Morgan Stanley Wealth Management is clothing itself as a fiduciary to move its advisors into the small 401(k) space.

The New York-based wirehouse is teaming up with Dresher, Pa.-based Ascensus to launch ClearFit, a program designed specifically for small-business retirement plans with between $0 and $10 million in assets.

“The small-business space is underserved, but it’s also where the majority of plans are,” says Kathleen Connelly, Ascensus executive vice president of client experience and relationship management. “The product brings the same type of low-cost investing that large institutional clients get to use all the way down market.”

While Ascensus will provide the recordkeeping services for the plan, Morgan Stanley will serve as ClearFit’s ERISA Section 3(38) investment manager, a responsibility typically of a plan advisor or sponsor.

Currently, most advisors servicing the small-plan space are non-fiduciary brokers, who could be exposed to litigation risk and other issues should the Department of Labor’s fiduciary rule become effective.

“This is a leading-edge move in the marketplace,” says Connelly. “There are not many broker-dealers who are stepping up to say, ‘You can hold us fully accountable to those investment choices.’’’ From Morgan Stanley’s perspective, it’s important to offer their clients a premier product that checks all the boxes on the things they should be concerned about … if you’re a smaller employer and you have the power, experience and breadth of Morgan Stanley behind you making decisions, you’re putting yourself in a safe place.”

At Morgan Stanley, only a few hundred advisors have been able to serve as plan fiduciaries, because most of the company’s representatives have charged commissions when serving plans.

ClearFit now gives Morgan Stanley and its advisors enough protection under ERISA to access the small-plan space directly, with Ascensus’s recordkeeping services in place to keep costs down for participants and sponsors.

As the investment manager, Morgan Stanley becomes responsible for selecting and overseeing ClearFit’s uniform investment lineup, which will use a multi-manager, non-proprietary approach within collective investment trusts.

Morgan Stanley will also design and apply proprietary glide paths to employees’ target-date investment selections. All told, the fund menu will cost less than 40 basis points for most participants.

“The same global investment management team will apply the same research that they make available to their institutional clients,” says Connelly. “Most of the time, small plans can’t access that type of expertise; they don’t have sufficient balances.”

ClearFit will use Ascensus’s infrastructure to integrate with employers’ payroll processing, manage withdrawals, loans and distributions, deliver notices to participants, and offer mobile and digital access to participants. The flat-dollar cost for record keeping, up to 25 participants, is $3,950, with a per-participant fee based on total plan size for larger employers.

ClearFit will also engage participants with educational materials and in financial wellness content.

“Morgan Stanley is working with us to create content on topics that should be important to small employers and employees,” says Connelly. “Sponsors will not have to ask for these materials and services; they’re going to be created and pushed out to the plans.”

Morgan Stanley’s plan advisors would then have more time to work with participants on other non-fiduciary issues, says Connelly.