AFTAs 2022: Best risk management initiative—Morgan Stanley

Project: The Portfolio Risk Platform

Overview

The Portfolio Risk Platform (PRP) is a customized version of BlackRock Aladdin that Morgan Stanley Wealth Management (MSWM) uses as its portfolio risk analytics platform, and includes stress scenarios (inflation, geopolitics, volatility) and the ability to model potential changes to a client’s portfolio.

What problem does it solve?   

Prior to PRP, the firm’s investment risk analytics were fairly limited and not broadly integrated throughout the firm’s systems. Additionally, field users and supervisory teams used different platforms and processes to gauge investment risk and client suitability, leading to challenges and confusion.

“The Portfolio Risk Platform provides a one-stop shop for its users to embrace technology and integrate it into the wealth management industry. Financial advisors can employ this institutional-caliber risk platform as part of their practice, thereby bolstering conversations with clients surrounding risk concerns and facilitating a deeper relationship with clients. This platform also consistently maintains relevance with frequent adaptions to help meet business needs and better assist Morgan Stanley financial advisors.”
Chris Scott-Hansen, managing director, head of trading and managed solutions, Morgan Stanley Wealth Management

How does it solve the problem?

Analytics from the Platform are visually organized within distinct “Insights” dashboards, allowing financial advisors to analyze portfolio risk across client accounts. Additionally, advisors and supervision teams are able to “speak the same language,” thus lessening confusion and overlap, and it allows advisors to incorporate these analytics into client reports.

Future developments

Morgan Stanley Wealth Management will next look to integrate PRP’s analytics into its brokerage trading systems, allowing advisors to see both pre- and post-trade impacts to an account’s volatility. The firm is also working on simplifying the user experience with UI/UX improvements.

Why they won

One of the issues that continues to challenge buy-side firms’ salespeople is their ability to access accurate and reliable risk analytics while visiting clients. Morgan Stanley’s Portfolio Risk Platform, a customized version of BlackRock’s widely used Aladdin offering, addresses that challenge by organizing analytics within dashboards, allowing advisors to quickly analyze portfolio risk across client accounts. Morgan Stanley will further enhance the platform by integrating PRP’s analytics into its brokerage trading systems, allowing advisors to see both pre- and post-trade impacts to an account’s volatility.

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