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Morgan Stanley's Global Wealth Technology Turnaround

A new network, a services-oriented architecture, and new portals for salespeople, financial advisors and customers have produced dramatic results for Morgan Stanley's Global Wealth Management Group.

Morgan Stanley executives don’t mind describing the dire straits their firm was in in fiscal year 2005. "The general view of Morgan Stanley’s retail technology was that it was substandard," says James Wiggins, the firm’s executive director. "It was trailing a lot of other players in the quality of speed and software available."

"Morgan Stanley was lagging behind its competitors," agrees Lance Braunstein, Morgan’s managing director of field, data and application services. "The firm was going through an identity crisis, trying to figure out what we were and what we weren’t."

Since then, Morgan’s Global Wealth Management group has undergone a technology turnaround. About a year and a half ago, returning CEO John Mack hired James Gorman as president of the group, directing him to build a more productive retail brokerage operation that could generate stable revenue and earnings growth.

Gorman turned to the IT department for help, specifically pushing the technology side to provide more performance data. "We had a fairly underinvested business," Braunstein says. "We’d never been metrics-driven. We’d never really thought about the products we gave advisers at the branches, and our product and compensation strategies had been lumbering along as a wire house that took in a lot of transactions and relied on volume."

According to Braunstein, the new technology investments of the past 18 months have been focused on three areas: new business intelligence tools and dashboards for the sales organization, a new workstation for financial advisers and a new client portal.

New Plumbing: SOA

The first step before any new applications could be developed was to build a stronger network. After determining the branches’ bandwidth and latency requirements, with Cisco’s help the firm upgraded every branch network. A dedicated optical fibre metropolitan area network was installed. And Cisco’s wide area application service -- providing centralized storage and file services -- was implemented.

"This was compelling for us because everybody needs to store files somewhere, they need to be backed up, and there needs to be collaboration on those files between branches and people within a branch," Braunstein relates. "Yet the economics of deploying file servers to 500-plus branches weren’t feasible."

With state-of-the-art networks in place, the next layer of new technology to be built was a service-oriented architecture. Such a framework, Braunstein felt, would be most extensible and allow the reuse of programming work. But constructing the SOA wasn’t easy. "Everyone talks about SOA, but there is so much sunk cost in legacy systems that they’re hard to back out of," Braunstein says. "You start where you can."

Commonly used software components, such as data access calls and identity management functions, needed to be rewritten as Web services that could be used by any application -- a culture shift for developers who were used to doing everything themselves. "At first, developers felt it was disempowering to have to plug in to the framework and leave things like making an identity call to the standard Web service," Braunstein says. Over time, though, they began to see the merit of not having to rewrite those routines, he adds.

Next, portions of legacy applications had to be rewritten to fit within the new SOA architecture -- a difficult task, according to Braunstein, as each application had to be retrofitted to a common, consistent interface.

The backbone of the SOA is a "canonical service bus" that provides a common way to describe a message and for applications to talk to one another. An application framework was built on IBM’s WebSphere server using SOAP XML as a messaging standard.

One result of transitioning to SOA is more-consistent data, Braunstein says. For instance, previously if an adviser pulled up a client portfolio on his workstation, he would see different numbers than the client would see on the firm’s Web site. "You don’t inspire a lot of confidence that you know what you’re doing when those two data sets are different," Braunstein concedes.

Information at Your Fingertips

To create the kinds of dashboards and reports Gorman wanted, Braunstein’s team used software from Informatica to extract, transform and load data from source systems into a data warehouse. Braunstein then applied business intelligence software from Business Objects to the data to create views of productivity and profitability for the sales organization (again using IBM’s WebSphere).

One tool shows a U.S. map delineated by Morgan Stanley’s four geographic sales regions. Statistics on revenue, net assets and financial advisers are provided. The user can look at national statistics or drill down into a region or branch. "We’ve built and continue to build a business intelligence platform that allows the business to be more metrics-driven than intuitive or anecdotally driven," Braunstein says. For instance, the dashboard enables branch managers to track objectives for revenues and assets under management. "That’s insight they didn’t have before," Braunstein notes.

Morgan Stanley also moved to improve the information available to the Global Wealth group’s financial advisers, who used to have a set of more than 60 applications that couldn’t provide them with a holistic client view. So Braunstein’s team built another WebSphere-based portal that provides a common look and feel for all applications. "Whether I’m journaling funds between accounts, entering a trade, looking at a combined summary for a client or looking at a statement for a client, the navigation is uniform; you’d never know you were looking at different applications," Braunstein says.

This is especially important when clients call in. Usually clients want to know how their accounts are doing or the overall state of the markets, Braunstein relates. Using the new workstation(see image), financial advisers have all the desired information at their fingertips, he asserts, noting that client reports that used to take three to five hours to create now take only 10 minutes to generate because of the application consolidation.

The workstation also helps advisers manage their books of business. For example, if advisers want to know which clients to call, they can target clients who have experienced major shifts in assets. Further, an alerting system lets advisers know when customers are concentrated in a position, which might be an opportunity to suggest a more diversified asset allocation, Braunstein explains.

Since the new workstation was implemented, the amount of revenue each financial adviser brings in per year has grown from $479,000 to $819,000 (that’s revenue produced by the business divided by the number of financial advisers), and assets under management per financial adviser has grown from $40 million to $89 million, according to Morgan Stanley. "We don’t credit technology for all of that, but clearly better technology helps," Wiggins says.

"The more time you have to go out and sell and manage clients and the less time you’re working on ‘administrivia,’ the more productive you’re going to be," adds Braunstein.

Client Portal

The technology upgrades didn’t stop there. Morgan Stanley rolled out a new customer portal 10 months ago called ClientServ (see image). The portal allows the firm’s more than 2 million retail brokerage clients to manage their portfolios, look at historical activity, review current holdings and positions, and check money market rates, as well as trade and do some basic self-service chores such as changing a phone number or address or getting a copy of a statement. The portal features Thomson market data, and Morgan recently added the latest version of CheckFree’s bill payment service.

According to Braunstein, the firm is working with Cisco to develop new communication and collaboration features for the portal, such as click to chat (using presence awareness and instant messaging) and videoconferencing. Also on the drawing board are live meeting and document-sharing features.

Morgan Stanley also is developing a new security layer, due for rollout in March 2008, for ClientServ that will provide authentication without requiring user involvement. This risk-based authentication, which is being crafted with tools from Digital Envoy and BioPassword, will provide a "bio-password" that captures each person’s signature keystroke rhythm and then checks the visitor’s keystroke pattern against his signature, Braunstein says.

Another security feature will detect the visitor’s IP address. If a given client’s geographic IP address suddenly changes from one in the U.S. to one in an Eastern Bloc country, a red flag will be raised. In that case, Morgan Stanley will use out-of-band communication, such as a phone call, to confirm that person’s identity.

"The challenge I set for the team was, ‘We’re never going to get people to adopt a token, so we need to come up with a multifactor authentication mechanism that’s nonintrusive and noninvasive to the user,’" Braunstein says.

Also in the works are new entitlement features that will let customers extend differentiated access privileges. For instance, a customer’s attorney might be permitted to see certain data and an accountant a different set of data.

With all the upgrades across the Global Wealth group, Braunstein says, Morgan Stanley is ready to take on the competition. "We’re probably now at least as good as our full-service brokerage competitors," he comments. "But more significantly, we’ve positioned ourselves to leapfrog our competitors from here on."


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