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Got less than $680,000 to invest? Morgan Stanley doesn’t want your business

Morgan Stanley Wealth Management is shifting its focus to cater to Australia’s affluent individuals, while collaborating with wealth manager Ord Minnett to handle clients with lower net worth. According to the Australian Financial Review, customers possessing less than A$1 million in assets (US$683,000), will be given ‘the option’ to transfer their accounts to 472 employee Ord Minnett. The US firm claims this strategic move allows it prioritize high-net-worth accounts, not-for-profits, and family office funds.

The decision to reevaluate its client base arose from Morgan Stanley’s exposure to inactive wealth management clients with less than A$1 million. The company has decided that the associated costs and time required to conduct Know Your Customer and Anti-Money Laundering checks on these accounts outweigh the returns, impeding the firm’s ability to concentrate on more affluent clientele.

Morgan Stanley informed its team of 103 financial advisers in Australia about the review this week. The next step involves notifying eligible clients who can migrate their accounts to Ord Minnett.

A spokesperson for Morgan Stanley emphasized their commitment to providing a top-tier offering for high-net-worth, ultra-high-net-worth, and not-for-profit clients in Australia. The firm has initiated a formal review process, which is expected to conclude within several weeks.

Once the review is completed, impacted clients will be contacted and presented with alternative solutions, where appropriate, ensuring a smooth transition.

It’s worth noting that the collaboration with Ord Minnett does not involve the sale of assets or branches to the stockbroker. Clients with assets below $1 million can also choose an alternate money manager instead of transferring to Ord Minnett.

Australia’s Hayne royal commission in 2018 exposed alleged misconduct within the wealth management and financial advisory sector, prompting significant changes in how wealth advisers operate. The subsequent increase in regulations for advising less-wealthy clients, combined with heightened tertiary