When Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors (collectively, “Morgan Stanley”) provide “investment advice” to you regarding a Retirement Account*, Morgan Stanley is a “fiduciary” as those terms are defined under Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or the Internal Revenue Code of 1986 (the “Code”), as applicable. When Morgan Stanley provides you with investment education, takes orders from you on an unsolicited basis or otherwise does not provide “investment advice” to you, Morgan Stanley will not be considered a “fiduciary” under ERISA and/or the Code.
Morgan Stanley provides “investment advice” as defined under ERISA and the Code when Morgan Stanley
- renders advice (a) as to the value of securities or other property, or makes recommendations as to the advisability of investing in, purchasing, or selling securities or other property, (b) on a regular basis, (c) pursuant to a mutual agreement, arrangement, or understanding with the Retirement Account owner or fiduciary, that (d) the advice will serve as a primary basis for investment decisions with respect to the Retirement Account assets, and that (e) the advice will be individualized based on the particular needs of the Retirement Account; and
- receives a fee or other compensation (direct or indirect) for such advice.
Morgan Stanley is registered as both a broker-dealer and as an investment adviser under federal and state securities laws, and provides services in both capacities. Morgan Stanley acts as your investment adviser only when Morgan Stanley has entered into a written agreement with you that describes the advisory relationship and Morgan Stanley’s obligations to you. If your Retirement Account is enrolled in one of Morgan Stanley’s advisory programs, Morgan Stanley acts as a fiduciary under ERISA and/or the Code, as applicable, with respect to the investment advisory services Morgan Stanley provides to your Retirement Account. Please refer to your program ADV and advisory agreement for more information about the services offered under the program, the advisory fees, potential conflicts between Morgan Stanley’s interest and yours, and Morgan Stanley’s role and responsibilities to you.
When providing brokerage services and account type selection services, the way Morgan Stanley receives compensation may create some conflicts with your interests, so when providing “investment advice” regarding Retirement Accounts in these circumstances, Morgan Stanley operates under a special rule that requires Morgan Stanley to act in your best interests and not put Morgan Stanley’s interests ahead of yours. Under this special rule’s provisions, Morgan Stanley (i) meets a professional standard of care when making investment recommendations (i.e., gives prudent advice); (ii) never puts Morgan Stanley’s financial interests ahead of yours when making recommendations (i.e., gives loyal advice); (iii) avoids misleading statements about conflicts of interest, fees, and investments; and (iv) charges no more than is reasonable for our services.
*Retirement Account means any Individual Retirement Account (“IRA”), Roth IRA, Health Savings Account, Coverdell Education Savings Account, Archer Medical Savings Account, a Plan covered by ERISA, or a plan described in section 4975(e)(1)(A) of the Code.