Morgan Stanley Targets Startup Employees for Wealth Management

By Tatiana Bautzer

NEW YORK (Reuters) – Morgan Stanley (NYSE:MS) aims to recruit employees from startup companies as wealth management clients, anticipating a resurgence in initial public offerings (IPOs) in the U.S.

Last week, the bank signed an agreement with Carta, a shareholder management firm supporting startups backed by private equity and venture capital. Carta estimates around 2,000 of its 40,000 clients are on the path to an IPO.

"Participants within these companies will need not just equity administration but all the advice, guidance, and financial planning associated with a significant liquidity event," said Jed Finn, head of Morgan Stanley Wealth Management.

The bank plans to provide retirement and investment advice to founders and employees.

Bankers have expressed cautious optimism about a resurgence of IPOs in the third quarter. Following this month’s elections, markets anticipate that the incoming administration of president-elect Donald Trump will loosen regulations and ease restrictions on deals, enhancing capital markets activity.

Finn noted that wealth clients arising from workplace relationships, whether during IPOs or after a company goes public, are generally younger than average wealthy clients. They often hold about 70% of their wealth in the stock of their employer.

Morgan Stanley currently has approximately 19 million wealth clients, and most of the 1.3 million new clients added last year originated from workplace agreements.

In 2019, the bank acquired Solium Capital, a stock plan management firm, for $1.1 billion, rebranding it as Shareworks.

Despite sluggish capital markets, upcoming IPOs may involve major companies that have undergone multiple fundraising rounds and expanded their workforces, Finn added.