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Morgan Stanley (MS) to Sell RIA Assets to CI Financial, Pathstone

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Morgan Stanley (MS - Free Report) has decided to sell Eaton Vance registered investment advisory (RIA) assets to two separate firms. Eaton Vance WaterOak Advisors’ Boston office will join Toronto-based CI Financial Corp. , while its Florida office will join Pathstone.

Eaton Vance WaterOak Advisors, formerly known as Eaton Vance Investment Counsel (“EVIC”), is an RIA firm that has served as the dedicated wealth management affiliate of global investment manager, Eaton Vance.

EVIC provides comprehensive wealth management services, including investment management, financial, estate and tax planning, and family office and trust services to help its clients maintain financial security over the long term.

Notably, in March 2021, Morgan Stanley got the ownership of Eaton Vance WaterOak Advisors when it acquired Eaton Vance, which was then integrated into MS’ investment management (IM) segment.

CI Financial is an active RIA acquirer, and since its entry into the U.S. RIA sector in January 2020, it has become one of the country’s fastest-growing wealth management platforms. The acquisition of the Boston-based team of Eaton Vance WaterOak Advisors (likely to close in the fourth quarter of this year) is expected to increase CI Financial’s U.S. assets to $133 billion.

Kurt MacAlpine, the chief executive of CI Financial, stated, “This is one of our largest U.S. acquisitions by assets to date and aligns us with a growing firm with a rich history, an exceptional team, industry-leading wealth management capabilities and loyal, sophisticated clients.”

For Pathstone, which is an independently owned advisory firm based in Englewood, N.J., the acquisition of Eaton Vance WaterOak Advisors (expected to close in early May) will add $3 billion in assets, bringing the firm’s total assets under advisement to more than $35 billion. Also, Pathstone will be able to significantly expand its footprint in Florida, where it has a small presence in Naples.

Matthew Fleissig, Pathstone’s president said, “We’ve been searching for a market leader in Florida for a very long time.”


Morgan Stanley has been undertaking several initiatives to restructure operations with a goal to increase focus on reliable revenue sources for a long time now. The company has been focusing more on segments like wealth management (WM) and IM, as these are less dependent on the capital markets.

MS’ decision to sell the RIA assets is a step in this direction as it emphasizes its commitment to the strategic focus. Last year, Morgan Stanley sold E*Trade Advisor Services, an RIA custody business, to Axos Financial. Both Eaton Vance WaterOak Advisors and E*Trade Advisor Services were being considered competitive with Morgan Stanley’s in-house advisor model.

Notably, driven by its restructuring efforts, the WM and IM segment’s aggregate contribution to Morgan Stanley’s net revenues jumped from 26% in 2010 to 51% in 2021. Also, the WM segment’s total client assets witnessed a four-year (2018-2021) compound annual growth rate (CAGR) of 28.9%, while the IM segment’s total assets recorded a CAGR of 50.1% over the same period. Thus, Morgan Stanley’s continued focus on less capital-market dependent operations and its opportunistic buyouts will likely keep aiding financials.

So far this year, shares of MS have lost 10.9% compared with 5.1% decline of the industry.

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Currently, Morgan Stanley carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Continuing with its growth efforts, Nicolet Bankshares, Inc. entered an agreement to acquire Charter Bankshares, Inc. and its wholly-owned subsidiary, Charter Bank. Subject to regulatory approvals and other customary closing conditions, the deal is expected to close in third-quarter 2022.

Assuming 100% phase-in of the cost synergies, the Nicolet-Charter merger is anticipated to result in earnings per share accretion in the high-single digits in 2023. Moreover, the deal will likely be immediately accretive to Nicolet’s tangible book value per share.

First Horizon Corporation (FHN - Free Report) and The Toronto-Dominion Bank have also signed a definitive merger agreement. Per the deal, Toronto-Dominion will acquire First Horizon for $13.4 billion in cash or $25 for each FHN common share.

Toronto-Dominion anticipates the FHN acquisition to close by Nov 1, 2022. The buyout is subject to customary closing conditions, including approvals from First Horizon's shareholders and the United States and Canada regulatory authorities.

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