Blue Chip Morgan Stanley to Buy Discount Broker E-Trade

The move will expand the bank’s access to well-heeled but not superrich investors — known in the trade as the mass-affluent segment — a sought-after group estimated to encompass more than 20 million households in the United States.

In addition to capturing the trading business that E-Trade brings, Morgan Stanley could use the brokerage as the vehicle for delivering other products and services, such as shares of initial public offerings it has underwritten.

In Mr. Gorman’s words, the combination would unite Morgan Stanley’s “full-service, adviser-driven model” with E-Trade’s “direct-to-consumer and digital capabilities.”

Michael McTamney, who researches banks for the ratings agency DBRS Morningstar, said the deal accelerates Morgan Stanley’s growth plans. The bank already had a strong high-net-worth client base, he said, and now “they’ll be able to bring in this next generation of wealth via the E-Trade platform.”

The deal would not be Morgan Stanley’s first with a retail stock brokerage. It merged with Dean Witter Reynolds two decades ago, only for the marriage to founder amid a clash between Morgan Stanley’s Wall Street aristocrats and Dean Witter’s more down-market brokers.

Morgan Stanley’s traditional rival, Goldman Sachs, has also sought to court Main Street, in a different way. Goldman created a retail-focused lending arm, named Marcus, in 2016 and partnered with Apple last year to offer a credit card.

Last month, Goldman said that it intended to grow its retail deposit base to $125 billion, and its consumer loan and card balance to $20 billion, over the next five years.

Article source: https://www.nytimes.com/2020/02/20/business/dealbook/morgan-stanley-etrade.html