Morgan Stanley Launches First Advisory 529 Plan
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By Kristen Kuchar

June 25, 2020

Morgan Stanley is launching the Morgan Stanley National Advisory 529 Plan, the industry’s first advisory 529 Plan, with the North Carolina State Education Assistance Authority (NCSEAA) to sponsor the plan. 

The new plan will be offered exclusively through Morgan Stanley Wealth Management Financial Advisors to their clients nationally and aligns with their goals-based planning strategy.

The plan, expected to be available this fall, will be offered only within an advisory relationship. Morgan Stanley Wealth Management clients who invest in the 529 plan will not pay brokerage charges or commissions on their portfolios. Instead, they will pay an advisory fee leveraging household pricing. They’ll have direct access to professional investment advice and experience a streamlined onboarding process, according to a press release.

For brokerage 529, clients pay commissions and ongoing trails based on whatever the fees are in the prospectus that’s set by the actual 529 plan itself. For advisory 529, clients pay a fee that is based on their total household assets and broader relationship with Morgan Stanley.

David Rosen, Head of Traditional Investment Products, Morgan Stanley Investment Solutions, explains there will be 11 different firm discretionary model portfolios utilizing non-propriety third party managers.

“Majority of plans are age-based – these are risk-based,” Rosen says. “Not everything should be aged-based in the current environment plan today.” Portfolios will consist of risk-based asset allocation models with both passive and active strategies designed to meet a wide range of investment objectives.

Rosen says that the inspiration to launch this plan was the fact that saving for education is a goal of many clients.

“A lot of our clients and financial advisors have demanded a product that’s an advisory based product,” he says. 

For advisors, the hope is to offer support via tools, technology and resources to do more for clients. “The plan is fully integrated into our goals-based tools,” Rosen says. 

For clients, in addition to swapping an advisory fee for brokerage charges, they will have direct access to professional investment advice and experience a streamlined onboarding process. 

Morgan Stanley advisors will still offer competing 529 plans. “We still offer over 20 other competing plans from third party asset managers and different state providers,” Rosen says. 

“Ultimately, we think this will be widely adopted by advisors and clients,” Rosen says. 

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