Morgan Stanley remains the world's biggest seller of managed accounts, in which customers pay a fee rather than trade-based commissions to have their assets managed, but it is phasing out a program that lets them choose among more than 300 actively managed mutual funds for their investments.

As of July 1, the firm closed TRAK Fund Solution to new investors, saying they have better and more flexible opportunities in other fee-based programs that include the funds in TRAK. Existing customers can remain, but about 40 percent of their assets have moved since the company told its more than 17,000 brokers of the plan to shrink in May, said James Tracy, who runs Morgan Stanley's Consulting Group Wealth Advisory Solutions.

"People are doing much more sophisticated things with their portfolios" than investing only in mutual funds, he said.

The move comes as major U.S. brokerage firms are tweaking their fast-growing managed account platforms to better unify pricing and reduce paperwork. Bank of America Corp's Merrill Lynch wealth management unit, for example, is merging more than five managed programs into a single Merrill One platform by the end of next year.

Consolidation riles some brokers who have to explain the changes to clients, but the firms say improved managed account technology makes it easier for brokers to monitor client portfolios, reduce paperwork and spend more time servicing clients and meeting new prospects.

It also allows brokerage firms to standardize fees and discount limits across programs, whether customers invest on their own, give full discretion to a broker or use model portfolios created by a firm.

Merrill One, for example, uses a single billing and fee process no matter how many management programs are used. Morgan Stanley expects to make some changes in its discounting and fee policies over the next two years, but will not announce anything until its budget process is complete by yearend, Tracy said.

TRAK Fund Solution was created in 1994 at Smith Barney, which Morgan Stanley purchased in full last year. Together with a companion program in which Morgan Stanley gets a management fee, TRAK had $34.7 billion of assets as of June 30, according to Cerulli Associates. The companion program remains open to new investors.

Mutual fund advisory programs surpass all other types with $1 trillion of assets as of June 30. But they are more popular at discount brokerages and regional firms that focus on less affluent investors than do larger firms such as Morgan Stanley and Merrill.

Those firms rank first and second respectively in total managed assets with a combined market share of 35 percent, or $1.3 trillion, but are ninth and tenth in mutual fund-only assets, according to Cerulli.

The biggest managed fund sponsors are Fidelity Investments, Ameriprise Financial and Edward Jones, with a 39 percent share among them.