Frequently asked questions

Step 1: Complete an investor profile questionnaire and suitability application

Answer a short series of questions about your investment objectives, time horizon, and risk tolerance that will help us make an investment recommendation.

Step 2: Customize your portfolio

You can further personalize your portfolio with additional investment strategies like socially responsible (SRI and ESG) and smart beta ETF investments.

Step 3: Review your recommended portfolio

We will then present you with an investment proposal in which we recommend an investment strategy based on the results of your investor profile questionnaire. You may choose to accept our recommendation or select a different investment strategy for your account by retaking the investor profile questionnaire. You will have to attest to your new investment objective and risk tolerance needs to align with the new portfolio you chose.

Step 4: Implement your plan

Open and fund your Core Portfolios account.

New clients (External transfer)

You can fund your account by making a cash deposit or transferring securities. Securities transferred to fund an account will generally be liquidated upon receipt. We can accept certain types of securities for deposit at our discretion. Please note that this could result in a taxable event.

Existing clients (Internal transfer)

You can fund your account using cash or existing securities. Securities transferred to fund an account will generally be liquidated upon receipt. We can accept certain types of securities for deposit at our discretion. The intra-firm transfer tool on the Move Money page will allow you to easily transfer a portion or the full value of an existing account into a new Core Portfolios account. As an added benefit, all transactions will be processed commission-free and the proceeds will be used to fund your recommended portfolio. Please note that this could result in a taxable event.

You can convert any eligible E*TRADE Securities account into a new Core Portfolios account. Account eligible for conversion include:

• Individual and joint brokerage account
• Custodial accounts
• Traditional or Roth IRA
• IRA for Minors
• Beneficiary IRA
• Individual or Roth Individual 401(k)
• Rollover IRA
• SEP or SIMPLE IRA
• Profit-Sharing Plan or Money Purchase Plan
• Investment-Only Retirement Plan

You generally have four potential options for your qualified retirement plans from former employers. You can:

• Leave your assets in your former employer’s plan, if permitted;
• Roll over your retirement savings into your new employer’s qualified plan, if one is available and if rollovers are permitted;
• Roll over the retirement savings into an individual retirement account (IRA); or
• Cash out and take a lump sum distribution from the plan. This would be subject to mandatory 20 percent federal tax withholding, as well as potential income taxes and a 10 percent penalty tax.

Read FINRA’s Investor Alert: The IRA Rollover: 10 Tips to Making a Sound Decision and find out the costs and features of your previous and current employers’ plans before making a decision. If you’re not sure which avenue might make the most sense for your situation, it can be a good idea to consult with a legal professional or a tax advisor.

Additionally, in considering whether a client advisory account is right for you, please consider the following among other factors:

• Your desire for an enhanced type of service.
• Your prior and/or current level of involvement in making and/or participating in investment decisions.
• Your prior, current and/or anticipated level of investment activity.
• The volume of investments in the account that are ineligible for transition to an advisory program (including current investments).
• The anticipated volume of investments in the account.
• The existence of firm, financial adviser and/or third-party manager discretion (if applicable)
• Changes in the manner in which fees and expenses will be calculated
• Your desire to be charged an asset-based fee
• The difference between a brokerage and an advisory account

It is very important that you understand the differences between advisory and brokerage services, including the manner in which you pay us for these services. You must attest and acknowledge within the Single Advisory Contract (“SAC”) that you understand the differences between Brokerage and Advisory (e.g., pricing differences, trading authority, etc.). Please refer to this explanatory document for more information: understandingyourrelationship.pdf (morganstanley.com). For subsequent transitions from Brokerage to Advisory, or new Advisory account openings, clients are directed to the current SAC and the Important Account Information booklet, which govern each of the subsequent Advisory accounts opened and describe the services offered in both Brokerage and Investment Advisory relationships.

If, after carefully considering your options discussed in the prior question above and discussing with your legal and tax advisors, you believe that an IRA is right for you, please continue with the following steps for IRA rollover process and account setup:

Step 1: Complete an investor profile questionnaire

Answer a brief series of questions to get a recommended portfolio based on your timeline and attitude towards risk.

Step 2: Open a Core Portfolios IRA account 

Fill out your information and select a retirement account (Rollover IRA, Traditional IRA or Roth IRA) when you reach the step where you choose an account type.
Please note: If your old plan is a Traditional 401(k), select a Core Portfolios Rollover IRA or Traditional IRA. If you want to roll over a Roth 401(k), select Core Portfolios Roth IRA.

Step 3: Transfer assets to your Core Portfolios IRA

You can fund your account by making a cash deposit or transferring securities. As an added benefit, all transactions will be processed commission-free and the proceeds will be used to fund your recommended portfolio. Please note, this could result in a taxable event.

Clients can open a new Core Portfolios account and request to transfer vested unrestricted shares from their stock plan account into their Core Portfolios account, subject to any limitations set forth in the account.

Please note: Shares held in an E*TRADE Securities stock plan account may be subject to certain sale and/or transfer restrictions and may be ineligible to be used to fund an account for the Core Portfolios Program. Please consult a stock plan administrator regarding eligibility of certain holdings.

Once you open a Core Portfolios account, you will need to fund your account with at least $500. Once funded, all the investments are typically made within three business days. You'll receive a consolidated confirmation statement letting you know when we make trades on your behalf.

Your account is monitored daily and automatically rebalanced to maintain the appropriate asset allocation aligned with the investment strategy you have selected, if your portfolio drifts too far, generally 5%, from the weighted percentage of the portfolio’s target asset allocation or when material deposits and withdrawals are made. We will also provide you online statements with information on your holdings, any trades we made in your account, dividends you may have received, and other account activity.

You can view the details of your portfolio, track performance and see how it compares to leading market benchmarks 24/7 through the online dashboard at etrade.com and via the E*TRADE app. In addition, we will send monthly market commentary, along with timely insights during major market events, to help keep you stay informed about your investments and the market.

Once you fund a minimum of $500, you can expect to see the initial portfolio holdings purchased within two to three business days of accepting the Advisory Agreement. Additional deposits into the Core Portfolios account are also invested within two to three business days.

Yes, this feature is available. You can use the online Transfer Money service to set up recurring deposits into your account based  on the amount and schedule that works for you. Deposits will be invested automatically into your Core Portfolios account and can help build assets without any further steps on your end.

Yes, you can deposit or withdraw cash from your account at any time by logging on and selecting "Add/remove funds." If you need additional cash, we will strategically sell investments from across the portfolio in an effort to maintain the portfolio's target allocation.  Please note that this could result in a taxable event and buying and selling in your account could impact portfolio performance.

The minimum investment amount to maintain the account is $450. If the account balance falls below $450 due to market fluctuations, we will continue to manage your account, however if the account balance falls below the minimum amount due to withdrawals, we will discontinue managing the account until the investment minimum is met. Since it is hard to maintain an adequately diversified Core Portfolios if the account balance is less than the initial portfolio minimum, we may not rebalance the account back to your target allocation. MSWM will discontinue managing your assets and may require that you close your account. You have the option to open a brokerage account or other investment advisory account in other investment advisory programs offered by MSWM and transfer your assets to that account.

Once you have selected your portfolio, you can further customize your strategy based on your investing preferences.

Core Portfolios (Smart Beta): Want a more active portfolio strategy? We’ll allocate a portion of your assets to a smart beta ETF – a type of ETF that favors equities with certain characteristics which may help enhance your overall returns.  Factors, or specific characteristics of stocks that have performed well historically, are utilized to select stocks. This strategy also combines elements of active and index investing.

These strategies seek to outperform a benchmark index and typically aim to enhance returns or minimize risk relative to a traditional market-capitalization-weighted benchmark. An ETF employing a smart beta strategy may have higher portfolio turnover which may indicate higher transactions costs relative to its benchmark. Utilizing smart beta strategies does not guarantee against underperformance relative to a more traditional market-capitalization-weighted benchmark. 

Core Portfolios (Socially Responsible): Looking to align your investing with your personal values? We’ll adjust your portfolio to include an ETF that focuses on companies known for their environmental, social, and governance practices. Socially responsible ETFs invest to a specific mandate, including incorporating SRI criteria into investment analysis; screening for companies that adhere to environmental, social, or governance standards; or fixed income ETFs focused on community impact securities.

SRI strategies may eliminate or limit exposure to investments in certain industries or companies that do not meet certain environmental, social, or governance criteria. As a result, the ETF may underperform other funds or an appropriate benchmark that do not have an SRI focus.

Core Portfolios is managed with a long-term perspective in mind. Frequent cash withdrawals might make the portfolio difficult to manage and cause it to deviate from its objectives. To avoid this problem, Core Portfolios doesn’t offer features such as check writing, debit cards, and Bill Pay. However, we don’t want to stand between clients and their cash. If you need to make a withdrawal select “Withdrawal” under “Move Money” tab on your account dashboard and follow the instructions.  Customer Service can be reached anytime at 866-484-3658 for any questions. You can also transfer money online to another account and withdraw it from there.

No, Core Portfolios is designed for investors who want ongoing help and professional guidance to manage their account. Please keep in mind, Core Portfolios is a discretionary program and only MSSB can place trades in a Core Portfolios account. Of course, if investors would like to do some investing and trading on their own, they can open a MSSB self-directed brokerage account at any time.

We provide resources like the E*TRADE Tax Center to help you understand how your investments may be taxed. All taxable account activity will be reported on the annual IRS Form 1099, which is typically available in February of each year. We encourage you to contact your tax advisor for any tax reporting questions.

Tax-sensitive investment strategy is available in Core Portfolios account.

Tax-sensitive investment strategy utilizes municipal bond ETFs that may help reduce taxes incurred on interest and dividends associated with those portfolios. All brokerage accounts are automatically enrolled in a tax-sensitive portfolio. Once enrolled in Core Portfolios, you can update this feature at any time. IRAs and other tax-advantaged account types are also eligible for Core Portfolios.

Tax-loss harvesting is a tax-efficient investing strategy that can potentially help minimize the amount of current taxes you have to pay on your investments. Under current US federal tax law, you may be eligible to offset your capital gains with capital losses incurred during that tax year or carried over from a prior tax return through tax-loss harvesting.

All active taxable Core Portfolios accounts are eligible to enroll in tax-loss harvesting. Once enrolled, Core Portfolios will monitor the enrolled account for tax-loss harvesting opportunities.

Tax-loss harvesting may potentially allow you to write off losses against any of your capital gains. Additionally, you may be able to write off losses up to $3,000 of ordinary income. Any losses that are not used against your capital gains and/or income in a given year may be carried over to the next year.

However, tax-loss harvesting may not always be beneficial. It may create an undesirable tax liability if your future tax bracket is expected to be higher than your current one. If you expect to be in a higher tax bracket in the future, it may not make sense to enroll in tax-loss harvesting. Additionally, tax-loss harvesting may not be appropriate for accounts with a shorter time horizon, as you may wish to avoid realizing short-term capital gains.

There is no guarantee that any harvesting request will achieve any particular tax result. MSWM does not provide you with any tax advice in connection with tax-loss harvesting. Tax-loss harvesting may adversely affect the investment performance of your account(s).

Please note that Morgan Stanley does not provide legal, tax or accounting advice. For additional information, please consult IRS guidelines and your tax advisor.

Visit the “Allocation” tab within Portfolios. Select an eligible account. Under “Tax-Loss Harvesting” near the top of the page, select “Enroll.”

To unenroll, select “Unenroll” in the same location.

Once you enroll in tax-loss harvesting, we will monitor your Core Portfolios account to find potential for tax-loss harvesting opportunities. When we find that you could potentially lower your tax bill by harvesting losses, we'll perform tax-loss harvesting for you automatically. There are no trading costs to harvest your losses, and we'll look to purchase a replacement security in the same investment asset class to ensure you keep your target exposure.^d1

We will send you an alert at enrollment, and when each tax-loss harvesting trade is executed.

Visit the Allocation tab within Portfolios. Select the account enrolled in tax-loss harvesting. Your realized losses since initial enrollment will be reported under “tax-loss investing.”

Refer to these articles to learn more about tax-loss harvesting and how to get started:

• Here’s how tax-loss harvesting can work year-round for you
• How to automate tax-loss harvesting