Morgan Stanley Courts Startup Employees With Stock-Plan Deal

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Morgan Stanley

MS 0.13%

is betting a partnership in Silicon Valley will lead to new long-term clients for its wealth-management business.

The bank said Tuesday that it struck a deal with Wilson Sonsini Goodrich & Rosati to take over the stock plans the law firm manages for thousands of clients. Terms of the deal weren’t disclosed. Startups often offer stock as part of an employee’s pay. Wilson Sonsini created its own stock-plan software decades ago to help clients track the value of their employees’ holdings as companies matured from early-stage startups and raised outside money to finance their growth.

Morgan Stanley is pushing into stock-plan administration as an early entree into the financial lives of a new generation of customers. Some of those clients, the bank hopes, will turn to it for more lucrative services, such as advice, as their needs grow more complex. The digitization of finance has unleashed low- or no-cost services, such as commission-free trades and zero-fee investment funds, that money managers are deploying to attract new clients.

The Wilson Sonsini agreement aims to give Morgan Stanley a leg up in cementing connections with startups and their employees before a possible public offering. Some will become millionaires overnight; Google Inc., LinkedIn,

Twitter Inc.


Lyft Inc.

are among the companies the law firm helped take public.

Morgan Stanley paid $900 million to acquire Solium Capital Inc. in 2019, adding a platform that specialized in privately held firms and last year bought E*Trade Financial Corp., which manages stock plans for hundreds of companies, for $13 billion.

“This agreement, along with the acquisition of Solium and the corporate-services business from E*Trade, is a part of our long-term strategy to be the premier provider of financial solutions to workplace employees,” Jed Finn, head of corporate and institutional solutions for Morgan Stanley’s wealth-management business, said.

The Wilson Sonsini clients’ employees will gain access to other services, including Morgan Stanley’s financial-wellness programs, self-directed investing accounts and student-loan consolidation plans offered by E*Trade, and the bank’s network of financial advisers.

The partnership may also forge stronger ties between those clients and other Morgan Stanley businesses, including its investment bank.

Morgan Stanley manages plans for more than 3,900 companies and their 4.9 million employees, and expects to add several thousand corporate clients through its arrangement with Wilson Sonsini, people familiar with the deal said.

Morgan Stanley’s wealth-management business has $4 trillion in client assets.

The Wilson Sonsini clients aren’t required to migrate to Morgan Stanley’s platform, and those who do move to the bank won’t have to pay more than they had previously to track stock plans, the people said.

Wilson Sonsini plans to phase out its own stock-plan software. In recent years, a group of upstart and established financial-services firms have seized on the employee-stock-plan business, investing heavily in technology that offered companies an array of new services.

Carta Inc., a startup backed by Andreessen Horowitz, and

Nasdaq Inc.’s

Nasdaq Private Market have launched exchanges to help private-company employees and investors trade their shares.

Write to Justin Baer at [email protected]

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