Morgan Stanley Gobbles Up E*Trade; $13 Billion Deal Adds Mass Affluent ‘Tech Heavy’ Revenue Diversification To Global Brand

Morgan Stanley keeps flexing its muscles across a multiplicity of finance and wealth management opportunities. Moving beyond recruiting and organic growth in its wealth management division, Morgan Stanley is set to add E*Trade to its brand aspirations.

Per multiple media reports this AM:

“E*TRADE represents an extraordinary growth opportunity for our Wealth Management business and a leap forward in our Wealth Management strategy,” said James Gorman, Chairman and CEO of Morgan Stanley, in a press release. “In addition, this continues the decade-long transition of our Firm to a more balance sheet light business mix, emphasizing more durable sources of revenue.”

Some initial details of the deal are as follows:

“Morgan Stanley will pay $58.74 a share in stock for E-Trade in a deal bringing together $3.1 trillion in client assets. Morgan Stanley shares fell more than 4% in premarket trading. E-Trade shares jumped about 23% to $55.16 per share.”

The immediate question to be asked: how does this affect Morgan Stanley’s legion of HNW and UHNW advisors across the country? Does E*Trade become a low cost/robo type of service for accounts under $500k? When the deal closes and the integration of the online broker is finished, does the comp plan change to reflect the ‘laying off’ of accounts that don’t meet a certain threshold?

Our guess would be yes. The acquisition of assets that exist at E*Trade will be accretive to Morgan Stanley’s bottom line – but it may have a different result for advisors who call the firm home.