Moving forward together
As you may know, E*TRADE and Morgan Stanley joined forces in late 2020. We’re now entering a new phase of our journey together and are excited to share with you what’s next.
Here’s what you need to know
Morgan Stanley will be assuming the custody and clearing services provided by E*TRADE Securities.
Account transfers will occur on a rolling basis, and we’ll keep you informed every step of the way.
No action is required for the transfer to take effect, and your online experience will remain exactly the same.
1 week before transfer weekend
All outgoing account transfer requests will be rejected and will need to be resubmitted (using your new account number) after transfer weekend.
The sweep option for new accounts opened by existing clients starting Friday, the week before transfer weekend will default to the Cash Balance Program until the transfer is complete.
You will no longer be able to change your sweep option until after the transfer has been completed.
On the Tuesday before transfer weekend
Processing of all incoming account transfer requests will be paused until after transfer weekend.
On the Friday of transfer weekend
Starting after the close of extended hours trading, all open orders except futures will be canceled, (with most order types being automatically reentered before the next trading day), and online account access will be disabled through Monday afternoon. This could temporarily impact your access to any banking accounts you hold with us, as well as the availability of certain banking and cash management features. Learn more.
While your online experience and the way you access your account(s) will remain the same, there are a number of post-transfer changes to keep in mind, including the assignment of new account numbers. You can explore these changes by expanding the sections shown below.
For additional details, see the Notice of Changes you received from us.
The following general changes will take effect on your transfer date:
You’ll be assigned a new brokerage account number with nine digits, which you’ll be able to view online. For reference, your old account number will also be visible on etrade.com and the E*TRADE applications.
Fractional quantity decimal places
- For certain products, the share quantity for your portfolio and watch list positions will be rounded and adjusted to three decimal places (from five decimal places previously). Your historical data on E*TRADE platforms, however, will continue to display to five decimal places.
- For certain products, if you hold a long position with a quantity that extends to more than three decimal places, the quantity will be rounded up to the next highest number at the third decimal place (e.g., 100.32816 will be rounded to 100.329). If you’re short these same products, positions with a quantity of more than three decimal places will be rounded down at the third decimal place (e.g., -98.34795 will be rounded down to -98.347).
Dividend and interest payments
If you’ve elected to have your dividend and interest income distributed on a monthly basis, you’ll experience a change in the way your monthly distribution amount is calculated. After the transfer, your dividend and interest income will be added to your available cash balance. If the cash available in your account on the distribution date is less than your accumulated income balance (due to trades, withdrawals, and so on), the amount that’s distributed to you will equal your available cash balance. This may result in a different distribution amount than you received prior to the transfer.
Dividend reinvestment program (DRIP)
Following the transfer of your account, account-level DRIP enrollment will apply to both current and future portfolio securities, as will account-level unenrollment. You can also choose to select specific positions to include or exclude from account-level DRIP enrollment.
After the transfer, you’ll need to use your new nine-digit brokerage account number when initiating real-time payments.
If you have nontransferable securities in your account before the transfer, Morgan Stanley may reach out to you after the transfer regarding the removal of those securities. Nontransferable securities are securities of issuers that have not employed the services of a transfer agent for six years or longer, often due to inactivity or insolvency, which the Depository Trust Company (DTC) has deemed eligible for its Position Removal Program (PREM). The DTC produces a PREM-eligible report each month, reflecting all positions held by Morgan Stanley that the DTC has deemed nontransferable for six years or longer and that are PREM-eligible.
Banking and cash management features of brokerage accounts
When you’re assigned a new brokerage account number upon transfer, you’ll also be issued a new checking account number to be used when establishing new direct deposits and automatic payments tied to your transferred brokerage account. You can view this number by logging on to etrade.com, locating the account on the Complete View page, and selecting Quick links > Routing and account number. This number will also appear at the bottom of any brokerage account checks you order after the transfer is completed.
Your existing checks, debit card, Bill Pay, and automatic payments and instructions tied to your E*TRADE brokerage account will continue to operate without change.
After the transfer, for any new wire requests tied to your transferred brokerage account, select E*TRADE as the financial institution (ABA number 056073573) and use your new nine-digit account number.
After the transfer, you can continue to use your current checks with your old account number. However, when you reorder checks tied to your E*TRADE brokerage account, you’ll notice your new account number on them. You’ll continue to be able to view 24 months of cleared check images through etrade.com. Check images can also be viewed on the E*TRADE mobile app via Menu > Check Deposits > Activity.
After the transfer, any direct deposits you’ve set up with your old account number will continue. For any new direct deposits tied to your transferred brokerage account, use your existing routing number (ABA number 056073573) and new nine-digit account number. We also encourage you to update your existing instructions with any depositors to reflect your new account number.
After the transfer, any automatic payments you’ve initiated directly with a payee using your old E*TRADE brokerage account number will continue. For any new automatic payments tied to your transferred brokerage account, use your existing routing number (ABA number 056073573) and new account number. We also encourage you to update your existing instructions with any payees to reflect your new nine-digit account number.
Your debit card number associated with your E*TRADE brokerage account as well as the card’s features and benefits will not change. Plus, any recurring payments associated with your debit card that you established prior to the transfer will continue without change.
ATM fee reversals
You will continue to receive ATM fee reversals as stipulated by the E*TRADE ATM refund policy.
Any account information you’ve saved in a mobile wallet on a smartphone or other mobile device will continue to operate without change.
After the transfer, you can continue to deposit checks via mobile deposit. Plus, co-located E*TRADE and Morgan Stanley branches can accept check deposits into your transferred brokerage account(s).
Statements, trade confirmations, and reporting
Due to the transfer, the following statements and reporting changes will apply:
For the month in which your current E*TRADE accounts are transferred to your new accounts, you’ll receive two account statements: one from E*TRADE displaying a zero balance along with any account activity details that took place prior to the transfer, as well as the movement of all securities, funds, and balances to Morgan Stanley; and another from Morgan Stanley detailing any account activity that took place after the transfer, as well as the receipt of all securities and funds from your E*TRADE account(s). Note that the period displayed throughout the statement indicating “This Year” is specifically the period from conversion to the end date shown. After the transfer, you’ll continue to receive your account statements no less frequently than quarterly as long as you have a security position, account balance, or account activity.
If there’s residual activity (e.g., income payments) in your original E*TRADE account after the transfer, you may receive a subsequent statement from E*TRADE as these assets are received and then transferred to Morgan Stanley.
New statement format, features, and differences
In general, your new Morgan Stanley statement will contain all the information you’ve been receiving, but in a new format and with some additional data we hope you’ll find useful. As expected, this new format may present information in different sections and/or with different labels. You can learn more about the new statement at etrade.com/mssbstatementguide.
Your new statement will be based on trade date, not settlement date (as on previous E*TRADE statements), and will show trades executed through the last business day of the month, regardless of whether or not they’ve settled. The settlement date is the date on which assets and money are exchanged between buyer and seller.
Here’s an overview of some of the components of your new statement, including how they may differ from previous E*TRADE statements:
- Account Summary. Known as the Change in Value table on previous statements, the Account Summary section includes accrued interest on both the Total Beginning Value and Total Ending Value lines, not as a separate line item. The section also shows Credits, Debits, Security Transfers, and Change in Value. Where appropriate, accompanying accrued interest will be displayed for fixed income securities on the Security Transfers line. Additionally, the new Holdings section (equivalent to Account Holdings) displays accrued interest below Estimated Annual Income, rather than in a separate column as on previous statements.
- Market Value Over Time. This graph is equivalent to the Net Account Value by Month End chart on previous statements.
- Asset Allocation. The Asset Allocation table and pie chart break down “packaged products” (e.g., mutual funds, exchange-traded funds, closed-end funds, and unit investment trusts) and annuities into their underlying asset classes. If the account has a net short position or a net debit, this information will be displayed as a bar chart. Please note that the classification of certain securities may be different than on prior statements.
- Cash Flow. The Cash Flow summary is an expanded version of the Portfolio Transaction summary on previous statements. It starts with an opening combined balance for Cash, Sweep MMFs, and Bank Deposit Programs, and displays details for all credits and debits. The Cash Flow summary ends with your closing Cash, Sweep MMFs, and Bank Deposit Programs for the period.
- Beneficiary Information for IRAs. This is displayed in the Account Summary section for all IRA types except Qualified Retirement Plans and Investment Only account types.
- Income & Distribution Summary. For accounts subject to tax reporting, the Income & Distribution Summary displays tax-exempt distributions separately. For accounts not subject to tax reporting (e.g., retirement accounts), income will not be separated into reportable and tax-exempt categories.
- Gain/Loss Summary. This new feature presents realized gain/loss for the current period and year, as well as unrealized gain/loss from inception to the present (calculated based on acquisition date).
- Investment Objectives. At the start of the Account Detail section, Investment Objectives and other important account information are displayed for reference.
- Holdings. The Holdings section is organized by product type. Fixed income securities are displayed by maturity date (or pre-refunded date, if earlier), while most other securities are listed alphabetically. The columns presented for each section may vary depending on security type. Additional information is displayed beneath the security in italics and may also vary. For example, for common stocks, you’ll see Research Rating and Next Dividend Payable Date; for fixed income securities, Coupon Rate, Maturity, and Ratings; and for mutual funds, Reinvestment Options. The new statement no longer delineates between cash and margin account types. Additionally, as a new feature, the Holdings section shows Unrealized Gain/Loss by position. The Total Cost column includes all commissions and fees, and excludes accrued interest on fixed income purchases. To help you cross-verify between product category and asset class, there’s an Allocation of Assets table at the end of the Holdings section, where you’ll see the various asset class totals for each of the product categories.
- Margin Loan Interest Schedule. For accounts with margin debit balances, the new statement includes a detailed Margin Loan Interest Schedule. A new line will be added to the schedule only when either the margin debit balance and/or margin interest rate has changed. The From and To columns mark the time period during which the debit balance and interest remained unchanged—and “No. of Days” indicates the duration of that period.
For fixed income securities (e.g., bonds or CDs): Upon transfer of your account, your new statement will show the incoming transfer of any fixed income positions, along with the value of accrued interest for each. Accrued interest represents the interest that has accumulated since the last coupon payable date. Your new statement will display accrued interest in the overall value of each fixed income line in the Balance Sheet and also include it in your Total Value calculation. On your prior E*TRADE statement, accrued interest was a separate line item and was not included in Total Value.
Trade confirmations and prospectuses
- Your Morgan Stanley trade confirmations will have a new design, while offering all the required information. There may be additional information and disclosures as well.
- For brokerage account(s), your trade confirmations and prospectuses will be available in the Documents section on etrade.com. Your current eDelivery notification preference selection, available on etrade.com, will be combined to apply to delivery of both trade confirmations and prospectuses. A separate notification will no longer be sent for prospectuses.
- For brokerage account(s), General Correspondence will be introduced as a new preference type. eDelivery will be automatically enabled for General Correspondence if it is elected for any preference in the account.
- For changes to advisory accounts, see Investment advisory accounts.
Some product descriptions for the holdings in your account on etrade.com and the E*TRADE applications may be different from those displayed on your account statements and trade confirmations.
Product pricing and valuation methodology
As a result of the transfer, the pricing methodology used to calculate prices for certain securities may change on a going-forward basis.
Tax reporting and withholding
Due to the transfer, the following tax-related changes will apply:
2023 tax reporting
For tax year 2023, you will receive multiple IRS tax forms (e.g., Form 1099 and Form 1042-S), as well as any applicable state income tax forms, reflecting reportable activity in your E*TRADE account(s) during 2023 prior to the transfer and in your new transferred account(s) during 2023 after the transfer. You may be required to account for information from all tax statements when completing tax returns. If you have questions about tax statements, please consult your tax advisor.
For undocumented accounts (no valid Form W-8 or W-9 on file), key enhancements to the determination of domestic vs. foreign presumption rules will be implemented at the time of transfer that could impact the tax withholding treatment for your account(s).
Tax lot rounding
Tax lot quantities will be rounded up or down to the nearest third decimal place (e.g., 24.92621 will be rounded down to 24.926; 24.92491 will be rounded up to 24.925).
Tax classification of securities
Due to differences in security reference data and the transfer of your account(s) to Morgan Stanley, you may experience a change in tax withholding, year-end reporting, and/or cost basis calculations related to the securities you held or continue to hold in your transferred account(s).
For example, if you have or had an options contract opened prior to 2023, the contract may not have previously been classified as a Section 1256 option. For tax year 2023, certain options contracts opened prior to 2023 will be reported as Section 1256 contracts on Form 1099-B, boxes 8–11. In addition, among other changes:
- Certain securities that were previously classified as debt for US tax purposes will, after the transfer, be classified as equity for US tax purposes, and vice versa.
- Certain securities that were previously classified as being issued by US issuers will, after the transfer, be classified as being issued by non-US issuers, and vice versa.
- Certain securities that were previously classified as being issued by corporations for US tax purposes will, after the transfer, be classified as being issued by partnerships for US tax purposes, and vice versa.
Margin and lending
Due to the transfer, the following margin-related changes will apply:
Margin billing period
- Upon the transfer of your E*TRADE brokerage account(s), your margin interest accrual period will change. Your current billing period for margin interest is the 26th of the month to the 25th of the following month. The new billing period will be the first day of the month to the last day of the month.
- Interest accrued from the 26th of the prior month through your transfer date will be reflected on your E*TRADE brokerage statement following the close of the billing period on the 25th of the month.
- Interest accrued from your transfer date to the end of the month will be reflected on your Morgan Stanley brokerage statement on the last day of the month.
Margin interest calculation
- Upon transfer of your E*TRADE brokerage account(s), the method of margin interest calculation will change. Your interest will no longer be calculated based on the average daily balance determining the rate. Your interest will instead be calculated using your actual daily debit balance and associated rate.
- For an explanation of how your interest will be calculated, see the Margin Supplement in your E*TRADE from Morgan Stanley Client Agreement for Self-Directed Accounts.
Multiple margin and pattern day trading account aggregation logic
- After the transfer, if you hold multiple margin accounts at E*TRADE and/or Morgan Stanley that are registered in the name(s) of the same beneficial owner(s), your start-of-day Special Memorandum Account excess, buying power, and pattern day trading (PDT) activity and equity requirements, if any, will be aggregated across your multiple margin accounts. PDT round trips, status, buying power, margin calls, equity requirements, and other account requirements and restrictions imposed in one margin account will apply equally to your like-titled multiple margin accounts.
Release rate changes
- Upon transfer, the lending value release rates for rights and warrants may change.
- These changes in release value may or may not have a material impact on your borrowing power. If you hold a large number of these asset types and/or have a large loan balance, please carefully check your statement and/or call 800-998-8079 if you have any questions.
Brokerage account statement
- The brokerage account(s) pledged to your LOC, if any, will be noted in your account statement.
- Your account statement will also include a new Margin Loan Interest Schedule section, providing a detailed breakdown of your interest amount.
Margin base rate and spread changes
- Upon transfer, your all-in margin rate will not change. The base and spread rates that make up your all-in rate may be adjusted to ensure that your all-in rate remains unchanged. For additional details on how your margin interest will be calculated, see the Margin Supplement included in the E*TRADE from Morgan Stanley Client Agreement for Self-Directed Accounts.
Here are a few things to know about voluntary corporate actions after the transfer, including a new way to view and participate in them at etrade.com.
Voluntary corporate actions
- Voluntary corporate action elections can now be made on etrade.com. You’ll also begin to see a list of your pending voluntary corporate action events on etrade.com.
- To view voluntary corporate actions available in each of your accounts, go to the new Shareholder Actions tab under Accounts > Portfolios. A link will be available for each corporate action with offer details and the election due date.
- Based on your delivery preferences, you’ll continue to get electronic or paper notifications of corporate actions.
- Control numbers will no longer be required.
- Holders of both self-directed brokerage and stock plan positions will no longer receive separate corporate action or proxy notices for these shares. Positions will be combined and presented for a single corporate action election or proxy ballot.
Voluntary election adjustments
The frequency of voluntary election adjustments will be changed from weekly to daily.
Pricing and fees in your brokerage account
$0 commissions for online US-listed stock, ETF, mutual fund, and options trades will remain. A number of fees, however, are being eliminated or reduced. For the full fee schedule, see etrade.com/fees.
Fees no longer being charged:
- Fees for duplicate account statements, confirmations, and tax forms
- Fee for early withdrawal from a retirement account before age 59½
- Excess contribution removal fee for retirement accounts
- Recharacterization fees for retirement accounts
- Cashless exercise fee
- Secure ID (RSA) token fee
- Reg T call extension fee
Fees being reduced:
- ADR conversion request fee: $25 (previously $30)
- Physical stock certificate fee: $60 (previously $500)
Morgan Stanley supports the following dividend options for mutual funds: Cash, Reinvest All, and Dividend Cash/Reinvest Capital Gains. Upon transfer, if Morgan Stanley does not support your current dividend option, your mutual fund(s) will be defaulted to Reinvest All. You can change your dividend selection anytime by contacting Customer Service.
For current clients of both E*TRADE and Morgan Stanley
If you have accounts at both E*TRADE and Morgan Stanley, the following changes will take effect on your transfer date:
Any updates you make to your employment information, legal address, phone number, or income and net worth will be automatically applied to all your accounts across E*TRADE and Morgan Stanley.
Client profile harmonization
- Your personal information will be consolidated and synchronized across your account records, if applicable. This process could result in a material update to the information we have on file for you, including your name, legal address, date of birth, phone number, and so on. In the event that we have conflicting information across your accounts, we will use your most recently updated records.
- To ensure accuracy, please visit etrade.com/myprofile and the Settings tab at morganstanleyonline.com > Profile Tab > Settings to confirm and update your personal information.
Once your accounts are linked, you’ll be able to transfer cash or securities between E*TRADE brokerage accounts and Morgan Stanley accounts on either etrade.com or Morgan Stanley Online. For more information, visit the E*TRADE Service Center or contact the Morgan Stanley team servicing your account.
Investment advisory accounts
Upon transfer, Morgan Stanley will become the investment adviser and also provide brokerage and custodial services for E*TRADE Capital Management, LLC (ETCM) investment advisory accounts, including Core Portfolios, Blend Portfolios, and Fixed Income Portfolios. Below you’ll find additional information about the impact of the transfer on these types of accounts.
Core Portfolios accounts
ETCM Core Portfolios accounts will be transferred to Morgan Stanley’s Core Portfolios Program.
- Minimum funding: After the transfer, if your account balance decreases to $450 or less due to a withdrawal, your account will be terminated. The account minimum for Morgan Stanley to approve and start managing Core Portfolios accounts will remain $500.
- Householding eligibility: After the transfer, assets held in your Morgan Stanley Core Portfolios Program account will no longer be eligible to be bundled together with other related accounts in one household in order to receive certain fee discounts.
- Dividend reinvestment: Dividend reinvestment will not be available in the Morgan Stanley Core Portfolios Program.
- Proxy voting: Following the transfer, Morgan Stanley will not vote proxies on your behalf.
- Rebalancing parameters: After the transfer, rebalancing parameters will be adjusted to 5%. This means that if the investments in your portfolio drift too far (generally by 5% or more) from the weighted percentage of your portfolio’s target asset allocation, we’ll automatically rebalance your investments to maintain the appropriate risk level aligned with the Investment Strategy you’ve selected.
- Portfolios page: After the transfer, key features from the Morgan Stanley experience will be added to the Portfolios page without losing any current features.
- Quarterly Performance Reports: After the transfer, Core Portfolios accounts will receive monthly portfolio commentaries in lieu of Quarterly Performance Reports.
Blend and Fixed Income Portfolios accounts
ETCM Blend and Fixed Income Portfolios accounts will be transferred to Morgan Stanley’s Select UMA Program.
For ETCM Blend Portfolios only:
- Account management. Upon transfer into the Select UMA Program, if you have a Strategist Manager, your account will continue to be managed by that Portfolio Manager in a comparable model. If you have questions about your portfolio’s investments, please contact the Morgan Stanley Virtual Advisor (MSVA) team, who will service your Morgan Stanley investment advisory account. You’ll be able to view the contact details for MSVA on the Complete View page on etrade.com.
- Potential sale of securities. Depending on the types of securities you hold in your account, such holdings may need to be liquidated upon transfer in order to rebalance your account in accordance with the investment strategy in Morgan Stanley’s Select UMA Program. Please be aware that any such liquidation could have tax consequences.
For ETCM Blend and Fixed Income Portfolios:
- Account accessibility. Upon transfer, your investment advisory account will be closed, and you’ll be able to access your new investment advisory account in the Morgan Stanley Select UMA Program on both etrade.com and Morgan Stanley Online (MSO). For your convenience, you’ll see a banner at the top of the Complete View page on etrade.com, as well as a prompt within the Morgan Stanley Account Card, instructing you to create MSO log-on credentials. Once you have access to your new account(s) on MSO, you can enable eDelivery, account visibility, and single sign-on to move back and forth with ease between the E*TRADE and Morgan Stanley platforms.
- Account standing instructions
- Action not required: If you have recurring deposit or withdrawal instructions set up through E*TRADE for your account(s), we’ll set up the same instructions for your account(s) in the Morgan Stanley Select UMA Program on your behalf. Any recurring transfers between your ETCM Blend or Fixed Income Portfolios account(s) and other E*TRADE account(s) will also be reestablished. Please note that any changes or new instructions will need to be provided directly to your MSVA team. You’ll receive confirmation of your recurring deposits or withdrawals set up through external bank accounts.
- Action may be required: Any instructions you established at a third party outside of E*TRADE or Morgan Stanley to debit funds from your account will need to be updated, as these will be returned. Direct deposit instructions will need to be reestablished for your Morgan Stanley Select UMA Program account. You should review and reestablish any transactions to debit funds from your account using an account eligible for check writing. For assistance, please contact your MSVA team.
- New incoming wire and check deposit instructions. Instructions to fund your account via wire transfer will change. Your new wire transfer instructions can be found on MSO via Services > Account Services > Account Information. Checks can be deposited electronically on the Morgan Stanley mobile app or by mail to: PO Box 290157, Tampa FL 33687
- Telephone support. After the transfer, you’ll receive ongoing advice and support for your investment advisory account from the MSVA team. Your MSVA team is available from 8 a.m. to 8 p.m. ET, weekdays. You’ll be able to view the contact details for MSVA on the Complete View page on etrade.com and MSO.
- Historical account information. The following historical information will be available for your closed investment advisory account: account documents (e.g., statements and tax documents); historical gain/loss information, available through the following tax season (2024); and two years of historical transaction activity on a rolling basis.
- Portfolio information enhancements. A number of enhancements to the portfolio information for your new investment advisory account will appear on etrade.com, including a list of holdings at Portfolios > Positions. You’ll also have access to a new asset allocation report based on Morgan Stanley’s asset taxonomy, as well as a new performance and historical value report. Plus, new transaction activities will be available in the Transactions menu (order information will no longer be provided for your new investment advisory account).
- Realized gains/losses. All future activity related to gains and losses for your new investment advisory account will be available on MSO via Realized Gain/Loss in the Accounts menu.
- IRA distributions. Client-initiated IRA distribution requests will no longer be available for investment advisory accounts on etrade.com. To request an IRA distribution, please reach out to your MSVA team.
- Playback summary. After the transfer is complete, Morgan Stanley will mail you a summary confirming your personal and account information. Please review this Playback Summary and reach out to your MSVA team if you have questions or find any inaccurate information.
- Electronic delivery. If you elected to receive account statements, tax notices, and/or other account documents for your investment advisory account electronically, that election will be reset to paper delivery upon transfer. To receive documents and tax notices for your Morgan Stanley Select UMA Program account electronically, you’ll need to select eDelivery in the preferences for the new account on MSO. You’ll be provided with a link to this MSO page at Documents > eDelivery Preferences on etrade.com.
Regardless of your eDelivery preferences, by agreeing to the Morgan Stanley Single Advisory Contract, you consent to receive the following communications from Morgan Stanley electronically (instead of by paper copies): the Single Advisory Contract, Form ADV Brochures and Brochure Supplements, Client Relationship Summaries, Privacy Notices, and any other regulatory disclosures. We’ll provide these communications to you either by sending them to an email address you give us or by referring you to a website.
- Advisory fee and advisory fee rate. The total asset-based fee rate, also known as your advisory fee, will not increase as a result of the transfer. After the transfer, you’ll receive information about your total advisory fee rate, which will include the Morgan Stanley Advisory Fee schedule, as well as the asset-based fee rate of your SMA Portfolio Manager (if applicable) in the Playback Summary.
- Transfer month advisory fee billing. Your advisory fee for the month of the transfer due to both E*TRADE and Morgan Stanley will be debited by Morgan Stanley during the week of the transfer. To calculate the fee, Morgan Stanley will use the market value of the account on or about the first business day of the week. The total advisory fee rate you pay to Morgan Stanley will not increase as a result of the transfer. Thereafter, the Morgan Stanley advisory fee will be charged monthly in advance based on the account’s market value on the last business day of the previous billing month. For more information about fees and expenses in the Select UMA Program, please see the Select UMA ADV Brochure.
- Platform fee. After the transfer, your investment advisory account in the Morgan Stanley Select UMA Program will be subject to a platform fee, which supports Morgan Stanley’s continuing efforts to enhance fee transparency and further reduce potential conflicts of interest. The platform fee is offset by a credit applied to your account from fee-based revenue we receive from certain investment product providers that compensate Morgan Stanley for administering its investment advisory platform. Although the credit will vary, Morgan Stanley expects it to equal or exceed the platform fee over time. Both the platform fee and the credit are applied to your account quarterly. The platform fee is separate from and in addition to the Morgan Stanley advisory fee and, if applicable, your SMA Portfolio Manager’s advisory fee.
- Trade confirmations. After the transfer, you will no longer receive an individual confirmation for each securities transaction in your investment advisory account. For fixed income securities, Morgan Stanley will bundle trade confirmations and send them to you monthly. For all other securities, transactions in your account will be reflected on your monthly account statement. If you prefer to receive individual trade confirmations for every securities transaction in your account, please notify your MSVA team.
- Power of Attorney. The Morgan Stanley Select UMA Program does not permit trading by clients or other individuals. If you had a Power of Attorney connected to your ETCM Blend or Fixed Income Portfolios account, it will remain connected to your Morgan Stanley Select UMA Program account upon transfer.
- Delays in completing certain account requests. To facilitate the transfer of your investment advisory account to the Morgan Stanley Select UMA Program, completion of certain liquidation and account termination requests made close to your transfer date may be delayed. Completion of requests requiring liquidation of ETF or mutual fund positions that are made less than four days before your transfer date may be delayed until the first business day following your transfer or as soon as operationally possible. For fixed income securities, completion of requests requiring liquidation made less than six days before your transfer date may be similarly delayed. These requests include model updates, pre-termination liquidations, liquidations to raise cash, IRA distributions, and so on. Completion of advisory account termination requests made less than four days before your transfer date may be delayed until the first business day following the transfer or as soon as operationally possible. If these situations apply to you, please plan for the appropriate time required to complete these requests.
- Ineligible accounts. Certain investment advisory accounts may be ineligible for conversion to the Morgan Stanley Select UMA Program due to restrictions in place on the account. These accounts will be converted to a self-directed E*TRADE brokerage account prior to the transfer date and will transfer to Morgan Stanley. Ineligible accounts will receive notice from ETCM detailing the termination of advisory status prior to the transfer date.
- Dividend reinvestment. As part of the transfer, your Morgan Stanley Select UMA Program account will be managed by Morgan Stanley at a specified target allocation, and any dividend or interest payments will be reinvested accordingly.
- Proxy voting. Following the transfer, Morgan Stanley will not vote proxies on your behalf. If all or a portion of the assets in your Select UMA Program account are managed by a Portfolio Manager, your Portfolio Manager will vote proxies for the assets they oversee. In accordance with the terms of the Morgan Stanley Single Advisory Contract, for all other assets in the account, you will expressly delegate proxy voting authority to a proxy voting service provider we will engage on your behalf. For more information about proxy voting in the Select UMA Program, please see the Select UMA ADV Brochure.
- Quicken, QuickBooks, and other aggregation tools. If you use Quicken, QuickBooks, or other aggregation software, you’ll need to update the software with your new investment advisory account information.
For all transferred ETCM investment advisory accounts:
As part of the transfer, performance will be recalculated by the Morgan Stanley performance engine utilizing the same transactional books and records data. Also, your investment advisory account(s) will be automatically enrolled in fractional share trading.
Stock plan accounts
Upon Transfer, Morgan Stanley will assume responsibility for the custody and clearing services of any E*TRADE stock plan accounts. Here are a few additional things to keep in mind.
Wash sale adjustments
A broker reportable wash sale occurs when you sell shares at a loss and buy identical shares in the same account within 30 days before or after the initial sale. The loss on the initial sale is reported as a disallowed loss, and the cost basis and acquisition date of the shares you acquire are adjusted.
Currently, shares you acquire in your E*TRADE account from your stock plan account are not adjusted for wash sales. After the transfer, however, these shares will be evaluated for possible wash sale treatment, and if a reportable wash sale occurs, the loss on the initial sale will be reported as a disallowed loss, and the cost basis and holding period of the shares acquired will be adjusted. As a result, in upcoming years, you may see more wash sale-related adjustments reported on your Form 1099-B for your Morgan Stanley account.
While wash sale adjustments can affect the tax treatment of a sale, they do not affect the underlying attributes of the shares your company may use to determine your ordinary income. You may also be required to report additional wash sales that are not reported on Form 1099-B on your tax return.
Combined stock plan and self-directed brokerage statements
After the transfer, you’ll continue to receive combined statements showing both stock plan and other assets, which will now come from Morgan Stanley. While your Morgan Stanley statements will look different, they will include the same basic information as your E*TRADE account statements, except for the following differences:
- The overall portfolio amount shown on E*TRADE statements includes the value of employee stock options that are vested and currently exercisable in your account. After the transfer, the overall portfolio amount shown on Morgan Stanley statements will not include vested and exercisable stock options since they do not represent assets held in your account. Instead, you’ll see a Stock Plan Summary section with information about the value of vested, unvested, and exercisable stock options, as well as deferred, pending release, and any other potential holdings.
- After the transfer, stock plan cash proceeds cannot be disbursed to you until your company delivers the shares to Morgan Stanley.
- Since it can take several days for your company to deliver shares to Morgan Stanley, there may be pending stock plan sale transactions when your statement is generated at month’s end. Until your company delivers the shares to complete any pending sale transaction, your Morgan Stanley statement will reflect both the value of the shares you sold in the transaction as well as the proceeds from the transaction. However, the proceeds will not be available for you to withdraw or invest until the transaction settles, your company delivers the shares to Morgan Stanley, and any cash due to your company has been transferred from your account. Any proceeds that are pending payment to your company will be identified on your account statement in the “Change in Value of Your Account” section and the “Stock Plan Summary” section.
Uninvested cash sweeps
Today, your uninvested cash balances automatically move (or sweep) into cash sweep programs, which can be found in your account statement under “Cash & Cash Equivalents.”
As a result of the transfer, all eligible sweep option balances will be transferred to a Morgan Stanley bank sweep program called the Bank Deposit Program (BDP) on or about the transfer date except in certain cases where you are ineligible to participate, have a closed account, or you are a pattern day trader. Through BDP, available free credit balances are automatically deposited, or swept, by Morgan Stanley into interest-bearing deposit accounts established for you by, and in the name of, Morgan Stanley Smith Barney LLC as agent and custodian, at Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association, each a national bank, Federal Deposit Insurance Corporation (FDIC) member, and affiliate of Morgan Stanley, subject to a deposit maximum of $20,000,000. If your account is eligible, additional amounts above the deposit maximum are swept to the Morgan Stanley Institutional Liquidity Funds Government Securities Portfolio (MGPXX), a prospectus for which can be found at morganstanley.com/funds/MGPXX.
- To understand how these changes may impact your account over the weekend of your transfer date, see Changes to your sweep option.
- Accounts that are designated pattern day trading accounts will continue to maintain cash balances in the Cash Balance Program and will not be transferred to BDP.
For information regarding BDP, including the terms and conditions, see the BDP Disclosure Statement. Except for pattern day trading accounts, BDP will be your default sweep investment unless you’re ineligible to participate in it (e.g., for certain persons residing outside the US), in which case any free credit balances in all of your accounts will automatically sweep into one of the following based upon eligibility:
- Institutional Liquidity Funds Government Securities Portfolio (available only if you are a US person and are not eligible for BDP, or if you exceed the Deposit Maximum as defined in the BDP Disclosure Statement)
- Treasury Liquidity Fund – Cayman Islands Exempted Company that invests all its assets in Institutional Class of Morgan Stanley Institutional Liquidity Funds Treasury Portfolio, a US money market fund (Cayman Company is not governed by the US Investment Company Act of 1940, as amended, and is available only if you reside outside the US)
- US Government Money Market Trust (available only for Individual Retirement Accounts that are not eligible for BDP)
Your sweep balance will be held in an omnibus account at one or more sweep banks. No deposits or withdrawals will be accepted directly from you by the sweep banks; instead, money is moved based on the activity that takes place in your account.
Your deposits in BDP pay interest. The current rate of interest for BDP can be found at etrade.com/rates. There are no changes to interest accrual, tiers, and the payout process as a result of the change from your current sweep option to BDP other than those specifically addressed in the Notice of Changes you received from us.
Retirement and education savings accounts (and change of custodian)
Effective on your transfer date, E*TRADE will transfer your Individual Retirement Account (IRA), Coverdell Education Savings Account (CESA), and/or qualified retirement plan (QRP) account to Morgan Stanley. Here’s what this means for these types of accounts:
- E*TRADE will resign as your IRA, CESA, or QRP account custodian.
- Morgan Stanley will become the new custodian of your account(s).
- New Morgan Stanley retirement account documents will govern, not those of E*TRADE, as further explained below. However, for 401(k), profit sharing, or money purchase plans governed by E*TRADE’s prototype document (Prototype QRP), that document is not changing and still governs your QRP, but Morgan Stanley will become the document sponsor.
- Morgan Stanley will become the new IRS-approved nonbank custodian for your account if your account is an IRA or CESA or is maintained as part of a Prototype QRP that is exempt from the trust requirement under ERISA, does not have a trustee appointed, and is using a qualifying custodial arrangement (with E*TRADE as the custodian) under Section 401(f) of the Internal Revenue Code.
- After the transfer to Morgan Stanley, IRA, CESA, and Prototype QRP accounts will have new IRS approval letters.
- In addition to the E*TRADE from Morgan Stanley Client Agreement for Self-Directed Accounts and the Important Account Information for Self-Directed Accounts that will govern your account, your retirement account will be subject to additional retirement account agreements and documents. To find the documents that will apply to your retirement account, please access the appropriate document for your account type at Important Documents & Agreements. You should retain the relevant documents for your records, but you are not required to sign or return these documents to Morgan Stanley.
IRA and CESA beneficiary designation
If you, as IRA owner or CESA Contributor or Responsible Individual,1 have not previously submitted a beneficiary designation to E*TRADE in acceptable form, or the designated beneficiary does not survive the IRA owner or CESA beneficiary, as applicable, the default beneficiary under the Morgan Stanley IRA and CESA documents is (a) the IRA owner’s or CESA beneficiary’s surviving spouse, if any; (b) if no surviving spouse, then any surviving children (naturally born or legally adopted), in equal shares; (c) if no surviving children, then the surviving parents in equal shares (or 100% to the surviving parent); and (d) if no such individuals survive the IRA owner or CESA beneficiary, then the estate of the IRA owner or CESA beneficiary. More information can be found in section 1.3 “Beneficiary” under the Morgan Stanley IRA or CESA document. To view or manage your beneficiaries, visit etrade.com/benechange.
1. Under the Morgan Stanley CESA, the “Contributor” is the individual who establishes the CESA for the benefit of a minor individual (“CESA beneficiary”) and controls the CESA until the CESA beneficiary reaches age 21. The “Responsible Individual” under the Morgan Stanley CESA is the person who controls the CESA until the CESA beneficiary reaches age 21 if the Contributor (a) is the CESA beneficiary or (b) becomes incapacitated. The E*TRADE CESA generally refers to either party referenced above (the “Contributor” and “Responsible Individual” in the Morgan Stanley CESA) as the “Responsible Individual.”
SIPC, FDIC, and other disclosures
Morgan Stanley is a member of SIPC. Under SIPC, securities and uninvested cash (free credit balances) are protected in the event of a forced liquidation of Morgan Stanley for net equity claims up to $500,000, of which up to $250,000 may be for uninvested cash. SIPC coverage does not protect investors against securities fraud claims, market fluctuations, or other losses that are not related to net equity claims due to the insolvency of Morgan Stanley. Information about SIPC, including the SIPC brochure, may be obtained by contacting SIPC at 202-371-8300 or
by visiting sipc.org.
Effective at the time of the transfer, your account(s) will be protected under Morgan Stanley’s SIPC membership. Your SIPC coverage protection limits will not change. If you maintain more than one account at Morgan Stanley in separate capacities (e.g., individual and joint), the account(s) maintained in each capacity would be protected by SIPC up to the prescribed limits. However, if you maintain more than one account at Morgan Stanley in the same capacity, all such accounts maintained in that capacity must be aggregated for SIPC protection limits.
Excess of SIPC coverage
In addition to SIPC protection, in the unlikely event that client assets are not fully recovered and the full SIPC protection limits have been paid, Morgan Stanley’s supplemental insurance policy would be available to provide protection above the prescribed SIPC limits. This coverage is subject to an aggregate firmwide cap of $1 billion, with no per-client limit for securities and a $1.9 million per-client limit for the uninvested cash balance portion of any remaining shortfall.
As previously communicated to you, your E*TRADE account(s) are currently covered under the Morgan Stanley excess of SIPC supplemental insurance policy. Your excess SIPC coverage will not change upon account transfer. You can view additional information online about Morgan Stanley’s SIPC and excess of SIPC protection.
Certificates of Deposit (CDs) issued by FDIC member institutions that are purchased through Morgan Stanley and deposit accounts maintained through Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association (including, but not limited to, accounts with funds invested in the Bank Deposit Program, Savings, and Global Currency) are eligible for FDIC insurance up to applicable US dollar limits (visit fdic.gov). Unless otherwise specifically disclosed to you in writing, other investments and services offered through Morgan Stanley are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by, a bank, and involve investment risks, including possible loss of principal amount invested. Morgan Stanley is a registered broker-dealer, not a bank. CDs are insured by the FDIC, up to a maximum of $250,000 (including principal and interest) for all deposits held in the same capacity (e.g., individual or joint) per CD depository.
Automatic enrollment in the Morgan Stanley Class Action Service
After the transfer, you will be automatically enrolled in the Morgan Stanley Class Action Service (Class Action Service), which is administered by Broadridge Investor Communication Solutions Inc. (Broadridge). Broadridge automatically processes all proof of claim forms each time a security within your account(s) is impacted by a class action lawsuit. Any proceeds recovered from the Class Action Service will be subsequently deposited into your eligible account(s). In exchange for administering the Class Action Service, Broadridge will deduct 6% from any class action settlement received on your behalf. Morgan Stanley will notify you prior to processing any proof of claim form in order to give you the opportunity to opt out of a specific class action lawsuit. If, at any time, you do not wish to participate in the Class Action Service, you may choose to un-enroll by contacting Customer Service. The Class Action Service terms and conditions are included in the Self-Directed Account Agreements, which you can view under Important Documents & Agreements.