Morgan Stanley courts employees of near-IPO companies for wealth management

By Tatiana Bautzer

NEW YORK (Reuters) - Morgan Stanley (NYSE:MS ) is looking to add employees of startup companies as wealth management clients as U.S. investment banks prepare for a revival of initial public offerings.

Last week, the bank signed an agreement with Carta, a shareholder management company for startups backed by private equity and venture capital firms. Carta estimates about 2,000 of its 40,000 clients are headed toward an IPO.

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

The bank would offer founders and employees retirement and investment advice, for example.

Bankers had been cautiously optimistic about a revival of IPOs in the third quarter. Following the elections this month, markets expect the administration of president-elect Donald Trump to soften regulations and reduce restrictions on deals, favoring capital markets activity.

"Wealth clients coming from workplace relationships, either during IPOs or when the company is already public, are usually younger than the average wealth client and have around 70% of their wealth in stocks of the company they work for," Finn said in a phone interview.

Morgan Stanley has about 19 million wealth clients, and most of the 1.3 million new clients it added in the last year came from workplace agreements.



The bank in 2019 bought Solium Capital, a stock plan management company, for $1.1 billion and rebranded it as Shareworks.

While capital markets have been sluggish, upcoming IPOs may include large companies that have been through multiple fundraising rounds with larger workforces, Finn added.

Source: Investing.com