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Morgan Stanley and Vanguard mutual funds

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I was a bit surprised about the decision at Morgan Stanley to stop using Vanguard funds and agree with Cullen’s comments on the topic. Then, I read something that pointed out that Morgan Stanley advisors will be free to use Vanguard ETFs. If that’s true, are we perhaps making too much of a deal out of this news? Morgan Stanley advisors will enjoy the same fee compression pressure as the rest of the wire houses and independent broker/dealer firms and fee- based advisory asset levels will continue to grow. If Morgan Stanley advisors utilize more fee-based accounts with low cost ETFs from Vanguard, Schwab, etc. — rather than fee-based accounts with low cost (and no-load) open ended mutual funds, then it seems to me the fiduciary rule won’t be violated.

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Posted by Steve W
Posted on 05/05/2017 12:23 PM
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Yeah, I don’t intend to make too big of a deal about this. But it’s setting a really bad precedent IMO. If you don’t want people to sell VG funds then just tell them not to. Banning the funds is not only a bad look, but it puts your advisors in a bad spot. I just don’t see what they gain from doing this.

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Cullen Roche Posted by Cullen Roche
Answered on 05/08/2017 2:09 PM
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    I agree that it seems like a bone-headed move. If Morgan Stanley clients ask why their advisor isn’t using VG open ended funds in their fee-based accounts – then what is the advisor supposed to say? Ins’t the truth something like “because VG won’t cough up the money to be on our platform?”

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    Posted by Steve W
    Answered on 05/08/2017 2:55 PM
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