helps drive the manager’s thinking.

“In Australia, we draw on the research, resources and intellectual property of Morgan Stanley Wealth Management in the United States, localise it and make it fit-for-purpose for our Australian clients. That’s where our local portfolio implementation committee gets involved,” says Nathan Lim - Head of Wealth Management Research at Morgan Stanley Wealth Management Australia. “And with manager selection, we leverage a lot of the portfolio management best practices we get out of Morgan Stanley Wealth Management in the United States.”

Joining Nathan and Alex as the two portfolio managers on the investment committee at Morgan Stanley Wealth Management Australia, are three analysts: Wayne Chatterjee, Sharmeel Suka and Sophie Egan. Their job is to pull together the considerable resources and intellectual property of Morgan Stanley for the Australian market. It’s a job not for the faint-hearted!

In explaining Morgan Stanley Wealth Management Australia’s SMA offering, Nathan says it’s essential for the manager to be “flexible but decisive” with its decision-making, which means being willing to change its position if the facts behind an investment decision changes.

“At Morgan Stanley, we are very research driven. We are led by deep reflection and analysis on the circumstances at hand and where they suggest we are going,” he says. “The reality is, things change and they can change quickly. And once change happens, you have to make adjustments.”

Strategic Asset Allocation (SAA) underpins Morgan Stanley’s approach to investing, with Tactical Asset Allocation (TAA) used to anticipate and respond to changes in the macro environment. This enables Morgan Stanley to take advantage of opportunities through that research process.

“We blend that research-based approach with actual implementation for the client, which is how we bring the two together,” says Nathan.

It’s an approach that Alex supports, adding: “Everything we do is always backed by research. Our investment process is very robust, which shows in the consistency of our performance.”

The typical client using Morgan Stanley’s SMA offering tends to be older and financially independent, who wants a transparent and flexible investment solution. These clients also see value in managed accounts in the way their investments are managed, which forms a key part of Morgan Stanley’s overall client value proposition.

Firstly, Nathan says the SMA structure is particularly good for those clients who want a core-satellite approach to investing. He explains: “These clients will have a core that they will put into our multi asset model portfolio solution, but at the same time, they want to leave an allocation or a sleeve for opportunities that might crop up.

“For example, clients might want to take advantage of a global IPO or they might want to take a look at a structured note. These clients want to have the ability to tap into broader product offerings. So, having that core-satellite approach enables them to not worry about the bulk of their day-to-day wealth, but have the flexibility to examine opportunities as they arise.”

And importantly, Nathan believes Morgan Stanley’s SMA offering provides clients with exactly what they want; the ability to fully leverage the business’s deep intellectual capability by allowing it full discretion over their portfolio.

“It’s this approach to investing, by leveraging our considerable global capability and investment expertise, that provides our clients with the peace of mind that their portfolios are being managed in the best way possible.”

But it’s not just the retail market Morgan Stanley is exceeding in, with Alex quick to add that this year, the business has also had tremendous success with its SMA offering in both the wholesale and not-for-profit markets - particularly, with charitable foundations.

“It has been pleasing to see growth in the not-for-profit sector because that’s where our approach to portfolio management really sits well with these sophisticated investors, who have very specific needs and investment goals,” says Alex

This year’s judges were also impressed with the systems in place at Morgan Stanley to communicate portfolio changes to both advisers and clients. At the heart of its approach to stakeholder communication is Morgan Stanley’s democratisation of information, which is evenly distributed across the business.

“Whether you’re an internal or an external client, all clients get access to the same information at the same time. There is no uneven distribution of information concerning changes to investment portfolios,” Nathan says.

“There are ‘Chinese walls’ between our research and product departments. So, when the research department says it’s time to start selling down some of our international exposure, when that decision is made, we release that information simultaneously to everybody across the business.

“That means whether you’re part of an internal team on the product side implementing client portfolios or you’re an external client, everybody gets that same feed of information at the same time. There is fairness in the way we distribute our content.”

Alex agrees, adding that “first and foremost, we are a research driven business”. On average, Morgan Stanley’s TAA views are published every 4-6 weeks. Its portfolio changes and rebalancing are made on the back of that published research, which is made available to all stakeholders at the same time.

“That means all our clients’ portfolios are rebalanced at the same time,” says Alex. “Portfolio transparency and client communication is at the core of everything we are doing at Morgan Stanley.”

It’s no easy undertaking to consecutively win the prestigious Licensee Managed Account category in the IMAP Awards - a first by any licensee in this category. It’s a remarkable achievement.

“Winning this award needs to be shared amongst all the departments within Morgan Stanley Wealth Management Australia, as well as with our global network, which provides the Australian business with incredible support and resourcing,” says Alex.

Nathan agrees that Morgan Stanley’s track record of success can never be attributed to just one individual, rather, it remains - as it always has - a collective team effort.

“People have a tendency to associate investment performance with personalities, like a Nigel Douglas or a Kerr Neilsen. However, what makes us really special at Morgan Stanley is - ‘we are Morgan Stanley’,” says Nathan. “The faces may change, but there is always continuity in what we do.

“At Morgan Stanley, there is always somebody providing a new idea or a different perspective. We are constantly challenging ourselves internally, which is a good thing.” 

Importantly, Nathan adds that the award also reaffirms that Morgan Stanley Wealth Management Australia’s value proposition for clients is amongst the best in the country.

“And that’s really satisfying for all of us in the team, because it supports what we’re actually aiming to deliver, which is to provide our clients with the best possible client experience and investment outcome.”

IMAP congratulates all the finalists in the Licensee category for 2021

• • Alvia Asset Partners
• • Crystal Wealth Partners
• • GPS Wealth
• • Morgan Stanley Wealth Management Australia