Insights from the Morgan Stanley/E*Trade Merger

In light of the recent Morgan Stanley/E*Trade deal, we wanted to share what this deal could mean for you, your clients, and new prospects. Much of the below is a combination of articles written about the deal with some beneficial takeaways and insights.

The Deal

Financial service firms are moving out of their comfort zone.2

Morgan Stanley is buying online broker E*Trade for $13 billion in an all-stock deal, a move that shows how serious the Wall Street giant is about catering to everyday consumers.1 Aligning a strategy to deliver their offerings more efficiently and broadly at scale.

Morgan Stanley will merge its full-service, financial-advisor-driven business model with E*Trade’s digital brokerage and banking business.2 “MS was attracted to ETFC’s digital D2C broker offering,” a Credit Suisse analyst wrote about the combo.6 They don’t want to be limited to just one lane on the highway. They want to reach across various (ALL!) customer segments.” 2

TAKEAWAY: Providing a digital solution that offers fractional share capabilities, round up capabilities, and a mobile platform will help grab the attention of the younger customer base. This group tends to get overlooked when there is actually a lot of business to be made. $30 trillion is projected to pass down from Baby Boomers to Gen X to Millennials. (CNBC)


Reaching All Investors

Some of the most recognizable names on Wall Street, such as Morgan Stanley and Goldman Sachs, are scrambling to cater to all types of investors — not just the richest Americans.2 It’s also about everyday investors of more moderate wealth. It’s a “plant the seeds now and harvest them later” strategy. “This industry for three decades or more has always been moving upmarket,” said Dennis Gallant, a senior analyst at consulting firm Aite Group. “All firms are [now] moving to target smaller investors.” This “land rush” for more mom-and-pop investors, Gallant said, is a positive trend for consumers, putting financial advice at the fingertips of a population that hadn’t previously had access.2

Digital technology has helped usher in a dramatic shift among financial service firms, which can leverage the technology to reach everyday investors more profitably and also get a better view of overall household finances — not just investments, but other areas such as debt. That helps firms serve as a one-stop-shop for consumers’ financial needs, analysts said.2

TAKEAWAY: Morgan Stanley spent a great deal of money to be in the direct to consumer market. A digital technology solution is no longer a “nice to have” feature but rather table stakes if the Credit Unions and Banks desire to keep their clients from the TD Ameritrade/Charles Schwab brands and the newly created Morgan Stanley/E*Trade bank products.

Implementing a digital technology offering will create an opportunity for your firm to reach more investors profitably, in addition to smaller accounts and next gen clientele.  With the scalability a digital technology offering provides, you can attract and service accounts of all sizes, opening your brand up to new markets and new revenue channels.


Offer More. Reach More.

Pizzi and Gorman both talked about how the addition of E*Trade will also allow Morgan Stanley to offer more traditional banking services, such as checking and savings accounts, to E*Trade’s younger consumer base.1

Between zero trading commissions and competitive yielding savings accounts and cash management products, the competition for consumers’ cash and investments is as fierce as ever,” said Greg McBride, chief financial analyst for “And this reaches a broad spectrum of households, it isn’t just the ultra-wealthy that are in demand.” 4 If you’re in the financial services industry in any way, shape, or form, you’re in a race to gather assets.

TAKEAWAY: The E*Trade – Morgan Stanley deal, or the Credit Karma – Intuit deal is really about providing streamlined operations, lowering costs, increasing margins and gaining more data. Offering that digital solution will help you compete in today’s technological world and attract or keep the type of end customers that Morgan Stanley just paid $2,500 an account for.


Everyone’s a Tech Company

Big banks these days love to say that they’re really tech companies. What they usually mean by that is that they employ a lot of software engineers and talk a lot about machine learning and blockchains. But the other thing that it often means is that they’d rather be in the business of selling software subscriptions, building electronic platforms, and charging people recurring fees to use the platforms, than be in the business of financial intermediation. The historical business—much of the historical purpose—of the big investment banks, using their own capital to facilitate financial transactions, is just not that appealing these days. The money these days is in websites.3

TAKEAWAY: You have made the decision to look into a digital offering for your business. Where do you start? Look for a reputable tech company, a company who knows how to seamlessly integrate your business and a digital offering together. It is important to note there are businesses out there who acts as though they are tech companies, but in actuality they are just trying to maximize profits. Remember, technology needs to be at the core of company culture, not an afterthought.


The Answer: Technology

Democratizing digital access is about lowering fees, minimums and other barriers people face — like confidence.5 Brand names in the Wealth Management, RIA, Credit Union and Bank Channels have a tremendous opportunity to increase both the Average Revenue Per User as well as the loyalty of their customer base through the use of technology like never before.

TAKEAWAY: The ability and need to balance digital efficiency with human expertise is a necessary combination for any financial services company moving forward. (Think bricks and clicks for the retailers of the mid 2000’s.) A digital investing platform is an electronic platform that allows you to compete in today’s digital world. These companies are directly coming after your clients…do you have an offering that will give your clientele what they want and need? 



Using a digital technology solution is how you compete with all the competitors coming after your clients. FusionIQ’s digital investing platform positions you as the solution for your clients, allowing you to defend and grow your book of business while also attracting new clients.


  • More Business. This platform gives you the ability to attract and service more investors, traditional smaller accounts in addition to next gen clientele.
  • Offer a Digital Experience. Give your clients an easy to navigate dashboard so they can view their financial picture clearer and in real-time.
  • Deliver More. The platform can deliver your proprietary models and supports third-party models.
  • Build Your Brand. The platform looks and feels like your brand, along with being configured to your specifications on multiple devices.
  • Client Engagement. The platform creates a new revenue source that encourages increased client engagement. Majority of clients want to be communicated with in real-time.

Please let me know if you have any questions. We would be happy to discuss any thoughts or comments further. Thank you.


Mark C. Healy
Head of Strategic Partnerships
631.742.9805 |

John Guthery, CFA <br> Chief Investment Officer
John Guthery, CFA
Chief Investment Officer

John is a highly respected investment executive, bringing more than 27 years of experience to his role as Chief Investment Officer for FusionIQ. As CIO, John focuses on developing advisor platforms and business lines including finTAMP and Digital Model Marketplace. He also contributes to FusionIQ’s thought leadership and market analysis.

John’s extensive financial services background includes leading market research, due diligence and platform enhancements for top-tier wealth managers including LPL Financial, where he spent 19 years running product research, Park Avenue Securities, Voya Financial and WP Carey where he helped to design and manage public and private real estate funds and public BDCs. | Connect on LinkedIn

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